Technological advances in the extraction of shale gas are expected to bring so much more natural gas to market that the prospects for power generation have come in for a radical reassessment in several parts of North America. Not only will the discovery of new shale gas supplies exert a downward pressure on price for years to come, but the proximity to Central Canada of the Marcellus reserve could cause key pipelines between eastern Canada and the US to reverse their direction of flow, change operating strategies for power producers, influence the supply mix, and affect siting decisions for future power generation projects.
Canada now has more economic petroleum reserves than Saudi Arabia – with a lot less shipping required to reach North American markets. The impacts are not all positive for the existing power generation business. However from a consumer perspective, it’s a bonanza that will quite likely reduce emissions, make prices more manageable, and ease the adoption of renewables in the power sector.
Shale gas development is not restricted to the imaginations and drawing boards of ambitious boosters from the petroleum industry. There are commercial shale gas facilities in operation in several parts of North America now, making money at today’s prices. Recent advances in deep underground drilling techniques have made it much less expensive to extract marketable fuel and greatly expanded the range of locations with economically attractive natural gas resources. Who would have thought a few years ago that Pennsylvania and New York state would be in a position to export fuel to other parts of North America?
Even Ontario holds promise as a source of shale gas. Tyler Hamilton reported in the Toronto Star on March 20 on the activity of Canadian companies effectively prospecting for gas in Ontario. He noted that Tony Hamblin, a petroleum geologist with Natural Resources Canada, describes Ontario as a ripe opportunity that has been largely overlooked. “The possibilities, geologically, are there,” Hamblin said. “It just requires that people delve a little deeper. Certainly, areas in Ontario have just as much potential as any other.”
The revised assessments for potential gas supply has caught the interest of regulators as well. The Ontario Energy Board has said that it will be looking at scenarios for adaptation to the revised projections for gas in the near future.
Generators will undoubtedly be looking closely at the implications over the coming months. There are concerns that the increasing use of gas from eastern sources could have ramifications for the costs charged to generators who buy gas shipped from Western Canada on the TransCanada Main Line.
— Jake Brooks, Editor
Please see the following related articles, including a special feature by John Wolnik on the Marcellus Shale deposit, in this issue of IPPSO FACTO:
* Marcellus gas — a game changer, feature article by John Wolnik
* The Marcellus Shale and gas production (backgrounder)
* Environmental considerations impact shale gas options
* Editorial: Will Ontario miss another great gas opportunity?