Unconventional Gas: Fitting In
World energy demand is driven by increasing population and increasing wealth, according to Peter Wood, Petroleum Engineer, Office of the Chief Economist at the International Energy Agency (IEA), who spoke about where unconventional gas would fit in to the world energy mix at the Unconventional Gas & Oil Summit in Warsaw, Poland.
He showed the “current,” “new,” and 450 (parts per million of CO2) scenarios for world primary energy demand after 2010 until 2035; as the three scenarios headed in slightly different trajectories, the graph looked like a three-tined fork.
Demand growth was coming from developing countries, he noted, China making up about 30%, China and India making up about 50%. The rich world, said Mr. Wood, was contributing very little to this growth: “Increases in demand are offset by gains in energy efficiency.”
He said, “Every energy source is growing, gas and renewables are growing more than any. We see that you need both.”
Cheap gas, he said, had the potential to displace coal, in contrast to oil, which was being displaced. Gas bore a good outlook, according to him.
“We’ve produced probably about 150 tcm and there are another 400 tcm or so of conventional gas to go, and if you have unconventional gas, then you get almost 800 tcm. Perhaps an easy way to express that is about 120 years of gas volumes known today, and if you include unconventionals you’ve got nearly 250 years – in the energy world, this is actually quite a lot of time,” Mr. Wood explained.
He noted that the largest producers were Russia and the US, and his presentation showed how unconventionals production in the US would predominate by 2035; the future was bright for unconventionals in China, too.
What happened if everything went well for gas? “What we find is that unconventional’s contribution to world gas supply would increase from about 12% to about 24%, driven by growth in tight gas, CBM and shale gas.”
He projected an increase in the trade driven by LNG, increasing from nearly 400 bcm to over 1 tcm by 2035, with Australia becoming a leading LNG supplier.
Meanwhile, by 2035, Russia was likely to have leveraged a considerable proportion of its natural gas volumes to China, reducing European Union exports from 61% to 48%.
Then, there was what Mr. Wood presented as the “Low nuclear case.”
“What happens if they don’t increase nuclear use beyond 2009? If you don’t build nuclear plants, you have to build everything else: more coal, etc. leading to some emissions compared to zero emissions.”
Meanwhile, unconventional gas, he noted, was testing regulatory regimes.
“There’s a lot in the newspapers and it is stopping things,” he remarked. “You can go to jail in France if you do hydraulic fracturing. The treatment and disposal of water is essential, and there’s a need to eliminate gas venting.”
Mr. Wood reported that the IEA would come out with a set of “Golden Rules,” high level suggestions for how to address such issues, which the organization was working on. The report would comprise 40 pages.
He commented, “We’re looking for between 5-10 key areas where we think society is looking for a steer, like disclosure of fraccing fluids. Up until a year ago there was some discussion about disclosure of fracturing fluid.”
There would also be a rule around water: “People don’t know how much water the world uses.”
Regarding the IEA Golden Rules, he said, “A regulator will have to look at it, pick and choose and develop these further.”