National Experts: Shale Gas Key to America’s Transportation Future

A recent draft report issued by the National Petroleum Council (NPC) suggests that natural gas from shale formations can and will continue to play a critical role in our nation’s transportation future. According to the report — available in full here — “the potential for a long-term and low-cost domestic supply of natural gas, supported by significant economically recoverable shale gas resources, presents an opportunity for the increased use of natural gas as a transportation fuel.”

Key highlights from the report’s natural gas section:

• “With a sustained significant fuel price differential between oil and natural gas, driven by relatively low natural gas prices in the United States, the benefits from natural gas may be larger, earlier, and faster than alternative [transportation] technologies.”
• “There are few technical barriers that prevent NGVs entering the market. Market entry barriers are largely logistical and commercial and involve matters of timing and pace around the introduction of a new fuel and infrastructure into the transportation mix.”
• “Recent developments in shale gas resources have led to the potential for a significant increase in the domestic production capacity of natural gas. If this expansion in capacity results in long term and stable price advantages relative to petroleum fuels then its use in transportation is likely to gain further attention.”
• “Over the past decade, the deployment of new technologies in horizontal drilling and hydraulic fracturing has allowed the extraction of large volumes of gas from unconventional sources such as shale gas. This discovery has transformed the potential for the North American gas market as projections indicate an ample supply.”

Other Key Findings

• “Estimates of infrastructure build out costs suggest that when refueling infrastructure is built and well utilized, its impact on dispensed fuel prices could be as low as$0.06/GEG for LNG and $0.38 /GEG for CNG. However, the economics of infrastructure investment and the pace of development are some of the key challenges to expanded use of natural gas as transportation fuel.”
• “Natural gas contributes to lower greenhouse gas emissions compared to gasoline and diesel. For light duty applications, the range of quoted reductions is 7% to 30% for North American sourced CNG. For heavy-duty vehicles, the results vary depending on the natural gas engine technology but for North American sources of natural gas the range spans from 11% to 29%.”
• “From an energy security perspective, LD and HD natural gas vehicles have the potential to provide an economic driver towards alternative fuel use, displacing oil with domestically sourced natural gas.”