Gas Demand and Supply
2009
Projections
30
25 20 15 105 Shale gas Tight gas Lower 48 onshore conventional Alaska
0
1990
2000
2009
2015
Source: Energy Information Administration
2025 2035
Lower 48 offshore
Coalbed methane
Meanwhile, the numbers for natural
gas liquids “will grow pretty dramatically” because of drilling in liquid-rich gas
reserves such as the Marcellus and
Eagle Ford shales, Spears said. Over the
next five to six years, about 25% to 30%
of natural gas will come from onshore
shale sources and by 2035, almost half
the production of gas in the U.S. will
come from shale sources.
This emerging market is also
spreading to a number of other
countries around the world. Spears
pointed to a recent Energy Information
Agency report that showed 33 countries
around the world have enough
recoverable shale gas reserves to
increase the world’s supply by 40% to
22,600 trillion cubic feet.
New horizontal drilling methods will
compound the importance of these shale
supplies, “changing the economics of
drilling tremendously,” Spears said. The
combination of hydraulic fracturing and
directional drilling, a combination that
began to be used for gas in 2004 and
for oil in 2009, means that each well
can produce much more and the returns
on investment for operators have gone
way up. For example, the Bakken field
is currently producing about a 70%
return compared to only about 5% for
open water shelf drilling.
Costs for drilling, however, will also
rise, and Spears said that means
activity may shift to some of the higher
profitability areas.
FORECAST: U.S. natural gas demand
will reach 25. 6 trillion cubic feet in
2016, with the lower 48 onshore production of shale gas growing at an
average annual rate of 14%. U.S.
drilling activity will be up about 22%
from last year and about 17% in 2012
with horizontal drilling activity up
more than 25% in the coming year.
Well costs are expected to rise about
4% per quarter through the end of
next year. Canadian rig count will
increase 17% in 2011 and 15% in
2012. International activity is expected
to increase 7% in 2011 and 8% in
2012 with South America and the Middle East the fastest-growing regions.
all that is about to change.
“Over the next decade, I feel it
[renewable energy] will evolve into a
clean energy standard—there are going
to be a variety of technology systems
adopted depending on regional priorities,” he said.
In the U.S.’s immediate future, the
year 2012 will see annual renewable
installations leap to almost 13,000
megawatts (MW) from just over 6,000
MW in 2010. What happens after that
point, however, is largely dependent on
whether the production tax credit due to
expire for wind that year is renewed, the
production tax credit for biomass
expires as planned in 2014 and the
investment tax credit for solar expires as
planned in 2016.
Still, even with those expirations,
renewable energy annual investments in
the U.S. will range between $15 billion
and $25 billion per year and biofuels
make up another $25 billion to $35 billion per year going forward to 2020
(according to IEA). That opens up a lot
of opportunity for suppliers to these
industries, Radhakrishnan pointed out.
Specifically, he said:
RENEWABLES: NEW
OPPORTUNITIES FOR
VALVE MANUFACTURERS
Despite the fact the advancement of
renewable energy depends so heavily on
government policies, many of which are
in a state of flux, the industry “has seen
continuous growth” around the world,
according to Rakesh Radhakrishnan,
associate director for Navigant Consulting, Inc.
The market share of energy that
renewables provided stood at about 12%
worldwide in 2009, according to the
International Energy Agency (IEA) and
about 6.2% in the U.S., but Radhakrishnan explained to outlook attendees why
; Around the world, hydropower is the
largest source of growth and opportunity, especially in developing countries such as India and China where
the industry is well established. It’s
also one of the cheapest sources of
power available, producing electricity
at about 2 cents per kilowatt hour
compared to 9. 5 cents for nuclear,
7. 5 cents for coal and 6 cents for natural gas. In the U.S., growth will
depend on policy, but a bill has been
introduced in Congress that would
support development of smaller
hydroelectrical plants. These micro-plants are compelling because they
don’t need the extensive permitting
and approval process that large dams
go through in the U.S.
; Seventy to 110 GW of biomass power
will be added in the world by 2030
(according to IEA), though biomass
will be competing with the biofuels
sector for resources. In the U.S., facilities are being built to make pellets
