Editor's Comments

While the price of oil – and, in tandem, gasoline – is steadily on the rise, the price of another commodity has quietly dropped. Natural gas is running at much lower rates than other petroleum products, and that lower price is catching the attention of numerous people in government and industry.

Natural gas is used in a range of situations, and its use in transportation has become a bigger portion of that use in recent years. Now, with average gas prices in the U.S. creeping towards $4 a gallon, the question of natural gas as a vehicle fuel is being considered again. In fact, legendary oil man T. Boone Pickens addressed the topic recently in an interview with CNN.

Pickens said that while his neighbours are paying $4 a gallon for gasoline, he’s paying about $1 a litre for natural gas – taken from the lines at his home – to fuel the Honda he drives to his office daily.

He suggests that natural gas should be a focus for governments and regulators as a method to ensure energy security for North America in the long run.
That’s not unlikely, considering the natural gas reserves being unlocked on this continent. The advent of shale gas extraction techniques has boosted the estimated amount of gas available in North America to the point where it’s likely we have a 100-year supply at current extraction levels (according to Natural Resources Canada).

The Canadian Energy Research Institute is expecting prices to remain low for gas – under the $5 per MMBTU mark – until at least 2020. (Henry Hub spot price, the standard for natural gas pricing, was $2.98/MMBTU to end 2011.) And supply is steadily increasing, especially in Western Canada. That has spurred interest from governments.

B.C. Premier Christy Clark made natural gas a key part of her government’s plans in February when she announced the province’s intent to support liquefied natural gas export facilities, powered by clean energy from the province’s existing grid. The intention of the plan is to boost the value of B.C.’s natural gas reserves while creating new jobs – the government expects 9,000 construction jobs and 800 long-term positions to be created with the construction of three new LNG terminals. Unlike the hotly-contested Northern Gateway pipeline proposal, Clark’s LNG strategy has general support, especially among First Nations in north-central B.C.
Natural gas has been popular for powering generators and other large engines for some time. Smaller, more efficient engines are continuing to be developed, replacing diesel in large trucks and other vehicles.

With the supply of natural gas expanding as new technologies help producers reach more reserves all the time and a steadily growing number of ways to make use of that gas, we can certainly expect to see more discussion of this commodity – especially if the prices stay low.