By JAMES HERRON
LONDON -- Global exploitation of shale gas reserves could
transform the world's energy supply by lowering prices,
improving security and even curbing forecast carbon dioxide
emissions, but the industry might be stopped in its tracks if
it doesn't work harder to resolve concerns over its
environmental safety, the International Energy Agency (IEA)
The IEA's report shows how the shale gas industry, which has
already dramatically altered the energy landscape in the US,
stands at a tipping point that will determine how it spreads
across the rest of the world.
"If the social and environmental impacts aren't addressed
properly, there is a very real possibility that public
opposition...will halt the unconventional gas revolution in its
tracks," resulting in the loss of an historic opportunity to
provide cheaper and more secure energy to the some of the
world's largest consumers, said IEA executive director Maria
van der Hoeven at a press briefing.
However, if the industry follows a set of "golden rules"
recommended by the IEA it can win public support, allowing natural
gas to become the fastest growing energy source over the
next two decades, the IEA said.
For companies involved in the industry, this is an,
"immediate issue...that could have global implications," said
Fatih Birol, the IEA's chief economist, in an interview with
Dow Jones Newswires.
Shale gas has only
become a major energy source in recent years, as a process
called hydraulic fracturing that releases the gas from the
impermeable rock in which it is trapped has entered widespread
use. It has already produced a boom in natural
gas production in the US, driving prices to 10-year lows,
but is only beginning to spread elsewhere.
The industry's nascent international expansion has already attracted a
significant level of opposition, notably in Europe, from groups
concerned about the risks of water contamination, earth tremors
or the release of greenhouse gases.
Hydraulic fracturing has been banned in France and Bulgaria
and temporarily halted in the UK.
Opponents of shale gas
drilling have legitimate concerns, but all of them can be
dealt with adequately with existing technology and best practice, said
The IEA's golden rules would only add around 7% to operating
costs, he said.
These include carefully choosing drilling sites to avoid
earth tremors, using the highest standards of well design to
avoid groundwater contamination, properly disposing of waste
water and eliminating all emissions of polluting gases from the
well head, the IEA said.
Environmental group Greenpeace, which opposes all
exploitation of unconventional gas reserves, criticized the IEA
for not proposing specific procedures for preventing many of
these environmental hazards, particularly the venting of the
potent greenhouse gas methane from wellheads.
One past critic of the shale gas industry's methane
emissions - Craig Mackenzie, head of sustainability at the GBP142 billion
asset manager Scottish Widows Investment Partnership - said the
IEA's rules would make a big difference if widely adopted.
"The whole industry hasn't yet got behind this agenda," he
told reporters in London, but some companies such as Royal
Dutch Shell have already adopted best practice similar to the
IEA's new rules and are implementing them in China, which has
the potential to be a major shale gas producer.
If the shale gas industry follows its blueprint, the IEA
said that between 2010 and 2035 natural gas could be by far the
fastest growing fuel, with consumption increasing by 50% to
overtake coal as the world's second largest source of
Countries that were net importers of natural gas in 2010 are
likely to be the biggest winners, as they increase domestic
energy production and reduce the power of major exporting
regions like Russia and the Middle East, the IEA said.
gas prices would be around 30% lower in most major markets
than they would otherwise have been, reducing the import bills
of major consumers like the European Union and China by tens of
billions of dollars, it said.
None of these gains will occur if the lack of public
acceptance stifles the industry at this early stage, the IEA
said. In this scenario, global emissions of carbon dioxide
would actually be 1.3% higher, because carbon-heavy coal would
make up a greater share of global energy supplies.
The IEA's Birol said that despite the benefits of switching
from coal to gas, energy efficiency, renewable energy and
carbon capture and storage are still needed to prevent
dangerous climate change.
Dow Jones Newswires