Shale Gas Supplies and the Alaska Gas Pipeline Question

Michael Giberson

For 30 odd years there has been talk of building a natural gas pipeline from the North Slope of Alaska into Canada and down to the lower 48 states.  For a time it seemed almost a necessity given the prospects of diminishing gas supplies in the lower 48 and the cost of competing on the world market for LNG imports.  Then, of course, the boom in shale gas production, which has upset what “everybody knew” about the future of natural gas supplies in the U.S. and moderated gas prices in the process.

Is it still a good idea to spend $20-40 billion for a pipeline? The WSJ offers: “Latest Risk to Alaska Gas Pipeline: More Gas.”

(HT to NewsWatch: Energy.)

By the way, interested in learning a bit more about the shale gas boom?  One perspective is offered by the documentary film Haynesville, which follows the effects of that shale gas play on several Louisiana landowners.  I haven’t seen it yet, but have heard good things.  (I am hoping to arrange a showing in Lubbock.  Lubbock area folks should let me know if you are interested in seeing the film.)

6 thoughts on “Shale Gas Supplies and the Alaska Gas Pipeline Question

  1. Once we began investing $500-700 billion per year to reduce carbon emissions by 83% compared to 1990 levels by 2050, would there be investment capital left for a project which would be obsoleted by the carbon emissions reduction mandates before the end of its useful life?

  2. Worth noting, per Ed Reid’s comment that if shale gas is as big and as cheap as it’s proponents suggest, it could potentially displace a heck of a lot of coal fired power, purely on economic dispatch considerations, driving US CO2 emissions down by as much as 20%.

    Practically speaking, price would likely rise before it got to that point, but do keep in mind that given where coal and gas prices are today and the likelihood (someday) of some CO2 price coming into play, large increases in natural gas supply would be likely to tip the dispatch order of our power fleet, shifting from a gas-marginal grid to a coal-marginal grid.

    Details, plots and lots of math quantifying here, should you be interested:

  3. Sean,

    Expanding the existing natural gas transmission capacity to facilitate massive coal displacement for power generation would also require the investment of $billions in facilities which would be obsoleted by carbon reduction mandates before the ends of their useful lives. While government planners might not figure that out, investors probably would.

    In the words of my favorite American philosopher, Yogi Berra: “You’ve got to be careful, if you don’t know where you’re going, because you might end up someplace else.”

    Analyzing these issues would benefit from establishing sets parameters for the US in 2050 with a population of ~450 million, emitting 83% less carbon than the US in 1990 with a population of ~250 million. Once a set of parameters was established, it would be possible to look back and identify plausible paths between the two end points. My projection is that stationary combustion of natural gas for power generation is not among the carbon-emitting end uses responsible for the remaining carbon emissions in 2050.

    I also suspect that, if we step onto the “slippery slope” of anthropogenic carbon emissions reductions, an 83% reduction would not be the ultimate end point.

  4. Low cost gas can threaten to unseat coal in the dispatch process, and as Sean notes this reduces carbon emissions. But 20% reductions won’t get us to an 83% reduction target, so more would be required if that is the target pursued.

    In shale gas’s favor, with respect to the pipeline expansion issue Ed mentions, is that at least some of it is ‘upstream’ relative to some of the bottlenecks that would otherwise emerge. (Namely, the Marcellus Shale which runs up through Pennsylvania and New York.) It should be accessible without huge pipeline projects, assuming of course that regulators don’t prevent its development in the area.

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