Author’s note: No, I have not been in a cave for the past two weeks.  The impacts of unconventional gas on energy markets will be measured in months and years, not in days and weeks.  There is essentially nothing that current unconventional gas production can do to moderate crisis-driven escalation of oil prices and oil-linked LNG prices in the next few weeks.

In Part I and Part II of this series, the impacts of unconventional gas discoveries in the U.S., Australia, Canada and elsewhere were explored.  Gas-to-gas competition was seen as a powerful force for price moderation.

U.S. shale gas discoveries and production from coal bed methane (CBM) have already provided great benefits for energy consumers in the Atlantic Basin.  Gas-to-gas competition – shale v. LNG – has led to interesting market outcomes and investments. …

In Part 1 of this series, the trends in U.S. unconventional gas output in were explored. The impacts on gas markets — $3–5/MMBtu — were noted. If unconventional gas puts pressure on LNG and Gazprom, can this supply and supplier turn to Asia as their new market? Maybe, and just for a while. (1)

1.1.1 Australia’s Experience with Coal Seam Gas

CSG accounts for almost 15% of Australia’s growing gas production, and as much as 30% of probable reserves. LNG plants based on CSG are slated to commence production in 2014, with production of 794 Bcf/y (~16.7 mtpa). Australia’s CSG is believed to occur roughly above shale gas basins, raising the possibility of further unconventional production. Figure 1 shows the CSG, conventional gas fields and transmission infrastructure in Australia’s Queensland State.…

[Editor note: Part II tomorrow will summarize unconventional gas developments in Europe and Asia.]

In 2003 and again in 2005, Alan Greenspan, Chairman of the Federal Reserve Board, called on America’s governors and natural gas users to embrace vastly larger imports of methane energy. In his words: “North America’s limited capacity to import liquefied natural gas (LNG) has effectively restricted our access to the world’s abundant gas supplies.”

As he was speaking, a revolution was brewing under his feet. New methods of producing gas from unconventional resources–tight gas, coalbed methane (cbm) and shale gas–had greatly expanded the universe of gas resources available throughout the world.

By the end of that decade, the U.S., Australia and Canada would be able to book unconventional reserve additions in excess of annual production from all gas sources.…

In June 2004, EPA released a study examining the safety and performance of an energy technology known as hydraulic fracturing – particularly in the context of its use in coalbed methane wells, from which nearly 2 trillion cubic feet of natural gas were produced in 2008 (latest numbers).

The goal of the study was simple: Determine whether the fracturing of coalbed wells had the potential to adversely affect the quality and composition of underground sources of drinking water (USDW). EPA’s methodology: Research more than 200 peer-reviewed publications, and interview almost 100 different state regulators, environmentalists, and industry reps. EPA’s conclusion: No evidence linking the deployment of fracturing technology to drinking water contamination. Of course, since the study was released during the tenure of the previous president, its findings were rejected out-of-hand by environmentalists – never mind that the study itself was initiated during the Clinton administration by then-EPA administrator Carol Browner.…