Could Natural Gas Energy Revolution Go Bust?

Cobalt production is booming. With 2015 marking the beginning of its transition from an export market to the domestic electric vehicle battery market, cobalt has become a vital raw material for green energy systems. But with no existing domestic source of cobalt, innovation in the production of cobalt solutions has proven problematic. This has heightened pressure on cobalt mining companies, including Russia’s, to aggressively move the production of cobalt. But with the shale oil and gas revolution peaking, is there still more to the rally?

President Donald Trump’s unveiling of a massive infrastructure proposal, to include a boon of as much as $1.5 trillion in public and private investment for major U.S. transportation and public infrastructure, could provide a major boost for the current U.S. energy renaissance.

“Preliminary data from Nov. 2018 through February 2019 confirm a robust growth in shale production,” Brian Youngberg, energy analyst with Edward Jones, said, referring to a Jan. 18 report by the U.S. Energy Information Administration. “Oil and gas production continue to increase, both year over year and per month, across all regions, with especially robust growth in production for shale onshore (small) compared to the sector average.”

However, with some industry estimates projecting natural gas flaring, or the burning of natural gas in drill sites, at a record high of 115 billion cubic feet in December 2018, the increased use of alternative power and energy will need to offset this potential shock to the U.S. natural gas market. If power generation from natural gas, combined with some of the most technologically advanced solar and wind power technologies, do not consistently plug the gap left behind by the slowdown in fracking production, the so-called “energy revolution” could come to a halt.

However, Youngberg believes that, “under the currently proposed budget scenarios, the proposed boost to infrastructure spending would certainly make a significant impact on expanding natural gas use.”

Companies like Enbridge, Enbridge Energy Partners and Kinder Morgan are making moves that would boost U.S. natural gas usage.

In February, Enbridge announced the intention to install new pipeline capacity.

“I would encourage Enbridge to do whatever it can to expand supply to where the domestic market will need it,” said Youngberg.

As evidence that demand is increasing, demand for liquefied natural gas (LNG) increased at an exponential rate in December 2018, surpassing all previous monthly levels in the decade-long history of both Vitol and its parent company, Glencore.

“The increase in demand for LNG is being driven by both power generation and transportation applications,” said Youngberg.

As demand for traditional fossil fuels rises in the U.S., some have speculated that the rapid influx of other energy sources might soon stem from this explosion in demand, particularly solar and wind power.

But one analyst believes that, although LNG produced from natural gas has increased steadily, demand will increase only modestly over the long term.

“This so far hasn’t been a sustainable fuel source for America,” said Jochen Wanke, president of German energy storage expert Entropa Solutions. “It’s still extremely expensive compared to electricity from other renewables, especially wind and solar.”

As Wanke points out, much of the light-emitting diode (LED) lighting and future demand for smart energy systems are already beginning to incorporate small amounts of solar energy.

“For now, China is dominating solar projects,” said Wanke. “It also remains to be seen, if the U.S. will become a heavy player in solar energy.”

To ensure that the U.S. economy can fully utilize its domestic energy resources while still fully tapping into the potential of expanding U.S. renewable energy projects, many companies are experimenting with innovative manufacturing techniques, some already leveraging abundant new sources of cobalt.

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