A deftly written piece of international political economy.

The author's super blog The Daily Reckoning http://www.dailyreckoning.com.au/ seems to be very useful in these times of GFC and related politico-economic problems in the US.

Pete

Shale gas is known as coal seam gas in Australia.

If the anti-mining lobby gets its way, we'll never see any of the benefits.

There is no doubt that shale gas (and coal seam gas) will improve energy security for those countries lucky enough to have significant quantities of new gas resources.

There are two downsides. The first and most obvious is the potential risk of rock fracturing to underground water resources. This is a hot political potato where I live in northern NSW. There is no doubt in my mind that many of the vigorous campaigns against fracking mislead and overstate their case but it remains a real concern for the people located in new gas well locations. This issue needs urgent attention before the storm troops arrive – not afterwards.

The second downside is less well understood but actually concerns me more. It is true that today, the only viable path away from coal fired power stations in Australia today is natural gas. Shale and coal seam gas makes this practical from a resource supply point of view.

My concern is around the need for us to reduce our world GHG emissions by at least 80% by 2050. Natural gas may reduce our emissions from electricity generation by 40% but it will not get us to the needed target. A big financial investment over the next 10 to 20 years to replace our coal plants with gas plants will discourage our power plant owners from further investment to replace those gas plants with something that will get us to the GHG reduction target.

To those that don’t believe we need to reduce our GHG emissions, shale gas ticks the energy security box – at least for the next 50 years or so when we will face the problem again. In the mean time the industry needs to settle down the anxious farmers and local activists by clear demonstration that their concerns are unfounded.

For those that do believe we need to reduce our GHG emissions then we need to be cautious about diving into the coal to gas shift. It isn’t going to cut the mustard and, apart from nuclear energy, we don’t have a viable alternative to coal plants today.

Many others including industry insiders do not share the author's enthusiasm. The problems are
1) groundwater contamination or disruption
2) early depletion of wells
3) fugitive methane
4) disposal of saline pond water
5) roads and well heads taking up farmland
6) still half as dirty as coal.
A report detailing some EU concerns is here
http://www.energybulletin.net/stories/2011-07-25/impacts-shale-gas-and-shale-oil-extraction-environment-and-human-heath-report
Energy Bulletin also has several reports from a US perspective. Some fracking chemicals are highly toxic. Even if they don't poison the animals and crops the freshwater aquifers above the gas bearing layer may be diverted or suffer reduced pressure.

Since methane has about 25 times the medium term atmospheric warming potential of CO2 even tiny leaks can nullify any advantage. If combined cycle gas power plant has half the emissions per megawatt hour of coal it only takes 2% leakage to get back to line ball. That is 50% CO2 saving + (25 X 2%) equivalence = 100%.

Shale gas from fracking is a sideshow that will divert our attention from the main objective. That is to transition to genuinely low carbon. I fear the big business and their captive politicians will think the low carbon problem is solved when it is only slightly postponed.

David L

Shale gas is not coal seam gas...they are completely different. For instance one is from coal and one is from shale - two different organic-based rock types.

The main issue with fraccing is often its depth and proximity to groundwater supplies. The current problems in NSW and Qld are the result of shallow coal seams being fracced and gas leaking all over the place - a disaster for the local farming community. Badly managed, likely it seems to pollute water and probably not going to contribute a great deal to the state in the long run.

Over here in the West we have plenty of shale gas and tight gas, but, as far as I know, no coal seam gas...yet. The shale gas is usually kilometres deep and out of the way of aquifers...so far.

The major issue is probably how the fraccing liquid is managed once it is returned to the surface.

It will continue and further entrench dependence on fossil fuels and increase GHG emissions for the foreseeable future.

Of course there must be lots of people like this, who see only the old, petty international rivalries and business as usual. Still it's amazing to encounter such obliviousness.

Welcome to a world 4, 5, 8 degrees warmer, and a crashing human population. Long before all these grand myopic visions of yesteryear come to fruition the planet will have blown the global economy and such hubris the way of the dinosaurs.

(Yes, I know there's a coterie of warming deniers here ... save your fingers, we know what you'll say.)

At a time when sustainability is a key to future societal progress it can be questioned whether the injection of toxic chemicals into the underground should be allowed, or whether it should be banned as such a practice would restrict or exclude any later use of the contaminated layer e.g. for geothermal purposes and as long-term effects have yet to be investigated. In an active shale gas extraction area, about 0.1-0.5 litres of chemicals are injected per square metre. An unavoidable impact of shale gas and tight oil extraction is a high land occupation; possible impacts are air emissions of pollutants, groundwater contamination due to uncontrolled gas or fluid flows due to blowouts or spills, leaking fracturing fluid, and uncontrolled waste water discharge. Fracturing fluids contain hazardous substances, and flow-back in addition contains heavy metals and radioactive materials from the deposit. Currently there is a poor regulatory framework surrounding ‘fracking’ and it should be assessed whether the use of toxic chemicals for injection should be banned in general. At least, all chemicals to be used should be disclosed publicly, the number of allowed chemicals should be restricted and its use should be closely monitored. Shale gas will be an important part of Australia’s energy future but given historic high well decline rates and poor regulation and oversight as well as environmental problems the precautionary approach should be used to ensure that negative impacts can be minimised and managed.

I think we are being very short-sighted and economically lazy to opt for coal-seam or shale gas. Like the Malaysian 'solution', it almost looks good but is merely postponing a day of reckoning.
Geothermal is all but ready to provide base load power. Some push/pull from governments and corporations, and is there enough potential in Tasmania to power Victoria?
It true, why don't we go there?

Is Graham Young and OLO being paid a commission for this long investment advertisement (including links)?

No less than four direct claims for credit for foreseeing the geopolitical implications of our fossil fuel dependency and the entry of shale gas, and the whole is predicated on nothing more than seducing well-healed subscribers to an amoral feeding frenzy--though to be fair, he does include, between ellipses, "...mitigate climate change...". I wonder what the whole quote was? Certainly if shale gas lives up to the author's greedy expectations, it can have only the opposite to a mitigating effect on climate change, keeping the whole saturnalia going!
Like all economists I've encountered, this one is as heartless as the rest, tacitly condemning middle Eastern countries for "trying to buy compliance" (perhaps he'd prefer the riff raff be put down with bullets), while salivating over the money to be made from its failure.
Ah the irony, that the rapacious US led juggernaut that bestrides the world, presiding over unprecedented inequities, on and offshore, might be saved at the death by an act of God (shale gas).
What offends me most--and there's a lot to offend the senses in his dung heap of an article (that is, advertisement)--is the obvious Schadenfreude the scapegrace proffers at the concomitant demise of oil-rich nations. I'm sure the average wealthy investor will also get a kick out of it; profiting at the expense of the Arabs, I mean--not a bad marketing pitch to throw at the conservative classes in OZ!

Halduell, when some enterprising company, generate at their own cost, without tax payer subsidies, geothermal power, & supply it to south east Queensland, I promise I'll buy it, even at a small premium.

If anyone wants my taxes to subsidise their power generation, by direct subsides, or a carbon dioxide tax to force BS costs on our existing power, I'll fight it for ever.

Squeers, I am so glad I don't inhabit your world. It must be a thoroughly awful place to live.

Hasbeen:
<Squeers, I am so glad I don't inhabit your world. It must be a thoroughly awful place to live>

Ditto!

Fracking isn't the only technology in play here. One likely big player is the use of super critical carbon dioxide as a solvent, presuriser and pore-filling replacement for the recovery of oil from otherwise unviable deposits. As well as extracting the oil, the SCCD diffuses into the rock mass, sequestering itself in the process. It doesn't have any tendency to dissolve the water-soluble inorganic minerals and it won't contaminate aquifers, other than perhaps adding a small amount of dissolved carbonate. There is no waste-water problem with this technology.

As well as the benefit of improved recovery in marginal fields, it gets rid of a huge amount of CO2. At present, the same techniques are done using water or nitrogen. CO2 sequestration could prove the thing to make the use of SCCD a competitive alternative.

Now you've got them worried Antiseptic!

More oil, more gas, & more coal burning with nothing to complain about, all in one post. You are cruel.

Can't you see how bad that is for a greenie. With a cleaner world, & more cheep energy, how the hell are they going to ruin our lives, & control us now?

Back, back in the day, and long before the Stone Age ran out of stones, along came these new age greenies suggesting bronze might offer a better future.
Can you imagine the howls of indignation? Here was this Neanderthal family man with him family's future invested in the local flint quarry, and a day-dreaming trouble maker has the temerity to suggest his arrowheads no longer cut it.
Good thing about stones is you can always kick them. Or throw them.

That's not the way I heard it halduel.

I heard the local greenie was screaming that that all the fires to heat up the ore, would cause global warming, & destroy the planet.

After that one failed to materialise, they then claimed that all the noise from forging that bronze would frighten the game away, & every one would starve.

There's always a new scare campaign from the watermelons.