By 2015, 60 per cent of the world's new oil and gas will come from unconventional resources.
The question that should be top of mind is what this means for North America, and, just as important, for energy security.
"The dynamics are changing because of the development of unconventional resources around the world," said Robert Johnston, director of energy and natural resources with the Washingtonbased Eurasia Group.
What Johnston is alluding to is what the impact of development of unconventional resources currently being identified - such as shale gas opportunities in Poland and China - might be.
"North America is not taking liquefied natural gas, leaving spare capacity for other users and the shale in Europe frees up LNG. What's the impact of all this?"
Even as the emerging opportunities might be a decade away from meaningful development, it once again underscores the increasingly dynamic nature of the global energy industry that is very much the result of technological developments and regulatory awareness (or in the case of France, unawareness).
One of Johnston's themes during his address to a global group attending the Association of Petroleum Negotiators this week in Banff was that the development of unconventional resources will continue to displace production and existing trade flows, not unlike what is already being seen in the context of the U.S. and liquefied natural gas.
We are all too aware of the impact the development of shale gas reserves in the U.S. has had on the North American price for the commodity. By extension, it has displaced the need for LNG imports into the U.S. market and stranded a number of LNG terminals. The balance has tilted so far, says Johnston, that the U.S. Federal Energy Regulatory Commission has recently asked companies to abandon their regas applications for these import terminals.
For now, the LNG exports from countries such as Qatar that were destined for U.S. shores are now finding markets in Japan, Korea and the United Kingdom. As consumption rises in the Middle East, however, that spare capacity will disappear.
One place that is being looked to is the shale potential in Europe, with all eyes on Poland as the Texas of the EU. The U.S. Energy Information Agency estimates Poland's shale gas reserves could be as high as 5.3 trillion cubic feet - about 300 years of consumption at current levels.
Given its apparent willingness to develop the resource, Poland's production could well supplant LNG imports into the EU. Where there is some uncertainty is how high natural gas consumption would rise in the EU, should there be a wholesale decline in the use of nuclear power.
Of course, the other piece to think about in this context is how Russia will react to natural gas production in Poland that displaces what Russia sends to Europe. It's been no secret for a very long time that Europe is very keen to decrease its dependence on Russia to fill demand for its natural gas; Poland alone relies on Russia for two-thirds of its natural gas consumption while the EU as a whole gets 40 per cent of needs from Russia.
This has been one of the drivers behind the move by European energy players into the Middle East and North Africa - but given the uncertainty in that region, the need to look elsewhere for diversity of supply has surfaced again.
It's also no secret that Russia also has its eye on China to buy more of its natural gas, as does Australia. Some estimates put China's shale gas reserves exceeding those in the U.S. by 50 per cent.
Australia, many will be interested to find out, is on track to become the second largest supplier of LNG to China, after Qatar. Thus, both Russia and Australia are bound to be affected by the Chinese development of its shale resources, when it finally happens.
The question, of course, is how long will this take - and how it will get done. Truth is that China needs the expertise of the West to do this - clearly one of the reasons for the joint venture partnerships its national oil companies are striking with international oil companies.
On the other hand, as Gordon Houlden of the University of Alberta's China Institute points out - there are four universities in China specializing entirely in energy. Some say it could take a decade, others suggest it will be longer - but China is determined to increase its domestic energy production. And, unlike its IOC counterparts, Chinese companies don't have to disclose earnings and production each quarter.
All this, of course, puts a big question mark on Canada and its natural gas bounty. If there is one thing the shale gas revolution - no longer an isolated, North American phenomenon - will do is accelerate natural gas becoming a truly global commodity.
While some will shout hallelujah, because it means Canadian production will no longer be hostage to a North American market, it also means Canada will compete against other countries with lower costs of production.
Either way, the signals are clear that Canada has an opportunity to become a player in this evolving global market - but it does not have the luxury of time. One LNG terminal will not an export market make.
Source: www.calgaryherald.com
The question that should be top of mind is what this means for North America, and, just as important, for energy security.
"The dynamics are changing because of the development of unconventional resources around the world," said Robert Johnston, director of energy and natural resources with the Washingtonbased Eurasia Group.
What Johnston is alluding to is what the impact of development of unconventional resources currently being identified - such as shale gas opportunities in Poland and China - might be.
"North America is not taking liquefied natural gas, leaving spare capacity for other users and the shale in Europe frees up LNG. What's the impact of all this?"
Even as the emerging opportunities might be a decade away from meaningful development, it once again underscores the increasingly dynamic nature of the global energy industry that is very much the result of technological developments and regulatory awareness (or in the case of France, unawareness).
One of Johnston's themes during his address to a global group attending the Association of Petroleum Negotiators this week in Banff was that the development of unconventional resources will continue to displace production and existing trade flows, not unlike what is already being seen in the context of the U.S. and liquefied natural gas.
We are all too aware of the impact the development of shale gas reserves in the U.S. has had on the North American price for the commodity. By extension, it has displaced the need for LNG imports into the U.S. market and stranded a number of LNG terminals. The balance has tilted so far, says Johnston, that the U.S. Federal Energy Regulatory Commission has recently asked companies to abandon their regas applications for these import terminals.
For now, the LNG exports from countries such as Qatar that were destined for U.S. shores are now finding markets in Japan, Korea and the United Kingdom. As consumption rises in the Middle East, however, that spare capacity will disappear.
One place that is being looked to is the shale potential in Europe, with all eyes on Poland as the Texas of the EU. The U.S. Energy Information Agency estimates Poland's shale gas reserves could be as high as 5.3 trillion cubic feet - about 300 years of consumption at current levels.
Given its apparent willingness to develop the resource, Poland's production could well supplant LNG imports into the EU. Where there is some uncertainty is how high natural gas consumption would rise in the EU, should there be a wholesale decline in the use of nuclear power.
Of course, the other piece to think about in this context is how Russia will react to natural gas production in Poland that displaces what Russia sends to Europe. It's been no secret for a very long time that Europe is very keen to decrease its dependence on Russia to fill demand for its natural gas; Poland alone relies on Russia for two-thirds of its natural gas consumption while the EU as a whole gets 40 per cent of needs from Russia.
This has been one of the drivers behind the move by European energy players into the Middle East and North Africa - but given the uncertainty in that region, the need to look elsewhere for diversity of supply has surfaced again.
It's also no secret that Russia also has its eye on China to buy more of its natural gas, as does Australia. Some estimates put China's shale gas reserves exceeding those in the U.S. by 50 per cent.
Australia, many will be interested to find out, is on track to become the second largest supplier of LNG to China, after Qatar. Thus, both Russia and Australia are bound to be affected by the Chinese development of its shale resources, when it finally happens.
The question, of course, is how long will this take - and how it will get done. Truth is that China needs the expertise of the West to do this - clearly one of the reasons for the joint venture partnerships its national oil companies are striking with international oil companies.
On the other hand, as Gordon Houlden of the University of Alberta's China Institute points out - there are four universities in China specializing entirely in energy. Some say it could take a decade, others suggest it will be longer - but China is determined to increase its domestic energy production. And, unlike its IOC counterparts, Chinese companies don't have to disclose earnings and production each quarter.
All this, of course, puts a big question mark on Canada and its natural gas bounty. If there is one thing the shale gas revolution - no longer an isolated, North American phenomenon - will do is accelerate natural gas becoming a truly global commodity.
While some will shout hallelujah, because it means Canadian production will no longer be hostage to a North American market, it also means Canada will compete against other countries with lower costs of production.
Either way, the signals are clear that Canada has an opportunity to become a player in this evolving global market - but it does not have the luxury of time. One LNG terminal will not an export market make.
Source: www.calgaryherald.com
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