The Golden Age of Gas, Possibly: Interview with a IEA

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The Golden Age of Gas, Possibly: Interview with a IEA

The Golden Age of Gas, Possibly: Interview with a IEA

The intensity for a golden age of gas comes along with a vast “if” per environmental and amicable impact. The International Energy Agency (IEA)—the “global appetite authority”–believes that this age of gas can be golden, and that radical gas can be constructed in an environmentally excusable way.

In an disdainful talk with Oilprice.com, IEA Executive Director Maria outpost der Hoeven, discusses:

•    The intensity for a golden age of gas
•    What will a “age” means for renewables
•    What it means for humanity
•    The hurdles of renewable investment and technology
•    How a US shale bang is reshaping a tellurian economy
•    Nuclear’s grant to appetite security
•    What is holding behind Europe’s appetite markets
•    The subsequent vast shale venues over 2020
•    The existence behind “fire ice”
•    Condensate and a wanton trade ban
•    The many vicious appetite emanate confronting a universe today

Interview by. James Stafford of Oilprice.com

Oilprice.com: In 2011, a IEA expected what it called “the golden age of gas,” with gas prolongation rising 50% over a subsequent 25 years. What does this “golden age” meant for coal, oil and chief energy—and for renewables? What does it meant for amiability in terms of CO emissions? Is a healthy gas bang alleviation a clarity of coercion to work towards renewable appetite solutions?

IEA: We didn’t prognosticate a golden age of gas in 2011, we merely asked a impending question: namely, are we entering a golden age of gas? And we found that a intensity for such a golden age positively exists, generally given a scale of radical gas resources and a advances in record that concede their extraction. But a intensity for a golden age of gas hinges on a vast “if,” and we elaborated on this in 2012 in a news called “Golden Rules for a Golden Age of Gas”. Exploiting a world’s immeasurable resources of radical healthy gas binds a pivotal to golden age of gas, we said, yet for that to happen, governments, attention and other stakeholders contingency work together to residence legitimate open concerns about a compared environmental and amicable impacts. Fortunately, we trust that radical gas can be constructed in an environmentally excusable way.

Under a executive unfolding of a World Energy Outlook-2013, healthy gas prolongation rises to 4.98 trillion cubic metres (tcm) in 2035, adult scarcely 50 percent from 3.38 tcm in 2011. But we have always pronounced that a golden age of gas does not indispensably indicate a golden age for humanity, or for a climate. An enlargement of gas use alone is no cure-all for meridian change. While healthy gas is a cleanest hoary fuel, it is still a hoary fuel. As we have seen in a United States, a extreme boost in shale gas prolongation has caused coal’s share of electricity era to slide. Of course, there is also a probability that augmenting use of gas could flesh out low-carbon fuels, such as renewables and nuclear, from a appetite mix.

OP: When will we see “the golden age of renewables”?

IEA: Although we have not nonetheless expected a “golden age” of renewables, a current, fast expansion of renewable appetite is a splendid mark in an differently dour design of tellurian swell towards a cleaner and some-more diversified appetite mix. Still, a investment box for capital-intensive, low CO appetite technologies carries challenges. We need to heed between dual situations:

•    In rising economies, renewable appetite mostly provides a cost-competitive choice to new hoary formed era and are viewed as partial of a resolution to questions of appetite supply, diversification, and mercantile development. In China, for example, efforts to revoke internal wickedness are supportive vital investments in cleaner energy.

•    By contrast, in fast systems with indolent demand, no record is rival with extrinsic electricity prices, due to overcapacity. Governments are shaken about augmenting investment in low-carbon options that impact on consumer prices, and this is causing process uncertainty. But prolonged tenure appetite confidence and environmental goals need to be kept in mind.

Related article: Energy during Less than $0.01 per kW-hour: An Interview with Alex Xanthoulis

The altogether opinion for renewable electricity stays positive, even as a opinion can change strongly by marketplace and region. However, a electricity zone comprises reduction than 20% of sum final appetite consumption. The expansion of renewables in other sectors such as ride and feverishness has been some-more sluggish. For a golden age of renewables to materialise, incomparable swell is indispensable in these areas, for example, with a expansion of modernized biofuels and some-more process frameworks for renewable heat.

OP: How is a shale bang reshaping a tellurian financial and mercantile system? Who are a winners and losers in this rising scenario?

IEA: One of a pivotal messages of our World Energy Outlook-2013 is that reduce appetite prices in a United States meant that it is well-placed to reap an mercantile advantage, while aloft costs for energy-intensive industries in Europe and Japan are set to be a complicated burden.

Natural gas prices have depressed neatly in a United States – especially as a outcome of a shale gas bang –  and now they are about 3 times reduce than in Europe and 5 times reduce than in Japan. Electricity cost differentials are also large, with Japanese and European industrial consumers profitable on normal some-more than twice as many for electricity as their counterparts in a United States, and even Chinese attention paying  roughly double a US level.

Looking to a future, a WEO found that a United States sees a share of tellurian exports of energy-intensive products somewhat boost to 2035, providing a clearest denote of a couple between comparatively low appetite prices and a industrial outlook. By contrast, a European Union and Japan see their share of tellurian exports decrease – a total detriment of around one-third of their stream share.

OP: The IEA has remarkable that a US is no longer so contingent on Canadian oil and gas. What could this meant for tentative capitulation of TransCanada’s Keystone XL pipeline? How vicious is Keystone XL to a US as opposite to a significance for Canada?

IEA: The preference on a Keystone matter is one that contingency be taken by a United States Government. we am fearful it is not for a IEA to comment.

OP: With a chief emanate holding core theatre in Japan’s choosing atmosphere, is Japan prepared to lift a block wholly on nuclear, or is it too shortly for that?

IEA: This year’s World Energy Outlook, that we will recover in Nov 2014, will lift a special concentration on chief energy, so greatfully stay tuned. While we won’t plead what Japan should do, we will contend that each nation has a emperor right to confirm on a purpose of chief appetite in a appetite mix. Nevertheless, chief is one of a world’s largest sources of low-carbon energy, and as such, it has done and should continue to make an vicious grant to appetite confidence and sustainability.

A country’s preference to cut a share of chief in a appetite brew could open adult new opportunities for renewables, utterly as some phase-out skeleton prognosticate a deputy of chief ability mostly with renewable appetite sources. However, such a preference would also expected lead to aloft direct for gas and coal, aloft electricity prices, augmenting import dependency on hoary fuels and electricity, and a some-more formidable trail towards decarbonisation. Such a unfolding would therefore make it many some-more formidable for a universe to accommodate a 2°C meridian stabilisation goal, and have potentially disastrous impacts on appetite security.

OP: What is a pivotal means holding behind European appetite markets?

IEA: Europe has utterly a few advantages yet also many hurdles to overcome. If we had to collect one pivotal means that is holding behind European appetite markets, we would contend it is a miss of cross-border interconnections. Let me explain what we mean. As we showed in WEO 2013, Europe’s competitiveness is underneath pressure, as appetite cost differences grow between Europe and a vital trade partners – a US, China and Russia. High oil and gas import prices total with low gas and electricity demand, following a recession, are impacting European economies.

Europe should accelerate a use of a inland intensity and reap a amicable and mercantile advantages from appetite efficiency, renewable energies and radical oil and gas. In open economies, there are poignant advantages to be gained from giveaway trade and a vast appetite market. One example: Today, we can't make use of rival electricity prices opposite a EU, as earthy trade barriers exist and markets sojourn national. Europe is unwell to grasp a potential. The electricity grid and complement formation is really low, that also serves as a separator to a full and fit exploitation of renewable appetite potentials. This is since addressing a emanate of cross-border interconnections is so important.

OP: Where do we predict a subsequent “shale boom”?

IEA: According to WEO projections, there will be small non-North American shale expansion before 2020 due to a many progressing theatre of scrutiny and a time indispensable to build adult a oil domain use value chain. Beyond 2020, we plan large-scale shale gas prolongation in China, Argentina, Australia as good as poignant light parsimonious oil prolongation in Russia. The stream remodel proposals in Mexico have a intensity to put Mexico on a tip of that list as well, yet they need to be scrupulously implemented.

Related article: Are Canadian Energy Stocks Set for a Rebound? Interview with Colin Soares

OP: What is a picturesque destiny of methane hydrates, or “fire ice”?

IEA: Methane hydrates might offer a means of serve augmenting a supply of healthy gas. However, producing gas from methane hydrates poses outrageous technological challenges, and a applicable descent record is in a infancy. Both in Canada and Japan a initial exam drillings have taken place, and a Japanese supervision is aiming to grasp blurb prolongation in 10 to 15 years.

One thing we always discuss when we am asked about methane hydrates is this: It might seem distant off and uncertain, yet keep in mind that shale gas was in a same position 10 to 15 years ago. So we can't order out that new appetite revolutions might take place by technological developments and cost incentives.

OP: Have we strike a “crude wall” in a US, a indicate during that oil prolongation expansion might finish adult negligence due to infrastructure and regulatory constraints?

IEA: In Jan 2013, a IEA’s Oil Market Report examined a probability that as surging prolongation continues to pierce a US closer to apropos a net oil exporter, there might come a time when several regulations, utterly a US anathema on exports of wanton oil to countries other than Canada, could have an inauspicious impact on continued investment in LTO – and so continued expansion in production. We called this indicate a “crude wall”.

A year later, in a Jan 2014 Oil Market Report, we remarkable that with US wanton oil prolongation surpassing even a boldest of expectations in 2013 by a far-reaching margin, a wanton wall now seems to be appearing incomparable than ever. Having pronounced that, hurdles to US prolongation expansion are not imminent. Potential US expansion in 2014 seems a given, even opposite a backdrop of resurgent non-OPEC supply expansion outward North America.

OP: How is this moulding a wanton trade discuss and where do we predict this discuss heading by a finish of this year?

IEA: You are improved off seeking my friends and colleagues in Washington! This is apparently a supportive topic. Different people feel differently about it, mostly really strongly. Oil process always is a product of multiple, sometimes-competing considerations.

OP: What would lifting a anathema on wanton exports meant for US refiners, and for a US economy?

IEA: Many refiners and other vital oil consumers have pronounced they support gripping a anathema amid worries that permitting exports would outcome in aloft feedstock costs and erode their rival advantage, or change value-added attention abroad. On a other hand, oil producers have in ubiquitous come out in foster of lifting a ban, arguing that a “crude wall” might turn so vast that it can't be overcome; they see a probability of a bolt causing prices to unemployment and thereby choking off production. We have not constructed any minute research on a mercantile impact of lifting a ban, so we can't criticism on that partial of your question.

OP: Are there any other ways around a “crude wall” aside from lifting a trade ban?

IEA: As we wrote in a Jan 2014 Oil Market Report, many of a LTO is constructed in a form of franchise condensate, that is many optimally processed in a condensate splitter. There is now usually one such trickery in a United States, nonetheless during slightest 5 others are in several stages of formulation and construction.

I discuss this emanate since one could suppose a unfolding underneath that franchise condensate is released from a wanton trade restriction. The US Department of Commerce, that enforces a trade ban, includes franchise condensates in a clarification of wanton oil. However, this clarification could be changed, or a Commerce Department could simply emanate franchise condensate trade licenses during a insistence of a President.

Related article: Balancing Geological Potential and Political Risk: Interview with Tony Hayward

OP: How will a six-month agreement to palliate sanctions on Iran impact Iranian oil production? And if general sanctions are indeed carried after this “trial period”, how prolonged will it take Iran to impact a genuine boost in production?

IEA: The understanding between P5+1 and Iran doesn’t change a oil sanctions themselves. The oil sanctions sojourn entirely in place yet a P5+1 concluded not to tie them further. Relaxing word sanctions doesn’t meant some-more oil in a market.

As for a second partial of your question, we am fearful we can’t answer hypotheticals and what-ifs.

OP: What is a singular many vicious appetite emanate in a US this year?

IEA: I consider that if we take a perspective that a energy-policy decisions we make now have ramifications for many decades to come, and if we trust what scientists tell us about a meridian consequences of a appetite consumption, afterwards a singular many vicious appetite emanate in a US is a same emanate for each country: what are we going to do with your appetite process to lessen a risk of meridian change? Energy is obliged for two-thirds of greenhouse-gas emissions, and right now these emissions are on lane to means tellurian temperatures to arise between 3.6 degrees C and 5.3 degrees C. If we stay on a benefaction emissions pathway, we are not going to come tighten to achieving a globally concluded aim of tying a arise in temperatures to 2 degrees C; we are instead going to have a catastrophe. So appetite clearly has to be partial of a meridian resolution – both in a short- and long-term.

OP: What is a IEA’s purpose in moulding vicious appetite issues globally and how can a change be described, politically and intellectually?

IEA: Founded in response to a 1973/4 oil crisis, a IEA was primarily meant to assistance countries prepare a common response to vital disruptions in oil supply by a recover of puncture oil bonds to a markets.

While this continues to be a pivotal aspect of a work, a IEA has developed and stretched over a final 40 years. we like to consider of a IEA now as a tellurian appetite authority. We are during a heart of tellurian discourse on energy, providing lawful statistics, research and recommendations. This relates both to a member countries as good as to a pivotal rising economies that are pushing many of a expansion in appetite direct – and with whom we concur on an increasingly active basis.

Courtesy: James Stafford