CPABC Industry Update Summer 2014 - Page 27

2.  nergy markets are dynamic, with long transition E periods to new technologies and new supplies, owing in part to the massive capital stocks involved in energy systems; and 3.  atural gas, due to supply and demand N dynamics, will inevitably play an important role in the shift to a less carbon-intensive global economy. The Natural Gas Imperative The logical necessity of increasing natural gas use to help manage climate concerns is now well-established in the literature. Looking at global energy demand and supply options, it is clear that it won’t be possible to quickly convert to low/no CO2 energy sources. The size and complexity of the existing energy infrastructure, and the relative cost of supply options to satisfy demand, make it both technically difficult and costly to convert energy systems. 1 This is particularly true in a world where the lion’s share of future growth in population, economic activity, and energy consumption will be heavily concentrated in emerging market economies. Due to these energy supply and demand realities, the option to increase natural gas use is identified as a core component of the solution because only natural gas can serve as a relatively rapid substitute for higher CO2emitting energy sources. This transition role for natural gas, in combination with other actions, can ratchet down an otherwise increasing global CO2 trend. Although it is generally agreed that natural gas has fewer greenhouse gases (GHG) than coal, a more definitive report from the US Department of Energy’s (DOE) National Energy Technology Laboratory confirms that, on a life-cycle basis, this also holds true for LNG – even with long pipelines and long shipping distances to end-use markets. GHG life-cycle emissions, from natural gas exploration to LNG to final conversion in a power plant (in China), are 1  For an insightful review of energy system transitions, see Peter A. O’Conner “Energy Transitions.” Pardee Papers, No. 12, 2010. 40% lower than those produced from coal in a Chinese coal-fired generation facility. This difference would likely be even more favourable in the case of BC LNG, because the distance travelled from upstream through to delivery is shorter than that from the US (New Orleans). Upstream Natural Gas Activities Fracking Hydraulic fracking was first used on an experimental basis in 1947 and deployed commercially in 1949 in Oklahoma. Fracking is not revolutionary, except to the extent it was combined with horizontal drilling techniques, an innovation which has enabled access to gas that cannot be extracted using more conventional methods. This innovation has resulted in the shale revolution – providing substantial volumes of shale gas in a cost-effective manner. The environmental concerns about fracking include: 1) Water – quality and volume impacts; 2) Methane leakage; and 3) Earthquakes. A well-regulated shale gas sector, using today’s technologies, yields an upstream natural gas industry that can and does operate safely and with a relatively small environmental footprint. More importantly, where impacts outside of acceptable parameters have been found in other jurisdictions, the )