Because of U.S. shale natural gas, the United States "is no longer a big importer of or will not need to be an importer of liquefied natural gas [LNG]," the State Department coordinator for International Energy Affairs said Tuesday.

David Goldwyn joined with other government officials and delegates from 17 countries at the Global Shale Gas Initiative Conference in Washington, DC, to discuss the importance of shale gas as a low-carbon fuel option. Goldwyn said the initiative is part of the State Department's effort to promote global energy security and climate security around the world.

"The U.S. shale gas phenomenon has transformed global energy markets," Goldwyn said. "Because we have discovered and we have the technology to develop efficiently large quantities of gas from shale, global prices of liquefied natural gas have decreased. Gas has become cheaper. Gas is now competitive with coal on a Btu basis, which means that countries that might use coal can now not make an economic choice, but on a competitive basis choose gas for their next level of power generation."

Other countries now want to replicate domestic producers' success, he noted. "Their motivation and our motivation as the State Department to engage on this issue should be clear for foreign policy and energy security reasons. Countries around the world need diversity of energy supply. There are countries with millions of people -- in fact, tens and some hundreds of millions of people -- without access to electricity services. They need a feedstock and they need it for baseload energy. They also, in many cases, are dependent on a single country for their source of gas supply and they want some choice."

And the changes to the market brought about by shale gas can come quickly, he said. "The impact in the U.S. is we, eight years ago, expected that we would be importing vast amounts of liquefied natural gas, and now, because we have this large-scale domestic production, we won't need to...In this country, it's entirely possible if things continue on trend that we would have the ability to export gas extracted from shale, liquefy it and export it overseas. That's if we didn't use all of it domestically."

In other countries, "my guess is that most of what is being produced will be used domestically. So China, India, to give examples of two large countries, have very large gas demands over time. If they're able to produce shale gas, my guess is that it's going to be used domestically and not used for export. The large-scale producers of gas right now -- Qatar, Russia, Nigeria, Algeria, Trinidad and Tobago -- all that is from conventional gas."

Ten percent of U.S. gas production now comes from shale gas, said Goldwyn. "U.S. gas reserves have increased eightfold over the last 10 years. And projections we saw from the National Security Council [Tuesday] showed just that estimates from the Energy Information Administration for the United States, China and Canada show that we might be looking at somewhere near 30% of future gas supply coming from unconventional sources...shale-type gas [and] coalbed methane as well."

By 2035 Canada may produce "close to half" of its gas from shale and unconventional resources, said the State Department chief.

"If these shales develop, I think this could easily be the case in these countries. What we don't know right now is how much shale is there and whether it's technically recoverable or whether it's commercially recoverable. But there are large shale formations all over the world, and if they are even a fraction as prolific as the Barnett Shale has been, as the Marcellus Shale is proving to be, then it would be a dramatic portion of global gas supply in the future."

The pace of unconventional production overseas, however, has proven to be slow. Goldwyn said there were "a lot of reasons," partly because shale is "a relatively new phenomenon, even in this country. These very same shales that are producing now were uneconomic because of the technology even six or seven years ago, and the ability to do this now quickly and at a lower cost has really opened people's eyes here in the U.S. and in other places to that possibility...

"But part of the message that we have given is that for any country you need more than the resource. You have to have a regulatory system. You have to have the infrastructure. You have to have protection of intellectual property. You have to have a pipeline that will take the gas from wherever it's produced to a market. And you have to have a market price, because if there isn't a market price for natural gas, no one wants to produce that gas. No one will finance a pipeline, no one will produce a gas gathering system to remove the impurities, and no one will purchase it on the end."

Gas prices, partly because of political pressures in many countries, are one of the biggest challenges, said Goldwyn. "As part of the G-20, we've urged the removal of fossil-fuel subsidies, both at the production and at the consumption level. And I think as prices rise, you'll see interest and investment increase."

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