By SUMMAR SAID and ALEXIS FLYNN
Investment in shale gas won't be sustained if US natural gas
benchmarks stay at their currently depressed levels, Shell
chief executive Peter Voser said.
"The current prices of gas are obviously are not a price
which long-term will drive development in shale gas... so
current prices are not attractive from an investment point of
view," Voser told Dow Jones in an interview
that also touched on his outlook for 2012 oil demand.
Shell's CEO - who in 2010 oversaw the Anglo-Dutch major's $4.7
billion acquisition of East Resources and its US shale gas
assets - said he remained convinced the long-term price outlook
for the commodity remained a good one.
"Personally, I think long-term pricing in the US will go
up," said Voser.
US natural gas prices have fallen to their lowest point in a
decade as new technologies allow producers to access vast
untapped gasfields in Pennsylvania and Texas.
And the world's biggest energy firms have been quick to snap
up any available assets: companies like Shell, ExxonMobil and
BHP Billiton have all spent billions of dollars harnessing vast
acreage positions in the country.
However, many of these investments require sustained gas
prices of $3 to $4 per million British thermal units to cover
Natural gas futures Friday fell 2.5 cents, or 1%, to
recently trade at $2.580 mBtu on the New York Mercantile
If this level were to be sustained, it could increase
pressure on producers to scale back output in a bid to
However, the long-term investment thesis of companies like
Shell is that global demand for natural gas will continue to
rise as developed and developing economies increasingly switch
from coal and oil.
Separately, Voser said the world's oil needs would likely be
matched by supply in 2012.
"Oil demand this year will be under pressure, and growth
will clearly be lower than last year or the year before, but at
the end I see the long-term oil demand still growing after
2012," said Voser.
While crude markets are supplied on the short term, in the
long-term demand will outpace supply, said Voser.
"Oil prices are volatile, but I don't expect them to hit
that [$147 a barrel]," he said.
When it comes to deciding whether or not Shell will spend
money developing a major project, the company assumes an oil
price of $50 to $90 a barrel.
"I think prices need to stay at certain level in order for
us to invest," said Voser.
Dow Jones Newswires