The world shale gas industry has undergone big changes industrywide in just a year's time and it still faces a "period of great uncertainty and policy challenges," an energy expert said Tuesday.

CWC Group Senior Associate Aliorio Parra presided over the opening session of the Second Annual World Gas Conference and Exhibition in Houston. The former senior official of national oil company Petroleos de Venezuela said he believes the global gas supply and demand picture is "shifting toward a more balanced market" as two of the biggest energy users -- Germany and Japan -- cut their nuclear energy dependence.

As nuclear energy falls out of favor, excess liquefied natural gas (LNG) worldwide "will be soaked up sooner rather than later. This is a dramatic change from what we saw 18, even 12 months ago. It's also an encouraging sign of the potential for U.S. exporters of LNG waiting in the wings to bring capacity on stream."

The shift in the marketplace has occurred in the past 12 to 18 months, noted Parra. "First is the shift to shale oil from gas, which has been dramatic and could grow beyond our expectations," he said. "It could change oil as shale gas has changed the gas industry."

The second shift has been the "official endorsement" by government officials about shale reserves potential. "The latest is an estimate of 827 Tcf, compared with 350 Tcf only three years ago. I am sure we can expect more, perhaps much more, as yet to be discovered resources are brought into the recoverable stage."

Another surprise, said Parra, has been the "intense public discussion and debate" about shale drilling practices, and particularly hydraulic fracturing, which is "probably the single biggest challenge I have noted in the shale gas equation. It is really all about reducing our footprint above ground and below ground for concurrently solid progress to lay to rest some of the bogeys of the past. As the body of evidence grows, that shale oil and gas can be produced in an environmentally responsible way."

The "potential to dramatically reconfigure global energy flows seems very real indeed at the present time," he said. That fact has been demonstrated in recent shale discoveries, which include the new massive find by Spain's Repsol YPF SA unit in Argentina. Repsol claimed that the shale discovery includes 927 million boe of recoverable oil and natural gas, of which 741 million bbl is oil.

The "definition of shale resources has moved rapidly in the last 12 months," said Parra. "Now it's not a question of whether shales will be produced outside the United States but a question of when. That will depend on a number of factors...In the first place, it's whether the necessary resources, infrastructure and framework can be put into place in a timely way. Secondly, the concerns about developing shale have to be properly understood and digested by all of the parties...down to the communities themselves, who will be first affected by the developments."

Other uncertainties face the shale gas industry in the near to medium term, he said.

The "continued expectation of lower gas prices" appears to have stimulated "an industrial renaissance in the United States that has not been seen for several decades. This renaissance is based on a comparative advantage, particularly in petrochemicals and steel." With this renaissance Parra predicted that "newbuilds" will grow within the United States rather than outside the country.

More stringent regulations on domestic shale drillers and changes in fiscal terms may "stimulate and broaden the tax base and replenish the federal coffers." Or they may lead to less drilling and tighter supplies.

"In my view, we are still in the early stages of a learning curve about shale," said Parra. "Perhaps we have traversed only 20% of that curve. If this is so, the outcomes will change dramatically from the picture of today. And they will produce scenarios that may surprise many, if not all, of us."