CyprusGasNews May 2014 CyprusGasNews for June 2014 | Page 14

An unexpected consequence

of the shale oil & gas boom in
the US, which commenced in
the mid-2000s, was that US
coal exports have increased
significantly. In fact, US coal
shipments have doubled ever
since to 100 million tons with a
sizeable amount—about half of
that— being diverted to Europe
and Germany, in particular.
Part of this trend is attributed
to the economic crisis and the
fact that the EU competitiveness suffers from high energy
costs. At the dismay of renewable energy proponents
the high costs of renewables
(RES) have recently compelled
several EU countries― among
them Germany― to further
scale down RES subsidies.
Nuclear energy aside, lower
investments in RES imply that
EU countries will have to meet
their short-term energy needs
from other energy sources,
probably from, fossil fuels. Oil
is predominantly used in the
transportation sector, with a
few exceptions for power generation. Power plants, on the
other hand, are typically fuelled
by either coal or natural gas.
Narrowing down options, several EU countries are confronted with the challenge of choosing between coal and natural
gas. Add to this the geopolitical
dimension from the EU-Russia
spat, which surfaced after the
Crimea annexation, and coal
becomes the clear contender.
Coal is less environmentally
friendly compared to natural gas. On an equal energy
basis coal burning generates
1.75 times the carbon dioxide
(CO2) emissions of natural
gas. Moreover, natural gas

14 |CyprusGasNews

combustion releases 20pct
less nitrogen oxides (NOx)
than coal. Lacking a technologically proven, cost effective
and efficient way to arrest heat
trapping emissions from coal,
natural gas is the choice for
cleaner and cheaper electricity.
As surprisingly as it may sound
the current energy tendency
for EU countries is to promote
coal powered plants than
natural gas fired stations. Two
reasons are partly to blame.
One is the lower cost of coal
and the other is the fact that
EU countries are not important
natural gas producers.
How will then EU countries
honour their 2020 energy
policy commitments? Binding
obligations allude to at least a
20pct reduction in heat trapping gas emissions compared
to 1990 levels and a 20pct
renewable energy share of
the final energy mix. With coal
consumption soaring meeting
these targets becomes even
more remote.
The Case of Natural Gas
Natural gas despite being a
greener fuel than coal and oil
is cumbersome to transport
from source to consumption
point. Land pipelines offer the
least expensive way to source
natural gas to the markets be
they domestic consumers or
power plants. Yet the overwhelming share of produced
natural gas is consumed domestically (locally) from the
gas producing countries as a
means of conserving oil which
commands a higher price as
an export commodity.
If Europe is serious about
enhancing its energy security,
by diversifying its energy mix,
then shale gas is perhaps

another very attractive source
of indigenous fuel. Shale gas
in Europe is in no short supply.
According to estimates from
the EIA, published in 2013, EU
countries have about 470tcf
(13.31tcm) of technically recoverable gas resources. Given
an annual EU consumption of
18.7tcf then there is enough
gas to sustain the EU for 25

years.
Natural gas merits do not stop
in lower CO2 emissions compared to oil and coal. Gas-ToLiquid (GTL) plants have the
ability of converting natural gas
into liquid fuels such as gasoline and diesel. Depending on
its composition lean natural
gas, which consists of virtually
pure methane, may require
minimal processing. Oil on the
other hand requires more energy intensive chemical processing before its final utilisation.
Conventional natural gas fields
typically permit the extraction
of 70pct to 80pct, if not higher,
of the reservoir gas. By con-