10 March 2010 02:23 [Source: ICIS news]
HOUSTON (ICIS news)--Proposed US climate change policies that would cap greenhouse gas (GHG) emissions would threaten the recent and rapid growth of the domestic shale gas industry, an economist with energy major BP said on Tuesday.
Policies from the administration of former President George W Bush encouraged innovation, said Mark Finley, general manager of global energy markets and US economics for BP. He noted that shale production had grown 71% in 2008 alone, the biggest one-year growth for a country in world history.
Moreover, in 2009, production continued to expand on the back of prior innovations, with preliminary evidence suggesting that the ?xml:namespace>
“This happened here for a reason – not only the available resources, but the policy environment encouraged companies to take risks, to put capital at risk, to innovate on the technological front, and to find ways to commercialise a resource in the expectation of making a return off of it,” Finley said.
“It’s important not to take this for granted,” he added. “An unfortunate reality is that many of the policy proposals in the last couple of years in
“We cannot guarantee the demand side of this will be there going forward, so there are questions on whether the
Finley spoke at the CERAWeek 2010 energy conference in
Reserves of natural gas – used as a feedstock and power fuel by chemical producers – had increased by almost 50% in the last decade, while crude reserves declined, due in large part to government policies suggesting the development of unconventional resources, Finley said.
More recently, in 2009, natural gas prices traded at an all-time record discount to prices of oil and other energy commodities, with the price being so low at the end of 2009 that natural gas began to displace coal in power generation, Finley said.
“This was not at all in our mental map of where gas competed a couple years ago,” Finley said. “This is having an impact all around the world.”
The 2009 production levels were particularly impressive, given that they came in the face of sharply lower prices and a dramatic decline in drilling activity, Finley noted.
However, to sustain those levels, government policies must not only encourage domestic production and consumption, but also provide a platform for export.
The CERAWeek conference lasts through Friday.
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