Shale gas potential has been driving energy news bulletins
during the past couple of years, as there seems to be a whole new market, which
could lead to substantial discoveries and turn energy needs away from
conventional fuels like oil. In its recent weekly report, shipbroker Intermodal
highlighted that according to recent studies, there is a great abundance of
natural gas in ocean based methane hydrates and all land based natural gas. The
cost of natural gas is far less than the cost of conventional fuels. At the same
time the use of gas and the lessening dependency on Oil, could also help keep us
out of future useless wars, where blood and money are being wasted" it
said.
According to Intermodal's John Cotzias, "lately, the topic of extraction of fossil fuels from shale deposits arouses a general interest in many conversations and discussion topics. So what is Shale Gas? It is the natural gas that is found trapped within shale formations. Shales are fine grained sedimentary rocks like sandstone, limestone and shale that can be rich sources of petroleum and natural gas. Through the process of “fracking” these small underground “pockets of energy” are set lose and can channeled towards a reservoir where they can be collected. Thanks to the domestic hale gas production in the U.S, they now produce nearly as much as they consume, and the future looks bright as there is more to be produced… more to be exploited" he said.
He added that "as a cheap alternative to Oil, the U.S had the “foresight” of the booming future need for Gas, leading them a couple of years back to undertake tremendous expenditure for the construction of massive industrial infrastructure on its Gulf coast, which presently stand idle. Storage tanks and an extensive line of SS piping are just marks of the shift from a !as importing country to a potentially exporting one. These receiving installations that we described above face the obvious ,question of whether they should be transformed into export stations-terminals. Already most of these are applying for export licenses. However this has to be passed through the U.S department of Energy and the Obama regime faces strong voices against this, by environmentalists and energy-hungry American corporations who fear that allowing exports will likely raise the price of gas for the domestic consumers. The environmentalists claim that “fracking”, the process used to extract the gas by blasting it with water, pollutes the air and groundwater, a claim which so far seems to be over-exaggerated. On the other hand the Energy-hungry guys, don’t want to see the gas prices being pushed upwards, as they are currently enjoying the cheapest prices on the planet! So inevitably their argument that exports will increase gas price, falls short, as the increasing demand of this alternative energy source will do so, just by satisfying the pure economic S/D price setting equilibrium", Intermodal's Cotzias noted.
Meanwhile, according to the report, "the U.S is not alone in the investment of this new energy source. We have already seen Europe and the far East trying to battle their respective government regulations in order to start domestic production of their own. At the same time the African continent is emerging as the 7th most important source for LNG, with the Middle East, Australia and the US topping the tables. despite problems that have occurred in most African production areas, like a 1-year delay in Angola, Olokola standstill, feed supply in Egypt, and force majeure delays in Nigeria, the promising momentum of 20mil tons per annum, that Mozambique is estimated to produce, if it materializes will give a very welcome extra production boost in the much promising gas market. Estimates say that Mozambique production can more than double in the immediate years to come reaching up to 50 million tons per annum".
The big question of courses lies to how does this in turn affect shipping? According to Cotzias, "for one, with many companies investing heavily in FSRU and FRU they could possibly come in to good use in turning the current restricted LNG trade into a more flexible trade matrix with price arbitrage taking out any market differences. At the same time though and as much as all this might be good news for the LNG market, oil tanker face a different side of the same coin wherein they lose ground and their seaborne trade could potentially slowly decrease" he said.
According to Intermodal's John Cotzias, "lately, the topic of extraction of fossil fuels from shale deposits arouses a general interest in many conversations and discussion topics. So what is Shale Gas? It is the natural gas that is found trapped within shale formations. Shales are fine grained sedimentary rocks like sandstone, limestone and shale that can be rich sources of petroleum and natural gas. Through the process of “fracking” these small underground “pockets of energy” are set lose and can channeled towards a reservoir where they can be collected. Thanks to the domestic hale gas production in the U.S, they now produce nearly as much as they consume, and the future looks bright as there is more to be produced… more to be exploited" he said.
He added that "as a cheap alternative to Oil, the U.S had the “foresight” of the booming future need for Gas, leading them a couple of years back to undertake tremendous expenditure for the construction of massive industrial infrastructure on its Gulf coast, which presently stand idle. Storage tanks and an extensive line of SS piping are just marks of the shift from a !as importing country to a potentially exporting one. These receiving installations that we described above face the obvious ,question of whether they should be transformed into export stations-terminals. Already most of these are applying for export licenses. However this has to be passed through the U.S department of Energy and the Obama regime faces strong voices against this, by environmentalists and energy-hungry American corporations who fear that allowing exports will likely raise the price of gas for the domestic consumers. The environmentalists claim that “fracking”, the process used to extract the gas by blasting it with water, pollutes the air and groundwater, a claim which so far seems to be over-exaggerated. On the other hand the Energy-hungry guys, don’t want to see the gas prices being pushed upwards, as they are currently enjoying the cheapest prices on the planet! So inevitably their argument that exports will increase gas price, falls short, as the increasing demand of this alternative energy source will do so, just by satisfying the pure economic S/D price setting equilibrium", Intermodal's Cotzias noted.
Meanwhile, according to the report, "the U.S is not alone in the investment of this new energy source. We have already seen Europe and the far East trying to battle their respective government regulations in order to start domestic production of their own. At the same time the African continent is emerging as the 7th most important source for LNG, with the Middle East, Australia and the US topping the tables. despite problems that have occurred in most African production areas, like a 1-year delay in Angola, Olokola standstill, feed supply in Egypt, and force majeure delays in Nigeria, the promising momentum of 20mil tons per annum, that Mozambique is estimated to produce, if it materializes will give a very welcome extra production boost in the much promising gas market. Estimates say that Mozambique production can more than double in the immediate years to come reaching up to 50 million tons per annum".
The big question of courses lies to how does this in turn affect shipping? According to Cotzias, "for one, with many companies investing heavily in FSRU and FRU they could possibly come in to good use in turning the current restricted LNG trade into a more flexible trade matrix with price arbitrage taking out any market differences. At the same time though and as much as all this might be good news for the LNG market, oil tanker face a different side of the same coin wherein they lose ground and their seaborne trade could potentially slowly decrease" he said.