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The growth of unconventional gas production, largely from shale, will have “major implications over many years for markets and prices”, according to a report from the World Energy Council.
Secretary general Christoph Frei said: “Unconventional gas is causing a shift in the dynamics of the natural gas market which will be felt for many decades to come. Its spread around the world is being accelerated because it can make gas more affordable to consumers and reduce concerns about the security of supply.”
The report said a number of countries look likely to follow in the footsteps of the US, with China and Australia already making significant progress towards developing their unconventional gas resources. Argentina, Algeria, Mexico, Saudi Arabia, South Africa and Poland all look to be heading in the same direction, analysts said.
Frei said: “So far, the surprising resilience of the US shale gas market has led the way in the shale gas boom, and whilst other countries may not have the unique characteristics of the US, they will learn how to become LNG producers or exporters which will change the global dynamics of energy.”
He added: “Continued growth in the US and Australia will significantly influence the balance of supply and demand with Argentina, China and Saudi Arabia emerging as unconventional gas producers out to 2020-2025.”
Excess supplies in some countries will lead markets to become more interconnected, the study said, with prices becoming increasingly aligned across the world’s three main regional hubs of Asia, Europe and North America. The growth in liquefied natural gas (LNG) exports is likely to result in increased market liquidity and added bargaining power for consumers, as well as a move away from oil indexed gas contracts, according to analysts.
The report added that uncertainty over future gas prices is pushing producers to invest in more flexible projects with shorter lifespans, instead of deep wells.
In December the UK’s Oil and Gas Authority announced it was offering up a number of new licenses for onshore drilling, with around three quarters of the available blocks giving access to unconventional gas resources.
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