Grupo de Economia da Energia

Posts Tagged ‘gas sector’

The evolution of the Brazilian government’s natural gas policy

In natural gas on 05/12/2011 at 00:37

By Marcelo Colomer

Almost a year after Decree 7,382 by the former President of the Republic Luiz Inácio Lula da Silva, a seminar was held in Brasilia on the challenges of the new regulatory framework for the natural gas industry in Brazil. The event occurred in the last 29, from a joint initiative of the Ministry of Mines and Energy (MME), National Agency of Petroleum, Natural Gas and Biofuels (ANP) and Energy Planning Company (EPE).

The main objective of the event was to discuss with the sector agents the main challenges for implementing the new regulatory framework for the natural gas industry. According to the MME Secretary, Marco Antônio Almeida, there is recognition that Act 11,909 and Decree 7,382 do not cover issues relating to gas regulation, thus requiring additional regulatory acts. According to him, this is a major challenge for MME and ANP. Helder Queiroz, ANP Director, states that development of new resolutions and ordinances and review of regulatory acts in force are essential to bind ANP rules to the new industry’s regulatory framework. Continue lendo »

Environmental regulation: an obstacle to shale gas extraction?

In natural gas on 03/10/2011 at 00:15

By Edmar de Almeida & Luiz Suárez 

Shale gas is a type of unconventional natural gas in low permeability sedimentary formations. Unlike conventional gas, which migrates from rocks to reservoir rocks, this unconventional gas is trapped, because the low permeability hinders its escape. This characteristic prevented for a long time such gas extraction of, since there were no technologies able to promote its removal from shale formations.

Due to horizontal well drilling and hydraulic fracturing advent this paradigm has been overcome. This process consists of pumping sand and water under high pressure with other chemicals in the well in order to fracture the shale formations through slots opened initially by using “perforating gun”, allowing the release of gas from sedimentary formations into the well.

This technique was responsible for increasing greatly the recoverable natural gas resources of the world. In the USA, for example, 24 trillion out of 71 trillion cubic meters of total recoverable reserves is related to reserves of shale gas, according to International Energy Agency (IEA). This scenario changed significantly, and USA, as former LNG importer, became one of potential natural gas exporters.

By confirming that it was possible to extract gas from shale formations, natural gas already considered as a transition fuel to clean energy sources had this role reaffirmed. Not everything is a bowl of cherries; this new opportunity to obtain natural gas has been accompanied by questions about the negative impacts that hydraulic fracturing may cause on the environment. Continue lendo »

What the impacts on the current revolution market of the shale gas?

In natural gas on 25/07/2011 at 00:15

By Edmar de Almeida 

The development of technologies for production of shale gas has been considered a revolution for business and economics of natural gas. Many agents and even the U.S. government believe that unlinking price of natural gas from price of oil in the United States is a structural phenomenon that reflects the new technological and geological context of the natural gas industry. There is a perception that the technological revolution of shale gas will affect permanently not only the U.S. gas industry, but also the global gas trade. Those believing this structural show the following arguments to support this view:

  • The current shale gas resources in the USA are equivalent to 3.5 times the volume of all proved reserves in the USA today. Moreover, the availability of shale gas resources is not restricted to USA. A recent survey conducted by Department of Energy (DOE) has pointed out the existence of large volumes of shale gas resources in 48 sedimentary basins in 32 countries, including Brazil, Argentina, Bolivia, Uruguay and Paraguay.
  • The technological learning process in the last 10 years has reduced dramatically the cost of producing shale gas. The main innovations were: i) reduction of the time for drilling wells, ii) improvement of horizontal drilling techniques, iii) improvement of geological knowledge in production areas, iv) development of hydraulic fracturing technology and standardization of equipment. These innovations have reduced production costs to less than US$ 3 per MMBtu, in the best producing areas. Continue lendo »

The future of shale gas and dynamics of the natural gas industry

In natural gas on 06/06/2011 at 00:30

By Marcelo Colomer

The development and improvement of horizontal drilling and hydraulic fracturing techniques have allowed the expansion for production capacity of natural gas in low permeability geological formations, especially in shale formations. In this new exploitation context, there is a growing shale gas production in the USA and Canada, where the increase in domestic supply of natural gas has completely changed the energy market.

However, despite the increase in Canada and USA shale gas production, there are still major uncertainties about the productive potential of natural gas in low permeability geological formations. This is explained not only by lack of geological data in specific shale formations, but also by high and still little-known environmental impacts of the shale gas production. Continue lendo »

Impacts of the earthquake and the japanese nuclear crisis on the international natural gas market

In LNG, natural gas on 18/04/2011 at 00:20

By Marcelo Colomer & Edmar de Almeida 

One of the few existing consensus among energy experts at the moment is the recognition that the energy crisis, in particular the nuclear crisis in Japan after the great earthquake of March 11, will tend to benefit the international natural gas market. Many experts were in rush to point out a rapid redemption of the natural gas market after nearly three years of depressed prices. In fact, the price of natural gas and oil suffered a sharp drop from the 2008 crisis, remaining at a very low level, even after the recovery of price of oil in 2009. This expected price recovery in the gas market is considered as great relief by sector agents, although a more careful analysis of the current context of the market reveals that recovery may take longer than expected. Continue lendo »

Recent development and trends in pricing in the global LNG market

In LNG, natural gas on 29/11/2010 at 00:52

By Edmar de Almeida

The global Liquefied Natural Gas (LNG) trade has experienced an enormous expansion in the last two decades. This expansion was accompanied by an important evolution in pricing and types of contracts for LNG trade. Traditionally, LNG trade was supported by long-term contracts with a pricing trying to link the price of LNG to the competing fuels (oil or its byproducts). Until now, this sort of trade prevails in the LNG markets in Asia and parts of Europe.

The liberalization of gas markets in North America and some European countries allowed the appearance of new rules on pricing of natural gas. With the gradual increase of gas-gas competition, some short-term and spots markets were developed, allowing the use of new indexes for natural gas trade. Concurrent with the appearance of gas spot markets in North America and Europe, we have witnessed a fast development of the LNG market in the Atlantic Basin. The regasification capacity of the Atlantic Basin is now approaching half of global capacity. United States and United Kingdom, as an example, had stopped importing LNG in the 1980s, and returned to import LNG in 2000.

Continue lendo »

The divergent integration of the natural gas and electricity industries in Brazil

In electricity, natural gas on 20/09/2010 at 00:30

By Luciano Losekann

The movement of convergence of the natural gas and electricity industries characterized the global energy industry over the past 20 years. In OECD countries, the use of natural gas for generating electricity increased at a rate of 6% per year during this period and its participation in the generation matrix increased from 9% to 23%. Currently, the portion of natural gas is higher than nuclear one and lower than coal one.

Some dynamic factors explain this: (i) the discovery of significant natural gas reserves and interconnection of markets have changed the perspective, especially in Europe, natural gas as a product with limited availability and reserved for more noble purposes, (ii) the expansion of combined cycle turbines causes generating electricity from natural gas more efficient, increasing its competitiveness against other sources, and (iii) liberalization of industries reduced institutional barriers to new entrants. Continue lendo »