US shale natgas production is game changer - consultant

08 December 2009 20:30  [Source: ICIS news]

MIAMI (ICIS news)--Technological improvements and a dramatic build up of shale gas in the US has "changed the game" for the nation's energy industry, a senior consultant said on Tuesday.

Technological breakthroughs - specifically, hydraulic fracturing and horizontal drilling - have improved the ability for drillers to tap the vast reserves of natural gas, which were previously uneconomical to obtain, said Darryl Rogers, senior consultant at Purvin and Gertz.

Rogers was speaking to the CMAI World Methanol Conference.

Current estimates hold about 1,200 trillion cubic feet of natural gas, or "about 100 years of production if it can be recovered economically", he said.

Most growth in US gas demand will occur in the electric power sector. As the economy recovers, electric demand will improve.

In addition, public and political resistance to new coal fired power plants appears to be increasing, Rogers added.

"Some form of carbon tax or cap-and-trade legislation is expected during the next few years. If adopted, this will increase the cost of coal-based power and improve the position of other sources of power," Rogers said.

Another factor improving the outlook of natural gas is the likelihood that prices will be stable.

"We expect in 2010 that natural gas prices will rise to $6/MMBtu by the latter half of the year and will likely hold there until 2014," Rogers said.

North American gas prices are much lower than other international gas prices, specifically Europe and Asia.

"This could have a significant impact on other international gas markets," Rogers said.

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By: Steven McGinn
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