As new technology has increased output and because of its small carbon footprint, natural gas will play a bigger role in the world's energy consumption as long as government policies give the go-ahead to take over more demand, Royal Dutch Shell plc CEO Peter Voser said Monday.
Voser was a keynote speaker at the World Energy Congress in Montreal.
"Worldwide there's now enough technically recoverable gas in the ground for 250 years...at current production rates," Voser said. "If we create space for natural gas to grow, natural gas will change the world's energy landscape for the better."
North America's supply picture has been altered dramatically since explorers began to successfully tap shale rock a decade ago, the CEO said. The recession and an oversupply of gas in U.S. markets has dampened prices but in the long term, gas "will keep pace with supplies" because of the growth in emerging markets.
North America won't need to import liquefied natural gas (LNG) "anytime soon," he said. Asia and Western Europe will drive LNG demand in the near term, in part because European shale production isn't likely to boom before 2020 and because China and other emerging countries are "keen" to secure more gas supplies through long-term contracts.
However, shale gas and LNG "mutually reinforce" each other and give investors more confidence that big gas supplies are here to stay, Voser told delegates.
The CEO also addressed some of the recent criticism of shale gas production in North America. Shell has begun to line its shale wells with concrete and steel to protect drinking water supplies.
"This is not to suggest that nothing could ever go wrong," Voser said. "We've recently been reminded that things sometimes can and do go wrong. But let's also remember that energy is the lifeblood of civilization...
"Rather than closing our eyes to that reality, we must confront risks and manage them as effectively as we can. That requires good safety standards and well trained people. And at Shell, we think we have both."
Daniel Yergin, the noted chairman of IHS Cambridge Energy Research Associates (CERA), called the boom in gas development a "shale gale. However, it took about 20 years to learn how to successfully produce shale gas," he told the audience.
"Things do not happen overnight." Once the economic downturn is in the rear view mirror, the world will face a "major challenge" to meet energy demands, Yergin said.
However, he said, "the development of shale gas has been the single most significant energy innovation so far this century. The availability of that gas will provide greater flexibility in meeting the fuel needs of the electric power industry."
Citing the new IHS CERA Energy Scenarios, Yergin said world demand is forecast to increase 32-40% in the next two decades. "This demand growth will require investment measured in many trillions of dollars, and it will pose a dramatic challenge to all the energy industries."
The scenarios "show continuing decline in energy intensity with the introduction of new, more efficient technologies," said Yergin. "And there has never been such a great emphasis on energy efficiency around the world as is the case today. That is true whether you're talking about the United States, or China, or Europe."
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