Are we living at a historic moment in the evolution of energy markets?
The vast amount of natural gas in the United States and around the world now within our industry’s reach – thanks to advances in technologies used to produce energy from shale and other “unconventional” resources – suggests the beginning of a new era in the production of cleaner-burning natural gas. Yet even as development proceeds in the United States, the world’s response to this moment of opportunity is not certain.
The International Energy Agency (IEA) has also recognized this pivotal moment. In a new report, the IEA spelled out the future implications if we take full advantage of this new energy opportunity – as well as what might happen if we don’t.
On one hand, the IEA’s “Golden Rules for a Golden Age of Gas“ report envisioned a scenario in which widespread development of unconventional natural gas brings “far-reaching consequences” such as abundant and affordable supplies, which serve to meet growing needs; increased investment; and environmental advantages including lower emissions as gas displaces more carbon-intensive energy use for electricity generation. The IEA indicated that the technology and expertise to safely develop unconventional natural gas and take advantage of its benefits already exists.
But as IEA points out, this positive future for shale gas – with its related benefits – is far from assured.
The study highlights the importance of industry and government playing their respective roles to help maintain public confidence in the technologies and processes that are safely producing natural gas.
In its second scenario, the IEA took a look at the future if unconventional gas production were not allowed to expand from current levels. It’s not nearly as bright a picture. In addition to reduced natural gas supplies, researchers said:
- Global cumulative investment in unconventional natural gas would be cut in half compared to the high-development scenario.
- Energy-related carbon dioxide emissions would be 1.3 percent higher, a projection that IEA says “…offsets any claim that a reduction in unconventional gas output brings net environmental gains.”
- Moreover, these higher CO2 emissions largely come from coal-fired power generation that the IEA notes would be used instead of cleaner-burning natural gas.
The Golden Rules
So what do energy companies, government regulators, policymakers and other stakeholders need to do to ensure that this historic opportunity isn’t lost? As an important contribution to that question, the IEA’s report lists 22 “Golden Rules” that can help ensure the continuation of safe and responsible natural gas production.
The guidance includes measuring and disclosing operations and environmental data; engaging with local communities; surveying well sites to minimize impacts; promoting robust rules for well design and construction; managing water use and disposal; and making sure appropriate resources exist to handle permitting and compliance, among others.
The natural gas industry has demonstrated that unconventional resources can be developed safely and responsibly, and industry representatives have engaged positively with the IEA on their comprehensive report. According to the IEA’s Maria van der Hoeven, “The technology and the know-how already exist for unconventional gas to be produced in an environmentally acceptable way.”
The IEA stressed the need for “an appropriate balance in policy-making” so that regulation maintains high operational standards and promotes innovation and improvement.
In a speech last month at the World Gas Conference, ExxonMobil’s CEO Rex Tillerson made a similar point:
“Ultimately, we recognize that effective standards and our industry’s commitment to operational integrity, excellence, and accountability are the pillars of responsible development,” he said. “In this shared effort, governments play an indispensible role in helping set effective standards. But governments must be prudent so as not to stifle development or the investments in innovation that improve safety and performance.”
It’s this balance that can turn a moment of opportunity into reality.