The United States "may now be sitting on between 50 and 100 years worth of recoverable natural gas," and more than a century's worth of undeveloped gas is locked in place around the world, BP plc CEO Tony Hayward said Thursday.
Speaking to delegates at the World Gas Conference in Buenos Aires, Argentina, BP's chief urged world leaders to push gas over coal until renewable energies are more deployable. His speech echoed calls by other executives at the conference, who also urged a turn toward more global gas consumption (see related stories).
Based on the technological breakthroughs that have enabled the United States to build gas reserves, "we believe there's the potential to find and develop tight gas and shale gas in North Africa and the Middle East, Europe, China and in the southern cone of Latin America," said Hayward.
"There's also potentially high quality coalbed methane in Australia and Southeast Asia. All in all we estimate that as yet undeveloped or unidentified unconventional gas could contribute a further 4,000 Tcf to gas resources over the next few years."
Just four months ago BP issued its annual Statistical Review of World Energy for 2008, which estimated that proven global gas reserves had reached more than 6,500 Tcf, or 1.2 trillion boe, with enough reserves in place to provide the equivalent of 60 year's consumption at current rates (see NGI, June 15).
Adding in a revised estimate for undeveloped or unidentified unconventional gas reserves "would add another 60% on top of our 2008 figure for world proven gas reserves -- a total of roughly 100 years of consumption at current rates," the BP chief said.
"In oil alone, declining production from existing fields, coupled with new demand, means we'll have to bring on nearly 50 million b/day of new production over that time -- that's almost twice the current level of production in the entire Middle East," Hayward told delegates.
Satisfying an ever-growing energy demand in a sustainable way may be the world's biggest challenge but "until renewables gain a sizeable share of the power sector and cleaner coal is available through carbon capture and storage, I can see only one way of doing it -- by increasing the use of natural gas," Hayward said. If we get it right, gas can transform the global energy outlook in the decades to come."
To accelerate the growth of gas, "decisive and appropriate policy action on carbon pricing," as well as "a more customer-focused offer to the utilities," he said. "Until both producers and consumers know and pay for the cost of carbon, the uncertainty around planning and investing in the transition to a low carbon economy will remain high."
BP favors a carbon cap-and-trade system "because it gives environmental certainty based on an absolute emissions cap...Such a system needs to treat all carbon as equal and push for the best possible outcome in terms of both carbon and economic impact across all industrial sectors."
In the United States utilities "have historically favored coal over gas," Hayward noted. "There are a number of reasons for this, but principally it's been about price...gas has been more expensive than coal, and gas prices have also been more volatile. The current low price of gas has increased its share of power generation. But to capitalize on this advantage and compete properly with coal, we need to address volatility.
"We must review how we contract and price gas sales. Utilities need to be able to hedge against price uncertainty using flexible market mechanisms. Regulators need to ensure a level playing field enabling producers and consumers to work together to manage short-term fluctuations. The bottom line is that the new abundance of gas reserves should now give the power industry and its regulators the confidence to discuss long term supply arrangements, and rising demand should give producers the confidence that such arrangements can be profitable."
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