Though the conference sought to cover all forms of energy, the conversation frequently turned to natural gas.
Speakers at the 29th IHS CERA Week in downtown Houston last week fawned over the prospects of natural gas – greater supply, greater demand and new technologies that make rectifying the two increasingly possible – and frequently tossed around words such as “booming,” “unpredicted,” “revolutionary” and likened development during the past decade as a “blustering shale gale.” (One speaker joked, “This has really turned into a gas conference.”)
“This is simply the most significant energy innovation so far this century,” said IHS CERA Chairman Daniel Yergin. “As recently as 2007 it was widely thought that natural gas was in tight supply and the U.S. was going to become a growing importer of gas. But this outlook has been turned on its head by the shale gale.”
Energy demand by 2030 will be 40 percent more than in 2007, with China and India accounting for more than half of that increase, according to the International Energy Agency. At the same time, countries are trying to find ways to reduce greenhouse gas emissions.
Natural gas drilling has unlocked a 100 year supply of the fuel in North America alone, and its proponents say natural gas can be the bridge between fossil fuels and a renewable energy future.
“I remain certain climate change will be one of the key forces shaping business and policies over the next decades,” said Statoil President and CEO Helge Lund, adding, “Dealing with climate change, I’m constantly surprised by the tendency to focus on the most-expensive and difficult measures. I believe the one climate measure in the U.S. and in Europe that has been hugely underestimated and under-communicated has been the use of natural gas… Gas is a climate measure that is available now.”
Natural gas proponents say its supply – new shale discoveries are being made worldwide – combined with the fact that it emits half as much carbon as coal make it attractive to electricity producers and policy makers. The fuel is flexible, too, and can be used in transportation. It’s cheap at the moment compared to other fuels. And natural gas development contributed $385 billion to the U.S. economy in 2008.
“With such good arguments, it remains a mystery to me … why decision makers remain somewhat reluctant to fully exploit the benefits of gas,” Lund said. “And here I think we all have a promotion challenge ahead of us.”
Simply put, gas has a brilliant future, said Philippe Boisseau, president of gas and power at Total, which recently agreed to pay Chesapeake Energy Corp. $2.25 billion for a 25 percent stake in its Barnett Shale assets.
“There is a need for gas long-term, and everybody is really right now focused on the oversupply, which is driving prices down in the whole planet, including in the U.S.,” he said. “But very quickly this bubble will be reabsorbed by the growth of gas demand.”
Although gas has gone from a dearth to a glut over the past decade, there’s no sign development will slow.
RasGas Company Ltd.’s Hamad Rashid Al Mohannadi, managing director and CEO, said his company looks forward to delivering Qatari LNG to a Texas receiving terminal as soon as September. At the same time, Gazprom is mulling a decision to go forward with plans to ship LNG to the U.S. market, or scrap those plans.
When Al Mohannadi was asked whether LNG can compete with the massive shale gas deposits found across North America, he responded: “The question is whether shale gas can compete with LNG.”
Saudi Aramco’s Khalid Al-Falih, president and CEO of the world’s largest oil-producing company, said Saudi Arabia has made recent gas discoveries in the north of the country and in the Arabian Gulf, and will attempt to increase its own use of the fuel to allow for more of its oil to be exported abroad. The company also investing increasingly more money in gas projects, he said.
BP was one of the first major companies to see potential in shale gas resources, and in the company formed two joint ventures with Chesapeake Energy Corp. to acquire acreage and expertise in the field. BP’s Chief Executive of Exploration and Production, Andy Inglis, called the rise of shale gas “maybe one of the largest shifts” he has seen during his career.
