China has very little access to energy sources outside of coal. Even as the world’s leading installer of alternative energy (wind and solar), the difficulties of supporting the world’s #2 economy has kept the search for energy technologies going for many years.

One of the most promising alternatives to coal is natural gas. Over the last few years, estimates for how much shale gas China may possess has gone from some to maybe as much as the USA to far more than the USA.

China has never had any conventional natural gas to speak of, but over the last several years, it has become apparent that China has a tremendous amount of shale gas (unconventional).  The United States is global leader in the technologies and extraction of shale gas in part because of the many decades of experience in geology and operations during the age of conventional gas.

Today, the combination of horizontal/directional drilling and hydraulic fracturing have turned a resource believed to be scarce into an oversupplied market looking for new markets. Happily, EmberClear and others plan to create that new demand in the USA by producing electricity and energy rich liquids like transportation fuels and industrial fluids.

China, on the other hand has too much demand and needs more supply to keep prices affordable and improve their emissions footprint.  Beijing’s challenge is to figure out how competitive shale gas is with coal for their own country. With little geology and history, China’s catch-up plans start with gaining fundamental knowledge.

A rush to conduct geological surveys plus hundreds of billions invested into North American companies in the oil and gas food chain is the start.  On October 26, 2012, the first auctions for leases will be conducted and the wildcatters from all over the world will want to gain exposure despite very limited scientific and engineering information being available.

A great interview on CNBC (starts about 50 seconds into the clip) in late September 2012 has the very successful billionaire investor Wilbur Ross discuss the upcoming auctions. While the interview hops quickly from one thought to another, I believe it captures some of the great aspects of the global industry for shale gas:

1. China and the USA is the best route to bring China’s shale gas potential to market.
2. China’s tensions with Japan will play a role in shale gas as Japan represents one of the best long-term customers for Chinese shale gas and its byproducts.
3. Limited knowledge of the geology is not stopping progress. Given the potential size and importance to China, everyone is moving ahead assuming similarities in successful shale gas production are greater than any differences. Furthermore, any differences or challenges can be overcome with augmenting of technologies and practices.

Many readers already know about our relationship with the world’s largest power company, Huaneng Power Group. While it’s natural to see the biggest companies take interest, it’s also worth noting smaller companies and even companies outside of China have taken keen interest in the shale gas life cycle.

South Korean and Japanese companies are highly motivated to get involved because both countries use large amounts of energy and both have no reserves of either conventional or shale gas. These two mega-economies import their natural gas requirements at world record setting prices often three times the price of the same commodity here in the USA.

As we near the start of construction of our Good Spring NGCC electricity plant, it’s no wonder interest from around the world is high. Our plant will represent the finest example of an efficient natural gas combined cycle electricity plant.

Using turbines so efficient we obsolete similar plants just built a decade ago.  A measurement of how efficient an electricity plant performs often measure how much energy a certain type of technology and fuel is required to produce one kilowatt-hour of electricity.  This measurement is called the heat rate and is expressed as how many Btu’s it takes to create that Kwh.

Our plant has a heat rate of 6,500 Btu/Kwh. Good Spring NGCC  is over 20% more efficient than the industry average natural gas power plant in the USA during 2010 (latest year of info available). When compared to other major sources of power, our Good Spring NGCC will be over 37% more efficient than the average coal or nuclear plant.

When one considers how inexpensive natural gas has become and how productive the Marcellus Shale region has become, the economic advantage is clear. Like so many times in the past, the rest of the world wants and needs some Yankee ingenuity. Isn’t that what really makes America unique?