The massive quantities of natural gas made available via the revolutionary horizontal drilling and multistage fracturing technologies that have already hamstrung Canadian natural gas producers and put in doubt the viability of a Mackenzie Valley pipeline may also kill another massive Arctic project—the Shtokman development off Russia’s north coast.

Already a technically challenging and hugely expensive project, Shtokman, about 650 kilometres north of Murmansk in the Barents Sea, is expected to get a da or nyet by year’s end.

When New Technology Magazine first reported on the long-delayed project in 2005, Shtokman—at 113 trillion cubic feet considered the world’s largest offshore gas field—was expected to be producing by 2010. Weeks away from an expected final investment decision by current project partners Gazprom, Statoil and Total, the head of Statoil in Russia was quoted by Dow Jones Newswires today (Dec. 6) as questioning project viability, at least without concessions from Moscow.

“We are seeing a challenging gas market in Europe, the main reason being the shale gas revolution in the U.S. This has had a tremendous effect on the gas and LNG industry globally,” Jan Helge Skogen was quoted saying, suggesting exemptions from mineral extraction taxes and export duties would be necessary to keep the project on track.

Similarly, sister publication the Daily Oil Bulletin reported last week that one of the main reasons a decision on the long-awaited Mackenzie gas pipeline remains in question is the massive amount of shale gas flooding the North American market, which is expected to depress prices for a long time.

“This has created a huge supply of gas here in Western Canada that now means that the Mackenzie pipe [would be] bringing gas to a market that’s probably already oversupplied with gas,” said Hal Kvisle, the retired chief executive of TransCanada Corporation. “And that’s going to be a big challenge. I do worry about the prospects for it.”

In testimony before the Standing Senate Committee on Energy, the Environment and Natural Resources in Calgary, Kvisle said the other two reasons the pipeline hasn’t gotten off the drawing board are the extreme regulatory delays and the risk that future gas discoveries won’t be enough to supplement the gas that has already been found. He said the three anchor fields discovered in the 1970s aren’t enough to fill the $16.2 billion pipeline for the 30-year life needed to make the project economic. If it’s built, further drilling will follow, he notes, and more gas is likely to be found, but it still represents an added risk.

Also like Shtokman, Mackenzie pipeline project participants are looking for federal government concessions, reportedly in the multibillion-dollar range, to make the project economic. Owners of the Mackenzie gas project, which would ship up to 1.2 bcf of natural gas from the Mackenzie Delta on the Beaufort Sea coast, are Imperial Oil Limited, ConocoPhillips Company, Royal Dutch Shell plc, ExxonMobil Corporation and the Aboriginal Pipeline Group.

Meanwhile, estimates of the shale gas resource becoming accessible due to the application of new technology, and overall production volumes, only continue to climb. The U.S. Energy Information Administration reported at the end of November that September gross natural gas production in the Lower 48 states had hit a new record at 4.5 billion cubic feet per day, even as prices continued to slump in the $360 per mmBtu range in the U.S. Production was up seven per cent year-over-year, despite a 29 per cent drop in federal offshore Gulf of Mexico output, due primarily to surging shale gas production.

This all goes to show the far-reaching and unpredictable repercussions a disruptive new technology can give rise to. Consider also the major change of plans for those expecting to be importing liquefied natural gas into North America a decade ago—rather, shale gas is suddenly creating export opportunities. Or consider the new round of exploration taking off around the world, as promising shale gas prospects pop up from South America to Eastern Europe to China. Or a report this week from IHS Global Insight (commissioned by industry group America’s Natural Gas Alliance) showing more than 600,000 U.S. jobs (including multiplier effect) are now supported by shale gas, along with a projected $118.2 billion contribution to the U.S. economy by 2015, up 53 per cent from last year’s level. All this from a sector that was virtually nonexistent 10 years ago.

One more thing to consider—none of this takes into account the more recent transfer of the groundbreaking new technologies into previously uneconomic tight oil prospects that is now in full swing. It seems the only safe prediction now is that more surprises are sure to follow as horizontal drilling and multistage fracking continues to reshape the global oil and gas industry.

For decades after the much reviled National Energy Policy of the early 1980s was swept away, it has remained, rightly or wrongly, a symbol of eastern interference and economic strangulation of the West so strongly held that mere mention of the NEP has remained a forceful rallying cry against any attempts by Ottawa to set any kind of policy direction in the energy industry.

At least, that’s been the case until the last year or two, when as a growing number of voices have begun to make the case for a new sort of energy plan (since the term NEP remains so politically-charged, proponents have tended to use alternative terms such as national energy strategy, framework, plan, program or vision). Perhaps most surprisingly, some of the loudest voices for a new national policy are coming from the very sector so hostile to any kind of national policy heretofore: the oilpatch. Indeed, after three decades without a plan, it seems the energy industry is practically screaming for some kind of national strategy.

The gathering consensus, in fact, seems to include just about everyone — from major companies and industry associations to economists, environmental groups and think tanks — except for those who can actually do something about it — the politicians. This is unfortunate, because if Canada is to implement some kind of strategy in the mandate of the next government, some honest and realistic debate about the issue before election day would have been nice. The only real energy issue discussed has during the election campaign has been proposed carbon-limiting cap-and-trade legislation, which has mainly been the subject of partisan bickering rather than reasoned debate.

Perhaps it’s the ghost of the previous campaign, when a proposed carbon tax was roundly vilified by its opponents, that has frightened politicians of every stripe from dealing with the topic in detail. But outside of politics, it’s not hard to find evidence — even in the oilpatch, as surprising as that might be to outsiders — that the pendulum is swinging in favour of a national strategy, even if that includes measures to cost carbon emissions. Consider some of the comments (culled largely from the Daily Oil Bulletin) made over that past year or so:

- David Collyer, president of oil company lobby group Canadian Association of Petroleum Producers, says CAPP is broadly supportive of a national energy strategy and is encouraging the federal government to work with the provinces and other stakeholders to develop an energy strategy. “Energy is a tremendously important asset to this country,” said Collyer. “Anything that important ought to mobilize people to try to come together to see if they can find a way through to a common strategy and common direction which then provides a framework in which we can make the decisions we need to make to advance that agenda.”

In a presentation to the Senate’s standing committee on energy, the environment and natural resources in February, he said one of the challenges is Canada’s diversity with very different interests across the country. “But I think it’s fundamentally important that we find an alliance around something like energy that is so critically important to our future as a country… If we get an alliance and bridge some of those internal differences we can both realize the economic benefit and proceed responsibly around energy development and at the same time represent ourselves as a country more effectively in the international debate.”

- Similarly, Canada’s oilsands producers said they would “encourage, support and will actively engage” in efforts to develop a national energy strategy, according to the dialogue report released by CAPP earlier this month. The response included a strong focus on technology and innovation, and support for policy and regulatory action in areas of national energy strategy and climate policy. Development of a national energy strategy requires broad engagement and leadership by Canadians across the full energy value chain and should not be a top down process by governments, the report stated. “Such a plan or strategy could maximize Canada’s energy strengths in a coherent fashion across the entire energy spectrum. It could spur technological development to address environmental issues as well as encourage commercialization of scientific research in the area of greenhouse gas reduction.”

- The Standing Senate Committee on Energy, the Environment and Natural Resources, which last June released a discussion paper entitled Attention Canada! Preparing for our Energy Future, said it believes the country needs a strong and thorough energy strategy — and the sooner, the better. “[The first report] represents the culmination of nearly nine months of study and research including testimony from Canada’s leading energy thinkers, research institutions and other stakeholders,” committee chairman David Angus said in the report. “The message is clear: there is urgent need for a national discussion on energy. Canada requires a comprehensive Canadian sustainable energy strategy now.”

- In March, Lorraine Mitchelmore, Shell Canada Ltd.’s president, called for a national approach to energy. “Canada’s emergence as a global energy superpower hinges on the country’s ability to develop a truly national approach to energy,” she said. “A national energy strategy will support a balanced approach to strengthening the economy, improving the environment and turning environmental stewardship into economic advantage.” Canada has all the hallmarks of an energy superpower, she said, but doesn’t have the right strategy to get there. “Developing that strategy requires collaboration among all stakeholders — energy companies, governments, communities and NGOs. We need to agree on an approach to energy that meets our respective needs and benefits Canada as a whole… Key elements of the strategy should be a price on carbon, sustainable and affordable energy with a reduced carbon footprint, and a national rather than a regional approach to our energy market.” Last fall, Mitchelmore, a native of Newfoundland, declared: “We are acting like 10 different countries. We need to act as one country and position ourselves for the future. Alberta should not be against Ottawa. We (Albertans) should not be against Quebec. We’ve got to start coming together … to compete globally. Because that’s the future.”

- While a national energy “program” would meet with distaste in Alberta, there is a role for a strategy, Chris Seasons, president of Devon Canada Corporation, said during a panel discussion on the oilsands last November. “To the extent we understand where we are trying to be 10, 20 or 50 years out, the better off we all will be in terms of getting there,” said Seasons, who is also CAPP chair.

- In two papers released in November, both the Canadian Council of Chief Executives (CCCE) and the Canada West Foundation emphasize the need for a clear, consistent and sustainable energy strategy that tackles issues including carbon pricing related to the need to address climate change, the DOB reported. The CCCE policy paper outlined five key steps that would help to ensure Canada achieves its potential as an energy and environmental powerhouse — including a comprehensive national policy on carbon. “We need to get past the current patchwork of federal and provincial action plans and commit to a coherent national approach to climate policy,” says the paper. “Canada need not wait for the Americans to move in key areas of policy.”

A portion of funds raised through carbon pricing schemes should be devoted to the development of technology, CCCE adds. “The private sector is ready and willing to do its part, but our industries need a road map that provides clarity and predictability so that they are able to contribute innovative and lasting solutions,” said council co-chair Hal Kvisle, former CEO of TransCanada Corporation.

- In its paper, the Canada West Foundation calls for a “robust, coherent and comprehensive Canadian energy strategy” to help Canada realize its “ambitions for a prosperous and sustainable future, for meeting climate obligations, and for remaining competitive within the global economy.” Roger Gibbins, foundation president and CEO, states: “At the Canada West Foundation we believe that Canadians must come to grips with how we produce and use energy. It is imperative that we find ways to develop resources and market them in a way that is socially responsible and environmentally sustainable, yet not compromise our economic competitiveness in a global market.”

- Further, in March, the Canada West Foundation released a comprehensive synopsis of papers and statements calling for reform of Canada’s energy policy framework — Finding Common Ground: The Next Step in Developing a Canadian Energy Strategy — which concluded there is broad agreement among Canadians on the need for a well-designed national energy plan. “The overall level of consensus on the need for a Canadian energy strategy is broad and strong, as is the consensus on the need to act quickly,” it concludes.

- At a January Calgary roundtable event sponsored by Enbridge Inc. and presented by Corporate Knights, Pat Daniel, Enbridge president and CEO, said: “I think we need an energy policy — not a national energy program but a policy and strategy in regard to energy in Canada. By gathering ideas from some very interesting thought leaders in the country, some of the very best leaders I think in energy, the environment and the economy in Canada, and by trying to engage a lot of Canadians in this process, we’re hoping to build a very bold, innovative approach to developing an energy strategy, something that aligns not only energy, but the environment and the economy at the same time.”

- Last April, Mike Cleland, Canadian Gas Association president and chief executive officer, highlighting climate change as one of the key challenges facing industry and government in -calling for a firm energy policy, one that accommodates the evolving role of natural gas in the North American economy. In particular, he said Canada will sooner or later have to come around to the matter of carbon-pricing. “We need to get back to energy policy,” he said. “We’ve got to get back to basics. A lot of policy right now is about micro-managing and picking technologies. We’ve got to be thinking about objectives and outcomes for the whole energy system, and what it is we need.”

Clearly, the energy industry itself is willing to cooperate in the development of a national strategy which can leverage our strengths, develop the necessary new technologies to position Canada for a secure and prosperous future and, in the end, benefit all Canadians. How much longer politicians can continue to disregard such advice is anyone’s guess.

One of the few accomplishments to come out of the Cancun climate summit was agreement that carbon capture and storage can be counted as an offset. Given the huge investment of Alberta taxpayer funding into CCS, to the tune of $2 billion, the province must be relieved that, if and when it becomes feasible, it will count for something.

But given the events of the past several weeks, that may not count for much – a number of CCS projects have been stalled or cancelled, raising new questions about its future.

In Australia, the state of Queensland, a major coal producer, pulled its support from a jointly funded flagship CCS demonstration project at a coal-fired power plant. The ZeroGen project was to have been in operation by 2015. The 530 megawatt plant was to sequester about two million tonnes of carbon dioxide a year, making it about twice the size of the planned U.S. demonstration facility revived by the Obama administration, FutureGen.

The government, which had already sunk almost $200 million into ZeroGen, concluded this month that it would not be viable on a commercial scale at this time. (Conversely, the state did open the much smaller Tarong post combustion capture project earlier this month, a pilot using amine-based solvents that could capture up to 1,000 tonnes of CO2 per year.)

In Britain, that country’s first clean coal project was put up for sale this month when its owner, Powerfuel, was put into administration. Powerfuel reportedly fell $1 billion short in its plan to build a 900 megawatt supercritical coal plant at a Doncaster coal mine. The plan could have allowed captured CO2 to be piped to North Sea oilfields for enhanced oil recovery (EOR).

Similarly, plans for a CCS demonstration project in North Dakota were put on ice this month reportedly due to the uneconomically high cost of up to $500 million. Basin Electric Power Cooperative had sought to capture up to 25% of emissions from a 450 megawatt unit of its Antelope Valley Station coal-fired power station at Beulah. The deferral comes after three years of work and a promise by the federal Energy Department to back a loan of $300 million.

Uncertainty about U.S. environmental legislation and the lack of a long-term national energy strategy played into the decision, the company said in a statement. Also a factor was the lack of a mature market for CO2 used in enhanced oil recovery. A nearby coal gasification facility owned by a subsidiary company has long tapped into that market, selling the half of its CO2 emissions that it does capture to the Weyburn EOR project in Saskatchewan.

Meanwhile in Saskatchewan, a decision whether to incorporate CCS to the refurbishment of the Boundary Dam coal-fired power plant was put on hold this month while the federal government dithers on its future GHG regulations. SaskPower announced $354 million would be spent to extend the life of its 45-year-old Unit 3 another 30 years. With a clean coal component, it is estimated the bill will balloon to $1.2 billion.

The stakes could hardly be higher for the success of CCS in Alberta. It is the linchpin for any chance the province has to meet its CO2 reduction targets, accounting for 70% of the projected 200 megatonnes of emission reductions planned by 2050. In other words, the province has gone “all in” for CCS, without which its carbon emissions (already accounting for half of Canada’s total industrial emissions) will soar as oilsands growth and coal-fired power production continues to ramp up in the coming decades.

(David Keith, director of the University of Calgary’s Institute for Sustainable Energy, Environment and Economy, told Canadian Press this month that Alberta is leaving itself vulnerable if attempts to limit global carbon emissions prove successful. “There’s economic risks that comes from the fact that we are not going to keep putting carbon in the atmosphere forever. There will eventually be hard regulations of some kind,” he said. “The economic consequences for Alberta under a really hard regime are catastrophic.”)

After decades of R&D, oilsands producers have made major strides in the past few years advancing the technologies used to tackle their growing tailings ponds, potentially removing that albatross from around their necks. And on a unit-of-production basis, they have brought about major gains to reduce CO2 emissions. But those reductions are overwhelmed by the rapid growth in the industry, pushing overall emissions ever higher. Given the setbacks in CCS around the world in recent months, and challenges by some that it is mere greenwashing that will never be feasible, the time is fast approaching where industry will have to show whether CCS can really work or not – that, or move on to a Plan B.

The tragic loss last week of the Transocean Deepwater Horizon and 11 of its crew — still missing as of the writing of this post — following an explosion while drilling in the deepwater Gulf of Mexico is sure to have reverberations short- and long-term for the industry.

It raises new questions about safety aboard offshore vessels and, at a time when the oil industry was finally starting to make progress on opening up more U.S. waters to offshore drilling, it gives new ammunition to opponents claiming offshore oil drilling and production is potentially hazardous to both crews and the environment.

While the tragedy is a reminder of the potential dangers involved in offshore drilling, one hopes such disasters do not overshadow the tremendous advances made in the offshore drilling industry in recent years that enable drilling for oil and gas from depths that would have been considered unimaginable even a generation ago.

Indeed, there is good reason offshore drilling technology features prominently in New Technology Magazine’s focus on Amazing Wells every year — the technological advances packed into these massive rigs are simply too amazing to ignore. Entering service in 2001, the $500-million Deepwater Horizon was, along with other rigs of the latest generation, a technological marvel from top to bottom.

Consider, for example, their use of computer-controlled dynamic positioning systems that can maintain a vessel’s position to within metres in open water amid 30-foot waves and 70-mile-an-hour winds, without mooring or anchoring. Or consider directional drilling techniques that can pinpoint the drillbit into reservoirs sitting 40,000 feet below the seabed, in waters up to 12,000 feet deep.

We have written about Transocean’s vessels before, and one of the stories in this year’s Amazing Wells feature in June will detail BP’s Tiber discovery, which set a new world standard for the deepest oil well of all time, drilled by none other than the Deepwater Horizon. As was posted to our Daily Update page last September, the semisubmersible rig drilled the well to 35,050 vertical depth and 35,055 feet measured depth (MD), or more than six miles, while operating in 4,130 feet of water.

We are thankful that 115 of the Deepwater Horizon’s crew of 126 were rescued, and our thoughts are with those who are missing and their families. The loss is certainly a setback for the industry (at a time when BP was reportedly close to announcing some good news — a significant oil discovery at the Macondo prospect), and investigations and lawsuits (two already announced) are sure to follow.

In the end, it is hoped the industry will co-operate in a full and transparent way with any investigations that follow, and use any learnings to improve further on the safety of this very complex, high-tech industry. It is also hoped the industry does not lose the audacity to continue to challenge the limits of exploration as it deals with unfortunate tragedies such as this.

In our haste to set limits on, and eventually reduce, global warming-causing emissions, there may be one important aspect we have overlooked — who will we rely on to quantify, assess and report emissions, so we know how much we are releasing and how much is cut.

As costs to emit carbon dioxide, methane and other greenhouse gases are introduced, either through a carbon tax or a cap-and-trade system, a proper accounting becomes vital.

The field is so young there is a critical shortage of trained personnel, according to a Canadian Standards Association speaker who outlined the problem at a Petroleum Technology Alliance Canada (PTAC) conference this week. While there may be post-secondary training programs generally to train pollution monitoring and abatement professionals, there are no comparable professional programs and standards for GHG calculation and monitoring.

And the risks associated with not having a trained and competent workforce to perform this function are potentially huge, as transparency and credibility will be critical. “If we want to prevent an Enron-type scandal, we want to have solid professionals working in this area,” said the CSA’s Pierre Boileau.

A recent State of the Industry Report that surveyed 700 international industry scientists and professionals (The 2009 Greenhouse Gas & Climate Change Workforce Needs Assessment Survey Report) showed a remarkable 88.9% believe the carbon performance management industry will at least double in the next five years; 83.9% report a shortage of qualified GHG staff and experts to undertake current needs and planned initiatives; and 86.8% believe there will be a shortage of qualified experts to support new emissions trading schemes and other policies. Interestingly, 64.5% also believe carbon markets will eventually grow to trade volumes equivalent to or greater than that of other major commodities.

To address this growing labour market gap, the CSA has recently introduced certification programs in the areas of GHG verifiers (to confirm the accuracy of carbon performance reports) and GHG inventory quantifiers (to quantify, assess and report GHG emissions). Details of both programs are available on the CSA website.

As a sector heavy on GHG emissions, the oil and gas industry ought to be concerned about the shortage. Boileau suggests, for example, that every company that is regulated for emissions in some way will need a qualified verifier. Certainly, any company seeking carbon credits for trimming emissions has a vested interest in making sure they can authoritatively quantify their cuts. Hopefully, enough young people will be lured into such newly created “green job” professions to forestall a crisis as we ramp up GHG emissions monitoring and compliance.

The oilsands sector has long been a target of environmental organizations and green-leaning jurisdictions like California, but the latest sideswipes come from some rather more unexpected sources — a major German bank and the International Energy Agency.

First came the report from Deutsche Bank, predicting “the game-changing emergence of a powerful disruptive technology” that will kill demand for oil about the same time as production peaks, just seven years from now. “This is the end of the 20^th Century of Oil; we are entering the 21^st Century of Electricity,” it declares. “We now have a ‘disruptive technology’ in the shape of the hybrid and electric car, that will very likely have a far greater positive impact on oil efficiency than the market currently expects.”

Oil demand “will fall dramatically once the high efficiency fleet hits critical mass; competing structurally cheaper natural gas will exacerbate the pace of demand decline. In our view global oil demand peaks in 2016, with oil prices, before a long, tandem, decline.”

As demand collapses, the costliest sources, like the oilsands, would, of course, be hardest hit. “The value of high capex intensity, long lead time, currently un-developed oil, such as undeveloped Canadian heavy oilsands, oil shales, and Brazilian pre-salt and other ultra-deepwater plays, could be far lower than the market currently expects.”

The least safe investment, the Deutsche Bank report concludes, is “clearly Canadian heavy oilsands and other high capex, carbon-intensive oil recovery processes…. It is a simple fact that the most dramatic cuts in planned capex in the current downturn came from Canadian heavy oilsands plays Suncor, Petro-Canada and Canadian Natural, and that those cuts were huge, approaching 70% within months of the oil price downturn.”

A not-much-less bearish assessment was offered up by the IEA in a report entitled, Transport, Energy and CO2: Moving Toward Sustainability, suggesting that in order to achieve the necessary deep cuts to GHG emissions by 2050, vehicle fuel efficiency be improved 50% by 2030. That could be done using technologies and practices that are cost effective today, it says, followed in later years by a “revolution in technology” likely built on a combination of electricity, biofuels and hydrogen.

Together with shifting travel habits, the prescribed emissions reductions could be achieved — contrary to what some global warming skeptics would have us believe — at lower costs than many assume, it concludes. But conservation has to start quickly. “2050 is only 40 years away. To put transport on a sustainable pathway within that timeframe, current trends must be changed substantially within the next five to ten years. Strong policies are needed very soon to begin to shift long-term trajectories and to meet interim targets.”

Both scenarios suggest the oilsands, and those who invest in them, better start thinking long-term about markets for costly synthetic crude, and about what can be done to bring down costs and GHG emissions in a hurry. Technology is all too often thrown out as the solution to the latter two challenges — there may be no time like the present to prove that so.

With forecasts of between three and six million barrels per day of oilsands production by 2030, the rewards for the Alberta and Canadian economies are potentially enormous.

But with the rewards come risks, particularly the threat of environmental degradation. It is a risk the Petroleum Technology Alliance Canada (PTAC) would like to see tackled early on. To that end, the Calgary-based organization is seeking participants to join a Clean Bitumen Technology Action Plan (CBTAP).

In what it concedes is “a tall order,” particularly in recessionary times when costs of development remain relatively high, PTAC is seeking to find suitable technologies to produce commercially from the resource while minimizing the environmental footprint. Early indications are that industry is interested. In a Technical Information Session July 15, about 80 industry representatives came to learn more about the initiative. Companies have until July 31 to sign on to the initiative.

“My gut feeling is that many companies are going to participate,” PTAC president Soheil Asgarpour said after the presentation. A similar attempt to establish an action plan in the midst of the oilsands boom two years ago fizzled out. “Unfortunately, everybody was too busy,” he said. “The time, I think, is right. Now people can afford spending time to look at technology.”

In his presentation, Asgarpour stressed the many benefits of a collaborative approach — if companies can be convinced to share their research and development efforts. “The key question [is], are we going to get them to the point of sharing information, because really, that’s the biggest hang-up that we have to overcome — sharing knowledge and information,” he said. “If we keep technology to ourselves, collectively we are all going to suffer.”

PTAC, he notes, has established a solid track record over 13 years of demonstrating the value of using a collaborative approach in successfully launching more than 250 research and development projects. As much as $50 worth of technology is developed for each $1 in company investment, he said. While reducing the environmental footprint is the main focus, reducing costs is also a priority.

Though the most obvious environmental challenge is curtailing greenhouse gas emissions as production grows, PTAC also warns of “the potential for a permanent tailings ponds legacy” as well as the need to mitigate impacts on air and land. Both improvements to present day methods of surface mining, steam-assisted gravity drainage (SAGD) and cyclic steam stimulation (CSS) techniques and brand new extraction technologies that could significantly reduce environmental impacts will be examined.

The CBTAP would start with a review of all existing technologies and studies to identify gaps, followed by workshops and topical reports leading to an authoritative document to serve as an action plan for technology development and a foundation for future policy, strategy and investment decisions, according to PTAC. Among those already expressing an interest were ConocoPhillips, Enbridge Inc., EnCana Corporation, StatoilHydro, ISEEE, Alberta Energy Research Institute, and the Canada School of Energy and Environment.

For anyone who might have seen the onshore North American natural gas sector as a sunset industry in recent years, the shale gas story must have come as a rude awakening. It seems not a week goes by without news of growing plays, new players entering the market, as well as novel and better techniques to drive costs ever lower.

Just by glancing at the headlines in the past week, for example, we learn that Talisman Energy Inc. has reassessed its unconventional gas in place at 132 trillion cubic feet, 30 tcf of which may be recoverable as it drives break-even prices to $4; Enbridge Inc. will build the $1-billion LaCrosse pipeline based on support from producers in the Haynesville Shale region of Texas and Louisiana; StatoilHydro, after spending $3.38 billion to grab a stake in Chesapeake Energy’s Marcellus Shale acreage last November, plans to work with Chesapeake to assess 14 different shale plays worldwide; and Eni entered a strategic alliance with Quicksilver Resources Inc. to acquire 27.5% interest in the Alliance shale gas area in Texas, also seeking to gain expertise in exploiting unconventional gas opportunities around the world.

With technically recoverable shale gas from U.S. and Canadian deposits now estimated at well over 300 tcf, there is also increasing speculation conventional and offshore natural gas exploration and development, LNG expansion and arctic pipelines could be undercut as shale gas production continues to boom. Things are changing in a hurry.

And almost lost among such news was a report from the U.S. Department of Energy that it has discovered what it called the world’s first resource-quality gas hydrate deposit in the Gulf of Mexico. As large as the shale gas resource might become, it could be dwarfed by that of gas hydrates, which surpasses all other oil and gas deposits combined. Gas hydrates may remain beyond technological and economic capabilities today, but like coalbed methane and shale gas before it there is little doubt that puzzle, too, will some day be solved. All of which leads me to a couple of conclusions: technology changes everything, and if anything, natural gas on this continent is a sunrise industry, with a long day ahead of it.