North America’s fossil fuels market has been transformed by unconventional extractions – US shale plays and Canadian oil sands – and light, tight oil is coming of age, according to the International Energy Agency’s (IEA) executive director.
That transformation is becoming widespread as other areas across the world such as Australia and East Africa join the revolution, where expectations are high for LNG exports. Fueling the growth is technology, with eyes worldwide centered on the US and how the country works to improve technology, lower impact on water resources, and better public perception.
“The revolution of this unconventional gas and the rise of light tight oil are already impacting world markets and these will continue to do so,” Maria van der Hoeven, IEA’s executive director, told the crowd gathered Aug. 17 at Rice University’s James A. Baker III Institute for Public Policy. “Cheaper and more secure sources of domestic energy are certainly welcome. But particularly in the case of gas, this revolution is spreading geographically and displacing coal.”
That means energy security and reduced carbon dioxide emissions globally.
Data presented during the talk revealed global resources exceed 250 years of current production. In Eastern Europe/Eurasia, proven reserves and other recoverable conventional gas are nearing 4,942 Tcf, with just less than 3,530 Tcf in recoverable unconventional gas. In North America, proven reserves and other recoverable conventional gas are just more than 1,412 Tcf, and recoverable unconventional gas is between 2,824 Tcf and 3,530 Tcf.
“North America can be a competitive source but it will take industry to make that happen,” Van der Hoeven said. “And there is little doubt that if low gas prices continue, these will provide a competitive advantage for the US economy for a long time. We project North America to become a net exporter.”
Already, countries hope to emulate the US unconventional gas experience, she added, noting not only is shale gas poised to be exported but also shale gas technology.
Asia will most likely be the top seeker of LNG supplies.
“Given the uncertain prospects of nuclear power in Japan, the political drive to clean up the energy system in China, and the acute energy shortages in India, Asia is intensely looking for LNG supplies,” she said before putting the spotlight on China.
There, coal dominates energy usage. Van de Hoeven noted coal mining in China produces more energy than oil production in the Middle East, creating environmental concerns. But the country is working toward improving the situation. It regularly invests in and learns advanced shale gas techniques, oftentimes taking lessons from the Eagle Ford shale play.
The IEA expects light, tight oil to grow by 1.1 mb/d by 2016 as producers target plays rich in liquids and tight oil.
Some forecasters predict the US could become energy independent because of success shown with shale plays.
“We need to keep our estimations in check however,” Van der Hoeven said. “The prospect of energy independence is very complex.” Factors include energy demands, infrastructure constraints, and oil prices. Nonetheless, “Diversity is a good thing for energy security.”
But whether unconventional gas reaches its potential rests on answers to some uncertainties. The greatest one involves policy, according to Van der Hoeven. “We must avoid excessive regulation, which chokes innovation and threatens the viability of the industry.” On the other hand, effective safeguards and laws must be in place with oversight.
The words touch on principles associated with the “Golden Rules,” as Van de Hoeven identified them. The rules are essentially guidelines for policymakers, regulators, and operators among others to follow when addressing environmental and social issues.
The Golden Rules are:
• measure, disclose, and engage;
• watch where you drill;
• isolate wells and prevent leaks;
• treat water responsibly;
• eliminate venting, minimize flaring, and other emissions;
• be ready to think big; and
• ensure a consistently high level of environmental performance.
“We have called them Golden Rules because the application can bring a level of environmental performance and public acceptance that can maintain or earn the industry a ‘social license to operate’ within a given jurisdiction, paving the way for the widespread development of unconventional gas resources on a large scale, boosting overall gas supply and making the golden age of gas a reality,” stated the IEA’s Golden Rules for a Golden Age of Gas book. “The Golden Rules underline that full transparency, measuring, and monitoring of environmental impacts and engagement with local communities are critical to addressing public concerns.”
Those concerns include developments’ impact on the environment, including land usage, air pollution, and water resources, which are scarce in some areas. Already, backlash against hydraulic fracturing is being witnessed in France and the US. If the social and environmental impacts of production are not addressed properly, Van de Hoeven said, it could halt the revolution.
“We must work to ensure that these vital resources can be developed without endangering our environment or the welfare of our citizens,” Van der Hoeven said. “The risks are real that public sentiment can derail these technologies. So let us embrace sensible rules to maintain credibility and public confidence. It’s not just good PR or good for the environment or good for our security. It’s all of these. It’s good business.”
Contact the author, Velda Addison, at firstname.lastname@example.org.
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