Shale gas is already impacting the Northwest; the question is whether it can realize its full potential, said a regional gas industry trade group head.
Even with some unknowns and a healthy dose of caution, the Pacific Northwest region is already benefiting from the nation's shale gas boom and it anticipates in realizing additional benefits longer term, the head of the Northwest Gas Association (NWGA) told NGI's Shale Daily Monday, citing a recent association white paper that concludes the region and North America have entered "a new era of more plentiful natural gas."
NWGA Executive Director Dan Kirschner would not totally discount the negative slant of recent New York Times coverage questioning the veracity of bullish gas industry predictions on long-term supplies, and allegations that potential Ponzi schemes and Enron-like scams may lurk in the current boom in the natural gas industry (see Shale Daily, June 28).
"Clearly, there are still a lot of questions out there about the impacts [of shale gas]," Kirschner said. "One of the facts that is fairly certain to our [NWGA] members, however, is that if these forecasts prove out, our region will probably benefit from it, even with a couple of wild cards being in the mix."
One big "wild card" for the U.S. Northwest is what impact will come from a "fully functioning" [Kitimat] liquefied natural gas (LNG) export terminal in British Columbia. How much influence it will have on the amounts of Western Canadian supplies moving south is still unknown, he said. "That's an open question today."
Early in June at its annual regional energy conference, a representative from Encana, one of the three partners in the Kitimat LNG export proposal, indicated that more than half of the supplies needed to support the export terminal are in place. While the financial investment decision is still to be made and final Canadian government approvals are still needed, the $3 billion pipeline and terminal project is moving forward and is expected to be operational at some point in the next few years.
"Certainly the buzz is that there is plenty of momentum on both ends of the value chain [supply and demand sides] for this project," said Kirschner, noting that another unknown his region is watching is the impact from the eastern shales on the additional amounts of Rockies gas that might be freed up for western markets.
"Shifting flows on pipelines is also a wild card. Both of the supply areas [Western Canada and the Rockies] that we depend on in the Northwest are in the middle of this activity. It makes it kind of interesting.
"From our utility members' perspective, we have had a healthy caution [about the shale boom] for the past couple of years, but in the last several months, the utilities have been saying that shale is not 'coming, it is already here.' That's the reason we are seeing prices sustained at a low levels and production growing.
"The way it stands, our customers -- including the pipelines -- are going to pay one way or the other. If the producers are right and truthful, that will be good for our customers, and if there is a problem out there, that is going to be another issue. It is all still so fresh and new."
Kirschner said he has not heard any of the potential financial and Ponzi scheme allegations raised in the Times articles.
"I think we all believe that the shale potential exists, I think everybody believes that," Kirschner said. "Then the question becomes: can it be produced at the prices we are experiencing today? Right now we're seeing the economics of that driving production investments. People aren't pursuing natural gas just for the sake of gas; they are going after oil and will take whatever gas is produced, and they are going after fields that are liquid rich."