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Shale gas producers must adhere to best practices: IEA head

Increase font size  Decrease font size Date:2012-08-29   Views:457
The shale gas revolution that has swept across North America in recent years can dramatically reduce US energy imports and be expanded globally, but only if gas producers can convince governments and the public that extraction can be done safely and in an environmentally friendly way, the executive director of the International Energy Agency said Friday in Houston.

"Companies need to realize they need to be transparent about what they're doing and they need to take people's concerns seriously," said Maria van der Hoeven, speaking at the Baker Institute Energy Forum at Rice University.

"And if anything happens -- if there's a spill or something -- companies have to act immediately, and they have to act in proper ways, because otherwise, there will be problems," van der Hoeven said, addressing members of the exploration-and-production industry.

"If somebody asks you something or when a government asks something or the press asks something and they get an answer of 'you can be reassured,' people don't believe you."

The dramatic growth of unconventional gas supplies in the US and its subsequent effect of lowered gas prices are the major factors driving the international gas markets, van der Hoeven said.

"In the US prices are at rock bottom, around $3/MMBtu. In Europe the impact is indirect, by LNG supplies being diverted from the United States," she said. Combined with the increasing effect of gas-to-gas competition in Europe, "this keeps prices in the middle range of $9-$11/MMBtu."

In Asia there are no spot gas markets and LNG and gas prices are derived from benchmark oil prices, van der Hoeven said.

"This leads to a very high price level, in Japan as high as $18/MMBtu," she said.

"We can expect this to change in Asia. Gas needs efficient, transparent markets to prosper. And given the uncertain prospects of renewed nuclear power in Japan and the political drive to clean up the energy system in China and the acute LNG shortage in India, Asia is intensely looking for LNG supplies," van der Hoeven said.

"North America can be a competitive source" of LNG supplies for gas-consuming nations in Europe in Asia, she said. "There is little doubt that if low gas prices continue, they will provide a competitive advantage for the US economy for a long time. We project North America to be a net exporter."

But beyond exporting the gas itself, North America is also poised to become a major exporter of shale gas technology, as other nations seek to develop their own shale gas reserves, van der Hoeven said.

"Now countries around the world are looking to emulate the North American natural gas experience. China and Australia are leading the way. There's also a great deal of interest in parts of Europe, for instance, Poland, and Latin America and elsewhere," she said.

However, she warned that in order for the promise of an abundant shale gas future to be fulfilled, in the US and elsewhere, gas producers must recognize the need to incorporate best environmental and safety practices into all their shale gas operations, van der Hoeven said.

She urged E&P companies to adopt the recommendations in a special report the EIA released this spring, "Golden Rules for a Golden Age of Gas," which she said provides a road map for "good governance, good management and good oversight" for the E&P industry.

 
 
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