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IEA: Are We Entering A Golden Age of Gas? - This is an interesting, blockbuster (125 pages) Special Report from the International Energy Agency. It is posted in the Subscriber's Area but here is the opening portion of an extensive Summary:

The factors that drive natural gas demand and supply increasingly point to a future in which natural gas plays a greater role in the global energy mix. Global uncertainties afflicting the energy sector can be seen as opportunities for natural gas. When replacing other fossil-fuels, natural gas can lead to lower emissions of greenhouse gases and local pollutants. It can help to diversify energy supply, and so improve energy security. It can provide the flexibility and back-up capacity needed as more variable capacity comes on-line in power generation. Gas is a particularly attractive fuel for regions, such as China, India and the Middle East, which are urbanising and seeking to satisfy rapid growth in energy demand. These are the very regions that will largely determine the extent to which gas use expands over the next quarter of a century.

The global natural gas resource base is vast and widely dispersed geographically. Conventional recoverable resources are equivalent to more than 120 years of current global consumption, while total recoverable resources could sustain today's production for over 250 years. All major regions have recoverable resources equal to at least 75 years of current consumption. Timely and successful development depends on a complex set of factors, including policy choices, technological capability and market conditions. Once discovered, major gas resources can sometimes take several decades to reach production.

Unconventional natural gas resources are now estimated to be as large as conventional resources. Unconventional gas now makes up about 60% of marketed production in the United States. Coal bed methane (CBM) development is growing in Australia, while projects in China, India and Indonesia are in the early stages of development. Use of hydraulic fracturing in unconventional gas production has raised serious environmental concerns and tested existing regulatory regimes. Based on available data, we estimate that shale gas produced to proper standards of environmental responsibility has slightly higher "well-to- burner" emissions than conventional gas, with the combustion of gas being the dominant source of emissions. Best practice in production, effectively monitored and regulated, can mitigate other potential environmental risks, such as excessive water use, contamination and disposal.|

My view - Fullermoney has often described natural gas - both conventional and unconventional (shale gas) - as a game changer in terms of global energy supplies. Today, it is in third position - behind oil and coal - in terms of energy usage but well ahead of both biomass and nuclear (see graphic on page 19). Natural gas currently supplies 21 percent of our global energy. The IEA predicts this will increase to 25 percent by 2035, as an energy-hungry world consumes 50 percent more natural gas than we use today. This would take its usage above that of coal - the primary pollutant - and close to the demand for crude oil.

Inevitably, a large degree of creative license is used in such long-term forecasts which cannot take account of many events certain to occur between now and 2035. Price will be the most important variable but given the amount of recoverable gas - both conventional and unconventional - which is widely distributed across the globe, I would not be surprised if natural gas becomes the world's leading source of energy before 2035.

What would be some of the implications?

This item continues in the Subscriber's Area.

Email of the day (1) - On shale gas pollution:

"I came across this video on You Tube the other day and was sufficiently concerned to think that it might be of interest to the collective. If Shale gas is the energy of the future then this sort of problem is going to have to be dealt with properly, unless it is just a local incident, or people are not going to stand for it."

My comment - Thanks and good point. Although the video is 18 months old, the initial, non political points are still relevant today. I see this subject as primarily a regulatory matter. The extraction of any fossil fuel is a nasty, dirty and dangerous process. The tradeoff is that we need technology, common sense and personal responsibility to extract these important fuels reasonably safely, and sensible regulation to ensure that precautions are taken to reduce environmental damage. Unfortunately, this will never satisfy everyone. The IEA report above also addresses these issues.

At the risk of belabouring another point, if we want an efficient, reliable and relatively safe alternative to fossil fuels, how about reviving the nuclear renaissance?

Email of the day (2) - On China:

"You have mentioned the over-supply situation with respect to Chinese market many times."

My view - Many thanks for this report, which I have posted in the Subscriber's Area along with my further comments.



Additional commentary by Eoin Treacy

Steve Jobs Uses iCloud to Pick Apart Industry He Helped Form - This article by Adam Satariano and Peter Burrows for Bloomberg may be of interest to subscribers. Here is a section:

"We're going to demote the PC and the Mac to just be a device -- just like an iPad, an iPhone or an iPod Touch," Jobs, dressed in a black sweater and jeans, said yesterday. "We're going to move the hub of your digital life to the cloud."

Apple recently completed a $1 billion data center in North Carolina that will serve as the backbone of the iCloud service. It will help devices synchronize calendar items, contacts, mail, iTunes songs, photos, apps and other files. "If you don't think we're serious about this, you're wrong," Jobs said while showing pictures of the data center.

Yesterday's event marked Jobs's second public appearance of 2011. Though he has been on medical leave since Jan. 17, Jobs remains involved in Apple's decision making. His absence is the third since 2004 as he copes with a rare form of cancer.

My view - Apple has for quite some time stood on the sidelines of the emerging cloud computing sector. Yesterday's announcement changes that attitude with a wholesale migration of emphasis to this emerging technology. While the tech savvy are familiar with cloud computing, many people have yet to hear of the movement. I have seen a number of companies beginning to advertise in airports and on expressways that they are open for cloud computing business which suggests the technology is now becoming more mainstream. This report from Deloitte, kindly forwarded by a subscriber, carries much more information on the subject. The last time I reviewed the relevant shares was in Comment of the Day on March 4th.

This section continues in the Subscriber's Area.

Email of the day - on the public mood in Greece:

"I am in Greece and it is very interesting to listen to what ordinary people have to say here. Due to media coverage, many believe that the problems of the Euro, in general, and of Greece, in particular, are the result of a conscious effort by USA financial circles to undermine the Euro and Europe. They do not look in the mirror and acknowledge Greece's responsibility. Only today I heard how masses of Greek avoid paying water and electricity bills by falsifying their meters.

"In addition, there is growing anger at the fact that ordinary Greeks, earning very low wages, are having to bear the financial burdens of austerity measures. The demonstrations here and in other European countries against austerity (often copying the Facebook/Twitter models of the Arab uprisings) have to be taken very seriously. There is real troubling building up on this front."

My comment - Thank you for this insightful, on-the-ground report contributed in the spirit of Empowerment Through Knowledge. The current Greek constitution dates from 1975 and followed a particularly tumultuous period in the country's history. EU membership, in addition to structural funds helped cement democracy but anyone older than 36 will remember a time when political division and social unrest were all too common.

A failure of governance has led Greece to the situation it is in today and the sooner the local population accept this fact the better for the country's recovery prospects. Denial is the most primitive of defence mechanisms. "I didn't do it" made famous by Bart Simpson is an example of such a defence. "Acting Out" is equally primitive and readily observable among crowds of people turning to violent behaviour to express their anger. This short report "15 Common Defense Mechanisms" by John Grohol may be of interest.

This section continues in the Subscriber's Area.

Japan May Spend Trillions of Yen on Batteries, Nomura Says - This article by Mariko Yasu for Bloomberg may be of interest to subscribers. Here is a section:

Japan may need to spend several trillion yen on batteries should it follow through on a plan to triple photovoltaic capacity by 2014 amid concern that nuclear power plants are too risky, Nomura Holdings Inc. said.

NGK Insulators Ltd. and GS Yuasa Corp. are among battery makers that may benefit as expansion of the solar power grid requires storage batteries, Kyoichiro Yokoyama, an analyst at Nomura, wrote in a report dated yesterday.

Japan may boost solar-power generation from the current 3.6 gigawatts to 10 gigawatts in 2014, according to the report. When capacity reaches that level, Japan will need storage batteries to smooth out fluctuations in power production based on weather, Nomura said, citing a government estimate.

Japan is preparing an energy strategy that may include an increase in solar and other renewable forms after the March 11 earthquake and tsunami crippled Tokyo Electric Power Co.'s Fukushima Dai-Ichi nuclear plant. The trillions of yen of investment in batteries would take place by 2020, when the target for solar power production is 28 gigawatts, according to the report.

Japan had the third-most solar capacity in the world in 2010, behind Germany with 17 gigawatts and Spain with 3.7 gigawatts, according to the European Photovoltaic Industry Association.

My view - So called alternative energy sources such as wind and solar are not truly viable as alternatives to mass electricity production fuelled by coal, oil, natural gas or uranium because they cannot meet base load requirements. The only way they could become viable is if technological leaps in battery technology are made to ensure electricity production when the sun is not shining or the wind is not blowing. At present industrial sized batteries that could meet this requirement do not exist. It is highly likely that they will exist in future given the amount of capital being invested in the sector.

This section continues in the Subscriber's Area.

The Chart Seminar 2011 - The November dates for The Chart Seminar are filling steadily following a sell-out tour to Sydney & Singapore and a successful start to our London series last week.

Anyone interested in securing a place at any of our events should contact Sarah Barnes at sbarnes@fullermoney.com.

The full rate is £950 + VAT. The early booking rate of £875 for non-subscribers expires on September 30th. Paid-up Fullermoney subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.

The date and venue for my remaining seminar in 2011 is:

London - November 3rd & 4th at the Radisson Edwardian Hampshire.