Eye on the Market | November 21, 2011 J.P Morgan Topic: The quixotic search for energy solutions The other good news relates to the discovery of new natural gas reserves. US shale gas production is up 14-fold over the last decade, and the EIA projects that by 2035, the US will no longer be a gas importer. Yes, the Energy Department recently slashed estimates of gas in the Marcellus Basin from 410 trillion cubic feet to 84 trillion; this followed the latest survey by the US Geological Survey, which last estimated the basin at 2 trillion cubic feet in 2002. However, the historical imprecision of peak oil/gas estimates make it a difficult science. To be clear, shale gas production will be critical; EIA projections to 2035 assume that rising shale gas production will offset declines in almost every other gas category (see p. 7). Deep sea gas reserves are a potential positive, but marginal costs may be an issue. As for shale gas exploration and radium (naturally occurring and surfaced in sometimes dangerous concentrations), and fracking chemicals themselves, the cost of natural gas electricity appears low enough to absorb costs related to wastewater collection and treatment. Eventually, replacements will be needed for fossil fuels. What “art of the possible” solutions do is give the world more time to find them. In the meantime, many scientists would prefer to put as much emphasis on efficiency as on new technologies. Examples include 95% efficient natural gas furnaces, LED/fluorescent lighting and more insulation. The largest direct energy saver in a 2010 report by the Pacific Northwest National Laboratory for the Department of Energy: deployment of diagnostic devices in residential and commercial buildings to manage HVAC systems and lighting. A potential game-changer: electricity storage that works, in commercial scale What would potentially change the energy equation is storage. The world has been generating commercially available electricity for over a hundred years,