But the money pledged still falls short of the $4 billion a year needed for the rest of this decade to wean poor African households off traditional dirty fuels including charcoal, kerosene and firewood, while climate campaigners criticised efforts to switch them to fossil gas.

Countries such as Brazil, Indonesia and India have made progress in recent years, in line with a global goal to provide clean cooking for all by 2030. Yet four in five Africans still use highly polluting cooking methods – around half of the 2.3 billion people who lack clean options worldwide, according to the International Energy Agency (IEA).

IEA Executive Director Fatih Birol told the summit his organisation’s aim of making 2024 “a turning point” for clean cooking was being realised.

“It’s now or never,” he said, adding that the IEA will track the commitments made in Paris and share the results with the international community in a year’s time. “We will follow it as if it is our own money,” he emphasised.

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Separately, the African Development Bank (AfDB) confirmed an earlier pledge, first made at the COP28 climate summit last year, to mobilise around $2 billion for clean cooking over the next 10 years, earmarking 20 percent of its energy finance for that purpose.

Speaking in Paris, AfDB president, Akinwumi A. Adesina, said his own eyesight had been damaged by smoke from cooking fires during his childhood in Nigeria, while a friend and members of her family had died in an accident after she was sold petrol instead of kerosene as cooking fuel.

“Why do we let things like that happen?” Adesina asked, adding that enabling clean cooking is a matter of “human dignity, fairness and justice for women”. “It is about life itself,” he said.

Experts have long pointed to the health damage to women and children from carbon monoxide and black soot emitted by cooking over open fires or with basic stoves. Dirty cooking contributes to 3.7 million premature deaths annually, according to the IEA, with women and children most at risk from respiratory and cardiovascular ailments linked to indoor air pollution.

Ahead of the Summit on Clean Cooking in Africa this week in Paris, some climate and gender activists pointed to the small number of African women represented at the gathering – who they said accounted for less than a fifth of registered participants.

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Janet Milongo, coordinator of renewable energy for Climate Action Network International, said the event was biased “towards the continuation of the colonial, patriarchal representation of the continent”.

Speeches were made largely by male leaders of governments and companies, with the notable exception of Tanzania’s president, Samia Suluhu Hassan, and Damilola Ogunbiyi, the UN Secretary-General’s Special Representative for Sustainable Energy for All.

Fatih Birol, Executive Director of the International Energy Agency (left) with the presidents of Sierra Leone, Tanzania and  Togo, the prime minister of Norway; H.E. Maroš Šefčovič, Executive Vice President of the European Green Deal and Akinwumi A. Adesina, President of the African Development Bank Group at the Clean Cooking Summit for Africa in Paris, May 14, 2024 (Photo: International Energy Agency)

Clean cooking ‘opportunity’ in NDCs

Ogunbiyi, who is Nigerian and has worked on clean energy policy for the government, said her country had made a big effort on solar electrification but had forgotten about clean cooking.

“We can’t make that mistake again,” she said, calling for clean cooking to be a key part of African governments’ investment plans for their energy transition.

UN climate chief Simon Stiell urged more governments to seize the opportunity to include measures to boost clean cooking in the next updates to their national climate action plans (NDCs) due by early next year.

As of December last year, only 60 NDCs included one or more measures that explicitly target clean cooking, such as Nepal’s goal to ensure that by 2030 half of households use electric stoves as their main mode of cooking and Rwanda promising to disseminate modern efficient cookstoves to 80% of its rural population and 50% of people in cities by that date.

Stiell noted that planet-heating emissions from dirty cooking methods are “significant”, amounting to about 2% of the global total – the equivalent of emissions from the aviation and shipping sectors combined.

UN agrees carbon market safeguards to tackle green land grabs

He said the world has the technology to shift people onto modern, cleaner sources of energy and cut emissions in the process, calling it “low-hanging fruit”.

Dymphna van der Lans, CEO of the Clean Cooking Alliance, a global partnership of organisations working on the issue, said it was important to raise awareness not just about the scale of the problem – but to ensure people understand it is an issue that can be solved.

“The technologies exist – they are out there, there are fantastic companies providing these fuels and solutions and services to these customers that actually can be deployed immediately… and reach the populations in Africa,” she told Climate Home after the summit.

LPG conundrum

On stage in Paris, companies ranging from fossil fuel giants such as Total and Shell to smaller manufacturers of cookstoves said they would expand their efforts to reach new customers with more efficient stoves running on modern energy, including liquefied petroleum gas (LPG), bioethanol and electricity.

While there is widespread consensus over ending the use of firewood and charcoal – which contribute to deforestation – there is less agreement over which fuels should replace them.

Efforts to build new distribution networks for LPG – a form of fossil fuel gas – are particularly controversial. At the summit on Tuesday, TotalEnergies CEO Patrick Pouyanné said his company wants to increase its 40 million African LPG customers to 100 million and will invest more to boost its LPG production capacity in East Africa.

Pouyanné said there is a need to make LPG cooking affordable – noting that the $30 upfront investment required for a stove and gas canister is too high for most people – which could be done through “pay as you cook” loans.

Some international development agencies that work on the ground to help poor households access clean cooking – including Practical Action – support the use of LPG as a “transitional step” towards clean cooking where options like electricity or ethanol are not available.

“Our primary objective is to ensure people, especially women and children, have access to the best possible solutions which don’t compromise their health and that in the long term aren’t contributing to the worsening climate crisis,” said Practical Action CEO Sarah Roberts.

In the IEA’s “least-cost, realistic scenario” to reach universal clean cooking this decade, LPG remains the primary solution, representing nearly half of households gaining access, while electric cooking is the main option for just one in eight homes.

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The IEA’s analysis shows that this strategy, centred on LPG, would drive up emissions by 0.1 gigatonnes (Gt) in 2030. But that would be more than offset by reductions in greenhouse gas emissions from switching away from firewood, charcoal and inefficient stoves, resulting in a net reduction of 1.5Gt of CO2 equivalent by 2030.

Net greenhouse gas emissions annual savings from clean cooking access in the IEA Access for All scenario by 2030 (in Mt CO2-eq) (Source: IEA)

Red = Combustion; Orange = Avoided combustion; Yellow = Unsustainable harvesting; Green = Net savings          

At the summit, Togo’s president Faure Gnassingbé described LPG as “really the way forward” for clean cooking, and said more production capacity was needed in Africa. He added that ESG investors – which normally apply green and ethical standards – should adjust their environmental criteria so they can back LPG cooking projects despite it being a fossil fuel.

“We should be clear-headed and not open up to sterile debates on this issue,” Gnassingbé told the summit.

Some climate justice activists disagreed, criticising high-level backing for fossil gas as a clean cooking solution.

Mohamed Adow, director of Power Shift Africa, a Nairobi-based energy and climate think-tank, said on social media platform X that the need for clean cooking alternatives “is used by many African politicians as an excuse for building gas infrastructure” which is intended to develop an export industry and never reaches poorer households.

Here’s my response to yesterday’s summit on Clean Cooking in Africa & the declaration issued by #IEA.

“This declaration is a lazy & misguided statement which seems to rely on the private sector to use gas as a solution to this problem.

However, there’s no evidence that will…

— Mohamed Adow (@mohadow) May 15, 2024

He said the money raised at the summit should be channelled instead into high-efficiency, low-cost electric cookers for African women, which could be powered by renewable energy.

Carbon finance principles

Another controversial way of promoting clean cooking, backed by the IEA-hosted summit, is by developing and selling carbon credits for the emissions savings from new technologies and fuels.

The IEA said that around 15% of the total amount pledged in Paris would come via carbon finance, with the proceeds from selling offsets helping subsidise customers’ access to clean cooking.

But Climate Home found in an investigation last year that the methodologies used to calculate emissions reductions from more efficient cookstoves in India had overstated their greenhouse gas savings.

To counter such problems, the Clean Cooking Alliance announced a new set of “Principles for Responsible Carbon Finance in Clean Cooking” in Paris, backed by 100 organisations working in the space.

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The voluntary principles, which aim to build confidence in carbon markets for clean cooking, say project claims should be evidence-based, case-specific and substantiated, and their benefits should be transparent. The alliance is also working with the UN climate secretariat on a new methodology for clean cooking carbon credits which it hopes will be ready this year.

Van der Lans said the goal was to strengthen the quality and integrity of clean-cooking carbon credits in line with the latest science, to achieve a higher, fairer price that fully reflects the work being done to protect forests by moving away from charcoal and firewood.

“Everybody within the clean cooking ecosystem is signing up to these principles,” she noted – from banks to carbon credit verification agencies and companies selling the technology.

“That is a good signal that we’re doing the right things and we’re moving this market in the right direction,” she added.

(Reporting by Megan Rowling; editing by Joe Lo)

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Protesters rallied outside Parliament in July as MPs debated fracking (Pic: Friends of the Earth UK/Twitter)

By Alex Pashley

Britain will come round to shale drilling, much like it did with nuclear plants and wind farms, the head of industry body UK Onshore Oil and Gas, Ken Cronin, has said.

A month after the government awarded new licenses to explore for oil and gas across England, the industry will step up its consultations with local communities to ease concerns about the controversial practice.

“The UK has seen protests with respect to onshore wind farms, nuclear power stations, solar farms over the last 20 years. Opposition to onshore energy production is not new,” he told Climate Home in an interview.

“Whether it is shale gas or onshore wind, there will be opponents and proponents. We’ll typically work through the fears and myths just like wind did a few years ago.”

Hydraulic fracturing has not taken place in Britain since a one-year ban was lifted in 2012, with energy firms running into heated local opposition.

Last year, Lancashire country council threw out a planning application for shale wells due to its adverse impact on the landscape, noise and increased traffic.

The UK government sees gas as the core element in its energy strategy, having announced coal plants will close by 2025 and slashed support for wind and solar, a move that has angered green groups.

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Public ire continues apace. Hundreds of people took part in an anti-fracking demonstration just days ago in Merseyside, near to a test drilling site, the BBC reported.

The government has since moved to weaken local councils’ grip on planning decisions. It champions the extraction of natural gas from shale as a means to energy independence and cut carbon emission to counter climate change. Green groups see this at the expense of the fledgling renewables industry which has lost cash subsidies.

This week a pro-fracking Conservative MP resigned from a parliamentary shale gas group funded by gas companies after a campaign by constituents concerned about plans to explore for hydrocarbons near their homes.

Still, shale extraction had to be considered in the “totality” of UK energy policy, said Cronin, who joined in 2013 to fight the industry’s corner.

“What we have to do as an industry is work at the local community level to tell them how we’re doing it, what information we are giving them, what their option is before we do any planning applications.”

Myths fuelling opposition relating to fracking’s link to tremors or contamination of the water supply were due to “isolated events in the US”, he argued.

The US National Earthquake Information Center (NEIC) recorded 1,427 quakes between 2014 and 2015 in Oklahoma, a major oil and gas producing state, leaving seismologists “concerned” about the potential impacts of fracking.

Report: UK government outlines plans to bypass fracking opposition
Report: UK political consensus on fracking for gas disintegrates

But densely-populated Britain had more robust safeguards in the design of its wells, chemicals used in frack fluid, and independent regulators than in America, which pioneered the technology, Cronin stressed. Given proper regulations, risks were “minimal”.

“We have been producing oil and gas for over 100 years in a heavily regulated industry with very few problems.”

Licenses have been awarded mostly in north England in the Bowland basin, the largest formation with predictions of over 2,200 trillion cubic feet of shale gas. Though there is no guarantee any is technically recoverable, or that drilling will be commercially viable.

Last year’s global warming accord confirmed natural gas’ role as a ‘bridge fuel’ from highly-polluting coal to lower carbon sources, making it central to meeting emissions targets. The UK is committed by law to cut emissions at least 80% by 2050 on 1990 levels.

Analysis: Is natural gas really a bridge to a greener future?

The fuel’s role in producing renewables technologies like solar panels to petrochemicals meant it was indispensable.

“I don’t see it as renewables versus gas. I see very much gas and renewables working together to meet the targets,” he said.

“I think if you look at the US, for example, that’s a very good example of what can be done… Texas has 30% of electricity from renewables despite the fact it’s one of the top shale gas producers.”

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The US overtook Russia as the world’s top natural gas producer in 2009 (Pic: www_ukberri_net/Flickr)

By Alex Pashley

Shale gas is upending global energy politics. As fracking offers a cheaper source of power and Europe independence from Russian energy exports, Moscow is concerned.

Last year, then-Nato chief Anders Rasmussen accused Russia, the world’s second-largest producer of natural gas, of spreading misinformation to destabilise shale.

President Vladimir Putin said Russia needs to “rise to the challenge” of the changing market in 2012. In other words: if you can’t beat ’em, join ’em.

Russia is being pushed towards tapping shale and its other abundant unconventional gas deposits to preserve its stake in the global energy mix, experts say.

Holder of the world’s largest natural gas reserves, the country could have up to 2.5 times the amount in unconventional reserves – shale, hydrates and coal-bed methane – as conventional supplies, Gazprom estimates.

Russia still holds five times the US’ natural gas reserves with 44.6 trillion cubic metres (tcm), according to BP’s 2014 statistical review.

Just 3% of the approximate 680 tcm of unconventional is shale. And 90% of total unconventional resources are located on the Asian side of the country, from the Ural Mountains through Siberia to the remote Arctic regions.

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Ten years after the US shale boom began, Russia is at least 15 years off commercial production, according to government projections. And amid plentiful supplies of natural gas, it doesn’t yet make economic sense, though geopolitical factors are weighing in.

“Although the present conjuncture is not conducive to investments in the still locally unproven and expensive methods of obtaining energy resources, Russia is developing its unconventional gas industry more and more boldly,” according to a policy brief by the Polish Institute of Foreign Affairs (PISM).

“The change in Moscow’s strategy is essential if the country is to maintain a strong leadership position among gas producers, as well as for the attainment of Russia’s geopolitical aspirations,” wrote analysts Zuzanna Nowak and Sonia Boczek.

Gas companies hail shale as a transition fuel, which can reduce greenhouse gas emissions by replacing dirty coal. But campaigners warn of the danger of locking in further fossil fuel-based development, rather than embracing clean energy.

Russia has come under scrutiny for being weak on climate. Russia’s pledge to cut carbon by up to 30% by 2030 from 1990 levels was criticised as “conservative”, while observers questioned its use of vast carbon-storing forests, making the target easier to reach.

Gas from coal-based methane and shale, for example, could fulfil domestic needs as Gazprom sees production decline 25% by 2020 and 75% by 2030, according to the brief.

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And as the IEA forecasts global demand for gas to rise 50% by 2040, Russia needs to embrace new technologies to retain its fifth share of the global gas market.

Sliding sales in Europe as it weans itself off Russian dependency with Energy Union, push it toward Asia where it can gain access to the latest Western technologies, withheld by sanctions over aggression in Ukraine.

While energy companies, Gazprom, Rosneft and Lukoil have expressed interest in exploring unconventional deposits, foreign investment and expertise is required for any scale-up.

Russia is looking toward Asian economies, from Indonesia and Vietnam to India and China, who are conducting research programmes in their own territories, as it pivots away from old markets in Europe, the brief said.

Even Russia and Japan may move past historically tense relations and partner in trading Japanese experience for Russia’s accessible hydrates deposits.

“To be able to lay claim to the status of gas power in the future, and to maintain its geopolitical influence in the world by trading gas skilfully, Russia is already being forced to take steps aimed at including unconventional gas in its portfolio.”

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(Pic: Shell)

By Gerard Wynn

Natural gas demand growth fell last year and rising U.S. production “abruptly slowed”, the International Energy Agency said on Tuesday, showing a pause compared with previous breakneck growth.

Global gas demand growth would have been zero last year without unusually cold winters in Europe and the United States.

OCED gas demand grew 1.1% and non-OECD demand by 1.2%, the IEA estimated in its “Medium-Term Gas Market Report 2014”.

“If not for the weather factors, OECD gas demand should have dropped by around 1%; consequently, the world would have exhibited stable natural gas consumption in 2013,” the IEA said.

Global gas demand grew 1.2%, compared with 2% in 2012.

The outlook for gas prices depended on growth in supply of liquefied natural gas (LNG), in a competition with coal which could make a return on the back of weak prices, as well as subsidised renewables.

The IEA noted that coal had grown recently in the United States, underlining the medium-term uncertainty.

“Despite all its well-known qualities, natural gas will find it difficult to gain market shares, notably in the power generation sector.Europe is certainly the best example, with declining gas-fired generation. But the recent recovery in coal-fired generation in the United States and difficulties for gas to compete against coal in Asian countries reinforces this assertion.”

Price volatility

Production growth last year fell in the United States, and global trade in LNG was unchanged following a decline in 2012.

China was the exception, where demand grew 13.3%, accounting for half global demand growth, and output grew 9%.

Global gas demand would rise 14% by the end of the decade, to 4,000 billion cubic metres in 2020 from 3,500 bcm last year, with strongest demand in China and the Middle East.

But that would only see the share of natural gas in global power generation rise 0.5 percentage points.

The United States and Australia would contribute the biggest share of supply growth for the rest of the decade, with Russia suffering from weak demand in Europe and the absence of a pipeline to China.

The supply outlook depended on planned LNG projects coming to fruition.

“Although many LNG projects are at the planning stage, actually very few final investment decisions (FIDs) have been taken since mid-2012. New greenfield projects are increasingly expensive, calling for securing revenues through long-term contracts preferably linked to oil prices.”

But LNG importers were increasingly reluctant to pay such prices.

The longer term picture, in the 2020s, remained positive, as tougher air quality standards continued to drive demand away from coal, oil and diesel in the power generation and transport sectors, the IEA said.

“Using gas for shipping is particularly promising for the post-2020 period. Due to stricter emissions standards being put in place, the sulphur content of fuels used in some specific coastal areas will be limited from 1% today to 0.1% from 2015 onwards. This tighter limit could be extended to other international waters with a 0.5% threshold as soon as 2020, instead of the current 3.5%.”

“Three alternatives compete: use of marine diesel oil (MDO), scrubbers or LNG.”

The post Global natural gas demand and output growth falter – IEA appeared first on Climate Home News.

By Gerard Wynn

Mexico gas-fired power generation will  surge in the wake of a projected doubling in US pipeline imports, the U.S. Energy Information Administration said last Thursday.

The shift to natural gas would cut dependence on more polluting fossil fuels including coal and oil, but may also undermine emerging wind power growth in the south and west of the country.

The US shale gas revolution has already slowed growth in the country’s domestic wind power sector, by cutting wholesale power prices and market incentives for the renewable power source.

“Nearly three-quarters of the projected growth in Mexico’s natural gas consumption between 2012 and 2027 is projected to occur in the electric power sector,” said the U.S. government energy research service, quoting data from Mexico’s national energy ministry, SENER.

“The growth comes largely from new combined-cycle plants, which benefit from greater operational efficiencies and lower emission levels compared to other generation sources.”

In all, Mexican natural gas consumption in the power sector would increase to 6.1 billion cubic feet per day (Bcf/d) in 2027, compared with 2.7 Bcf/d in 2012, according to the Mexican projections.

US natural gas producers would be major beneficiaries, with pipeline exports projected to more than double to Mexico in the next five years.

That would follow a doubling between 2009 and 2013, according to SENER.

“SENER projects that US pipeline exports to Mexico will reach 3.8 billion cubic feet per day (Bcf/d) in 2018. This would be more than double U.S. pipeline exports to Mexico in 2013, which averaged 1.8 Bcf/d,” the EIA said.

Wind

Mexican power generation is presently dominated by fossil fuels, where natural gas has recently surpassed fuel oil and coal as the number one power source.

“Power plants using fossil fuels comprise the overwhelming majority of Mexico’s electricity generation. In the past, petroleum products were the leading fuels in Mexico’s electric generation mix. However, natural gas consumed for electricity generation has risen significantly in recent years, a shift that has been a leading driver of Mexico’s rising natural gas consumption,” said the EIA.

Non-hydro renewables are dominated by geothermal power, and supply only 3% of the country’s electricity.

“The most significant source is currently geothermal, including the 645-MW Cerro Pietro plant in Baja California, followed by biomass and waste combusted in fossil-fueled power plants. At present, there is relatively little wind and solar generation in Mexico.”

The country has strong wind resources in the west, in Baja California where there are plans for a transmission line to allow modest wind power exports to the United States.

“Sempra International is developing the Energía Sierra Juarez (ESJ) wind farm. The electricity from this farm will be exported to the United States on a new transmission line. The 156-MW first phase of ESJ will be completed in 2014. ESJ’s longterm development plan includes additional phases, with a potential total capacity of over 1.2 GW.”

There are also strong resources in the south of the country, in the Isthmus of Tehuantepec in Oaxaca, where the EIA noted several projects were due to come on line by early 2015 with several hundred megawatts of wind power capacity.

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(Pic: BP)

By Gerard Wynn

The European Union aims decisively to shift away from dependence on Russian gas imports, following previous failed attempts, according to a draft European Commission document on energy security.

The Ukraine crisis has deepened European jitters over gas imports, where Russia is its single biggest supplier.

The European Commission note mentioned the word “solidarity” seven times, in a draft note whose final version would be published in June, titled “European Energy Security Strategy –  Comprehensive plan for the reduction of EU energy dependence.”

“The EU and its Member States have an overriding priority: ensure that best possible preparation and planning improve resilience to sudden disruptions in energy supplies, that strategic infrastructures are protected and that the most vulnerable Member States are collectively supported,” it said.

The EU relies on imports for 70% of its gas consumption. Six member states depended on Russia as their single external supplier for their entire gas imports, the Commission said.

#Energy security is intrinsically linked to #EU becoming a competitive, low-carbon economy. #ESSC

— José Manuel Barroso (@BarrosoEU) May 21, 2014

It called for increased gas storage in the short-term, to prepare for possible disruption in the coming winter to Russian gas transiting through Ukraine, and the development of reverse flows through gas pipelines to allow a more flexible routing of gas to where it was most needed.

It also underlined the need for a diversification of gas supplies. That included exploitation of domestic shale gas, and imports from alternative suppliers, with more imports of liquefied natural gas, for example from Qatar and in future the United States.

“Producing oil and gas from unconventional sources in Europe, and especially shale gas, could partially compensate for declining conventional production, providing issues of public acceptance and environmental impact are adequately addressed.”

It also emphasised a greater role for energy efficiency, especially in buildings and industry.

It said that the Commission would prepare efficiency goals for 2030, in a sign that it would propose a concrete EU energy saving target as already agreed for 2020.

“Energy demand in the building sector, responsible for about 40% of energy consumption in the EU and a third of natural gas use9 could be cut by up to three quarters if the renovation of buildings is speeded up.”

Shifting energy politics were visible also on the Russian side, as it signed on Wednesday a major gas supply contract with China, reducing its dependence on sales to Europe.

Priority

The Commission saw closer ties between EU member states as the critical factor for improving energy security.

It showed impatience with resistance from Russian gas supplier, Gazprom, to EU competition legislation which limits ownership of both energy and transmission assets. Gazprom sees such rules as a threat to its new proposed gas pipeline through southern Europe.

“The recent experience of certain non-EU operators challenging the application of EU legislation on EU territory might call for a stricter approach and a reinforcement of the applicable (competition) rules at EU and Member states level,” the Commission said.

“Antitrust and merger control rules must continue to be vigorously enforced since they ensure that the EU security of supply and industry bargaining position is not weakened through anticompetitive behaviour from and/or excessive consolidation or vertical integration of non-EU energy companies.”

The Commission detailed a long list of “key actions”, and said that the bloc had done too little to improve its security since previous disruptions of Russian gas, in 2006 and 2009, following gas price disputes between Russia and Ukraine.

“The EU needs, therefore, a hard-headed strategy for energy security which promotes resilience to these shocks and disruptions to energy supplies.”

DRAFT European Commission – Energy Security Communication

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Pic: Flickr/Cathy

By Gerard Wynn

US gas prices have risen to a level which is driving a “significant” return to burning coal, Bank of America Merrill Lynch (BofAML) Global Research said in a market report published on Tuesday.

The investment bank forecast that US gas consumption in power generation would fall this year, following a fall last year after four straight successive rises from 2008 to 2012.

And it projected strong gas prices through 2017 and beyond on the back of compelling demand and supply drivers.

The price of natural gas has implications both for US energy costs and carbon dioxide emissions.

US carbon emissions fell faster than in any developed country in 2012, because low gas prices following the shale gas revolution had motivated a switch to gas away from higher carbon-emitting coal.

The Department of Energy statistics arm, the Energy Information Administration, said last week that the relative economics of coal, gas and nuclear power would determine the trajectory of US carbon emissions over the next three decades.

Near-term gas supply contracts were now priced at levels which made significant numbers of coal-fired power plants more economic than gas plants, BofAML said on Tuesday.

“Prices have risen to the $4.70-5.00 level where gas to coal switching is very significant,” the bank said in its report, The long and the short of US natural gas.

“While near-dated contracts in 2014 have surged, calendar 2015 and 2016 prices have only moved up modestly. As a result, prices are now encouraging coal burn near-term, but are not yet incentivizing a big ramp up in drilling activity across the country.”

But the bank saw strong supply and demand drivers for higher prices in the longer term, too.

Demand for US natural gas would rise as the country built out liquefied natural gas (LNG) export terminals, and in the wake of expected coal-fired power plant retirements.

“Demand for natural gas in the US is poised to increase very meaningfully in the coming years. It is also important to note that much of this new demand coming online over the next 5 years will likely not be highly price sensitive.”

Regarding supply, the bank found that US shale gas productivity was no longer rising at previous meteoric rates, even as output continued to rise on the back of crude oil plays.

“Even if it increases further, it will likely fall far short of meeting the large pent up incremental demand over the next 5 years. To encourage producers to move back into high cost gas plays, we see long-dated (Cal17 and beyond) US nat gas rising to $5.50/MMBtu.”

Strength

US monthly gas prices reached recent historic lows below $2/ MMBtu in April 2012, according to Henry Hub benchmark data.

But they have risen strongly over the past year, and especially during the recent cold winter, reaching $6 in February, a level last seen six years ago.

BofAML expected prices sustained above $4 through this year and next.

“Unprecedented cold weather is leaving a big mark on the US nat gas market.

“In the very short run the only way to balance a tightening natural gas market is to force demand rationing through higher prices. We see prices staying solidly high this year to reduce gas consumption in power generation, with prices averaging $4.40/MMBtu in 2014.

“We expect the strength to continue into next year where we also see prices averaging $4.40/MMBtu.”

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The scientists had to wait for optimum weather conditions before measure the methane (Pic: Sonja Wolter, CIRES/NOAA)

By Sophie Yeo

The volume of methane leaking out from oil and gas fields is so high that it could negate the benefits of burning natural gas, researchers have found.

In February last year, scientists from Colorado Boulder University flew an aircraft above the Uintah Basin in Utah, which accounts for about 1% of the US’s natural gas production, following a mass of air as it moved into the region and then flowed out again.

When they looked at their results, they found that the air flowing out of the site consisted of 6-12% more methane than it did when it entered.

This figure is significantly higher than the one suggested by the Environmental Protection Agency, who, in a recent report, suggested that methane leaks made up just 1% of production.

But these previous estimates, the researchers say, depended upon a flawed method of measuring the methane leaks.

“We were very surprised that there was that much methane coming from the area,” said Colm Sweeney, co-author of the study.

He told RTCC, “We went there knowing there were going to be significant emissions, but we didn’t expect that when all was said and done almost 10% of the amount of methane that they’re producing is being leaked from the system.”

Methodology

According to their report, published this month in Geophysical Research Letters, the lack of reliable and accurate estimates of the amount of gas leaking from production fields existing at the moment is “critical gap in determining the climate impact of the recent increase in US natural gas production”.

It says that “In particular, the methodology used to account for fugitive CH4 [methane] emissions during production is in question.”

According to Sweeney, while the volume of methane being emitted is surprising, it is the use of a new methodology to measure the gas that could prove really important.

The researchers are now repeating the experiment in Denver and Texas, to see if the unexpectedly high amount of methane from Utah is merely an outlier, or whether it is representative of a more deep-rooted flaw in the way in which leakages are measured.

“The most significant result is that it proves that the methodology – the leak rate is interesting, but the methodology is something that we hope will be exploited,” he said.

Climate change

Although the research only takes into account one gas production site on one day, if the results from their improved method of measuring the methane leaks turn out to be replicable across other regions, it could seriously undermine the environmental benefits of burning natural gas in place of gas or oil.

Currently, natural gas is seen as a more efficient energy method of powering the grid. According to statistics from the US Department of Energy, natural gas combustion produces 177% more energy per CO2 molecule formed than coal, and 140% more than oil.

The problem with natural gas is that it is primarily composed of methane, a greenhouse gas that is 25 times more potent than CO2.

A recent study has suggested that if more than 3.2% of natural gas leaks into the atmosphere on its way from the point of extraction to a gas-fired power plant, the electricity produced will have a larger immediate climate impact than that from a coal-fired plant.

The 6-10% figure measured at the Uintah Basin is in excess of this, and could therefore offset the benefits of natural gas over other fossil fuels.

A natural gas revival

Such findings are likely to be painful for US energy authorities if they turn out to be widely applicable, as the country is currently turning to natural gas as a domestic energy source that is reducing both bills and greenhouse gas emissions.

According to the EPA, greenhouse gas emissions in 2011 were 6.9% below 2005 levels, which is partly attributed to the growth of the natural gas industry. Sweeney says that further application of their methodology would be necessary to get the EPA to adjust their emissions estimates.

The Uintah Basin is an old gas field that is currently undergoing a revival due to shale reserves that are now accessible through fracking.

Sweeney says that the methodology they used cannot specifically attribute the escaped methane to any particular part of the production process.

He says, “All we know is that somewhere there is leaking going on, and in the system it might be the gas from the actual wells, it might be through distribution, or it might be at the processing station stage, but somewhere in that production side of things, methane is leaking.”

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