Fossil Fuelers on Borrowed Time?

Fossil fuels come in a range of flavours - gas, coal, oil, bitumen - but their days are numbered.

Supposedly one of the cleanest, natural gas, is the subject of a new industry report that renewables pose a mortal threat to the viability of LNG projects.


The sheer volume of shale gas in North America has blinded many of its key promoters to an important dynamic: "Namely the fast progress of renewable energy technologies capable of providing an alternative to one or more of the major sources of demand for LNG, electricity production and in the future perhaps heating," the report found.

The report was prepared by the Brattle Group, an independent firm that "answers complex economic, regulatory, and financial questions for corporations, law firms, and governments around the world."

...To date, not one of the LNG export projects proposed in Canada has gone to the construction phase, "which provides further evidence of the uncertain need for North American LNG," the report says.

It warns that investors should not regard the LNG glut as a temporary matter, because the declining cost of wind and solar energy combined with their rapid adoption in many jurisdictions such as Germany and China could significantly dampen global demand for methane as well.

BC premier Christy Clark will probably shrug off this warning as she has others before it. To her, maintaining the illusion of a bountiful LNG industry has a political value that eclipses reality.

The B.C. government once based its controversial advocacy for LNG on rising Asian gas prices, which at one point exceeded $15/MMBtu several years ago. But they have now collapsed to roughly $6 to $7/MMBtu.

LNG projects can't be profitable without prices being around $11 because of the high cost of extracting and fracking shales in northeast B.C., analysts say.

The report has to be unsettling news for all high-carbon, high-cost fossil fuels including Athabasca bitumen.