Shale gas success hinges on public confidence - IEA

29 May 2012 15:06  [Source: ICIS news]

LONDON (ICIS)--The International Energy Agency (IEA) announced on Tuesday that a successful expansion of gas supply from unconventional resources, primarily shale gas, will only come to pass if legitimate public concerns about the associated environmental and social impacts are addressed.

In a world energy outlook report called “Golden Rules for a Golden Age of Gas” the IEA set out certain principles which, if followed, would allow governments, the industry and other stakeholders to address these impacts, win public confidence and ensure companies would have a “social licence to operate”.

“The technology and the know-how already exist for unconventional gas to be produced in an environmentally acceptable way,” said IEA executive director Maria van der Hoeven.

“But if the social and environmental impacts are not addressed properly, there is a very real possibility that public opposition to drilling for shale gas and other types of unconventional gas will halt the unconventional gas revolution in its tracks,” she added.

The IEA said if its principles were followed, total gas production would grow by 55% by 2035, with unconventional gas accounting for nearly two-thirds of the growth.

World production of unconventional gas, meanwhile, would more than triple in 2010–2035 to 1.6 trillion cubic metres, the IEA added.

Application of the IEA’s “golden rules” will also see the US become a significant player in international gas markets and China emerge as a major producer. New sources of supply would help to keep prices down, stimulate investment and job creation in unconventional resource-rich countries and generate faster growth in global gas demand, which would rise by more than 50% between 2010 and 2035.

The IEA said the “golden rules” underline the importance of full transparency, the measuring and monitoring of environmental impacts and engagement with local communities. They also highlight the careful choice of drilling sites and measures to prevent any leaks from wells into nearby aquifers; rigorous assessment and monitoring of water requirements and waste water; measures to target zero venting and minimal flaring of gas and improved project planning and regulatory control.

“If this new industry is to prosper, it needs to earn and maintain its social license to operate,” said IEA chief economist Fatih Birol, the report's chief author.

“This comes with a financial cost, but in our estimation the additional costs are likely to be limited,” he added.

Birol said that applying the “golden rules” could increase the cost of a typical shale-gas well by around 7%, but for a larger development project with multiple wells, investment in measures to reduce environmental impacts may in many cases be offset by lower operating costs.

By contrast, the report said a future where no “golden rules” are in place – what it called a “low unconventional case”, a lack of public acceptance would mean unconventional gas production rises only slightly above current levels by 2035, with the competitive position of gas in the global fuel mix deteriorating amid lower availability and higher prices.

By: Franco Capaldo
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