Economic slump could herald infrastructure shortage, TransCanada Corp. boss says
Project delays caused by the current economic slump sow seeds of future energy supply shortages and price hikes
He adds that there is more to the emergence of shale production than the technological advance of extracting gas from a previously unavailable source by using a combination of horizontal drilling and multiple “fraccing” or fracturing dense rock formations. It was the high price of gas that made the use of the new methods economical. Kvisle points out that neither of these methods is new. The advance is that the techniques have been combined, driven by prices that were high enough to justify the innovation.
Shale gas plays are also not going to sate North American gas demand at the expense of the Arctic pipeline projects that TransCanada is heavily vested in, says Kvisle. Provided they ever get past the drawn-out northern regulatory jumbles, the Mackenzie Valley and Alaska pipelines are going to contribute around two and four billion cubic feet a day respectively. The combined total will only be six billion cubic feet or less than half of the 13 to 16 billion that North American producers have to replace annually.
It doesn’t take Kvisle’s degrees in engineering and business management to figure out that once the current perfect storm of new supplies, lowered demand and low prices passes, capital investments in gas that were put on hold pose risks of swinging the supply and demand dynamics in the opposite direction. And that is not even accounting for an increase in demand that he projects will occur once the environmental cleanup costs of coal make the traditionally cheapest fossil fuel much more expensive or less available – or both, if regulations favor cleaner burning fuels and prevent new plants from opening up.
On the flip side of his concerns about infrastructure constraints that could lead to price spikes and shortages, Kvisle talks about natural gas as the fuel of the future and an energy source rife with possibilities. Problems with alternative fuels will be a large driver of the shift to gas, he claims.
“Everybody would love to see hydro and wind and solar, and all these other clean sources of electricity, contribute much more significantly. But the suite of opportunities just isn’t there,” Kvisle says.
“I personally would love to see nuclear contribute a much more significant component.” TransCanada is deeply involved in atomic power through part ownership of the Bruce generating station in Ontario. “But if a nuclear plant isn’t under construction today or has not been announced and submitted for regulatory approval, you won’t see any power coming out of it until 2020,” he says. “What is available is an enormous endowment of coal.”