Eastern Railroad Discussion > IEA: US gas to produce as much energy as coal by 2017

The International Energy Agency (which monitors energy usage, sourcing, and developments around the world) has a new report on natural gas use. There are significant impacts on US and Canadian coal hauling railroads.

US utilities have been activating gas peaker plants for full time use while they idle coal fired plants, but coal dropping / gas rising to parity will have a huge impact on the US railroads.

The IEA concludes that:

A quarter of new gas demand will come from China, another quarter from the Middle East and other Asian countries together, and a fifth from North America.
Low gas prices will result in gas generating almost as much electricity as coal in the United States by 2017.
Global gas trade will expand by 35%, driven by LNG and pipeline gas exports from the FSU region; most of this expansion occurs from 2015 onwards, following a period of further tightening of global gas markets.
Natural gas is the most important commodity with no global market price yet. Divergence among regional gas prices will decline but remain a feature of global gas markets. The emergence of a spot price in Asia would aid regional producers and buyers.


The agency produces reports for governments, energy users and producers, etc.

http://www.iea.org/newsroomandevents/pressreleases/2012/june/name,27383,en.html

Great, up goes my gas bill.

I doubt that many utilities will continue to burn coal if it costs them 2x what gas costs them. I suspect that's the problem the railroads envision. The export business for coal isn't as reliable or as profitable for them as domestic thermal coal is.

Hate to see the facts get in the way of a good outrage, but has anybody noticed that gas prices are going DOWN, not up?

The whole point of this story is that we have a new technology that allows us to get gas really, really cheaply. And it looks like there are places all over the world where this can be done.

I like watching coal trains as much as the next guy, but let's face the facts: the primary problem facing the coal industry now is not environmentalists, but economists.

How on earth can you see this as bad news?

Coal is being hamstrung by bad/alarmist policy decisions at the EPA - it's like being in a street fight with your shoe strings tied together, and the unfortunate thing is if the Sierra Club and their ilk (they're not even worthy of being called "environementalists") get their way, gas will be hamstrung just like coal - and the entire country will suffer.


march_hare Wrote:
-------------------------------------------------------
> Hate to see the facts get in the way of a good
> outrage, but has anybody noticed that gas prices
> are going DOWN, not up?
>
> The whole point of this story is that we have a
> new technology that allows us to get gas really,
> really cheaply. And it looks like there are
> places all over the world where this can be done.
>
>
> I like watching coal trains as much as the next
> guy, but let's face the facts: the primary problem
> facing the coal industry now is not
> environmentalists, but economists.
>
> How on earth can you see this as bad news?

There are a number of worldwide competitors for steam coal exporters, including Australia, South Africa, Poland, and Indonesia. However, Powder River Basin coal is both low-sulfur and very cheap to mine, so the export market via the West Coast should hold up pretty well. Appalachian coal is much more expensive to mine (about twice the cost of PRB coal right now), so Appalachian exports via the East Coast will probably dry up pretty quickly. Coal is going to account for a lot less than 46% of railroad carloadings (the 2011 figure) pretty soon.

I'm not sure I believe that a world price for gas will emerge, or even that there will be much of a convergence. To move gas across oceans, you have to liquefy it and put it in special tankers. That costs money. Arbitrage theory tells us that the price of LNG, delivered in, say, Europe, will be the US price plus the costs of transportation and handling. Those costs are substantial, so our domestic gas will remain pretty cheap while the Europeans pay a lot for LNG. It would be cheaper for Europe to build pipelines from Russia, Azerbaijan, and the Middle East, and that is happening. But gas will always be cheaper in North America than elswhere because it has to cross oceans in ships to get there.

This assumes that the shale gas revolution will only happen in the US.

It won't.

Dirty black shales are widely distributed worldwide, and the tricks that have worked so well in Texas, Pennsylvania, and North Dakota will probably work there as well. this has the potential to cut the link between Russia, the former Central Asian parts of the USSR, and the western European markets.

And that's a good thing, too.

As for the coal industry being hampered by ill informed environmentalists, you ought to see what the gas boys have to deal with. Google "hydrofracturing New York" some time to see truly lunatic people at work.

If only we could tap the never ending natural gas supply in DC

esprrfan Wrote:
-------------------------------------------------------
> If only we could tap the never ending natural gas
> supply in DC


"Like"

Just like the "biomass" that some cattle farmers capture....

esprrfan Wrote:
-------------------------------------------------------
> If only we could tap the never ending natural gas
> supply in DC

march_hare Wrote:
-------------------------------------------------------
> Hate to see the facts get in the way of a good
> outrage, but has anybody noticed that gas prices
> are going DOWN, not up?
>
> The whole point of this story is that we have a
> new technology that allows us to get gas really,
> really cheaply. And it looks like there are
> places all over the world where this can be done.
>
>
> I like watching coal trains as much as the next
> guy, but let's face the facts: the primary problem
> facing the coal industry now is not
> environmentalists, but economists.
>
> How on earth can you see this as bad news?


Misleading spin. Of course dropping gas prices are a factor, as are changes in the weather, but the EPA's unnecessary and heavy handed actions are having a huge impact. You are basically arguing that for a guy who eats 2 steaks and a gallon of ice cream every day, it is the steak but not the ice cream making him fat.

The EPA classifying CO2 as a pollutant is the height of absurdity and politicized pseudo-science.

The EPS wont recommend controls on fracking in an election year, but if the big "O" wins look out. Gas will not be so cheap. At any rate, carbon dioxide is produced from burning gas as well as coal.
Roger Beckett

up833 Wrote:
-------------------------------------------------------
> The EPS wont recommend controls on fracking in an
> election year, but if the big "O" wins look out.
> Gas will not be so cheap. At any rate, carbon
> dioxide is produced from burning gas as well as
> coal.
> Roger Beckett

That's one of the issues often overlooked. While natural gas produces far lower levels of particulates and objectionable gas than coal does, there is some fossil fuel effect. That's one reason why many of the environmental groups are unwilling to support a "cleaner" alternative like gas.

(Not my position, but it explains some of the fervor toward wind, solar, thermal, etc in the face of readily available alternatives.)