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Arctic natural gas trails shale revolution Peter Voser, CEO of Royal Dutch Shell, says Arctic gas now ‘quite long term’, as frontier occupies place on distant horizon Gary Park For Petroleum News
Development of Arctic natural gas should play a role as gas consumption outpaces the growth rate of oil, but the frontier region now occupies a place on the distant horizon, lagging behind the shale gas revolution, say executives of leading production and transportation companies.
Peter Voser, chief executive officer of Royal Dutch Shell, told a World Energy Congress in Montreal Sept. 13 that his multinational expects to more than triple its gas production in North America over the next few years and could exceed that target “depending on prices and markets.”
He said gas has the “potential to alter the energy landscape for the world,” but that prospect hangs on the availability of supplies and how market forces and government policies “will shape the demands of natural gas in the decades to come.”
Voser said the “most important contribution will be to develop carbon markets that deliver robust carbon prices and stimulate investments in low-carbon technologies.”
That could happen if regulators reduce emission allowances or introduce a minimum price for carbon dioxide and also consider emission performance standards for power stations, he said.
Soon more gas than oil He said Shell plans to spend up to C$4 billion in the next few years to develop its Groundbirch property in northeastern British Columbia and the Marcellus properties in Pennsylvania acquired for US$4.7 billion in a summer deal with East Resources.
“We will be more gas than oil by 2012,” he said, forecasting that gas will rise from 48 percent of Shell’s current production to 58 percent by 2020.
Voser expects gas prices will rise from their depressed levels to establish a better balance with oil and demand for gas will climb, notably within the power-generation sector, growing by 25 percent globally over the next decade, double the projected growth rate of oil, and by 50 percent over the next 20 years.
He does not expect environmental opposition to seriously impede the development of shale gas or other unconventional gas resources, even though he acknowledges energy development entails risks and “things sometimes can and do go wrong.”
“But let’s remember that energy is the lifeblood of civilization,” he said. “Whether we like it or not, producing energy and delivering it to billions of customers comes with certain risks.”
Long term for Arctic gas With an 11.4 percent stake in the Mackenzie Gas Project, Shell is certain Arctic gas will be developed, “but you are most probably talking quite long term now,” Voser said.
He said North America is far ahead of the rest of the world in developing unconventional gas reserves, although there should eventually be significant growth in Australia, China, Europe and South Africa — a surge he expects will delay progress in the Arctic and the construction of pipelines from Alaska and the Mackenzie Delta.
In a separate interview, Russ Girling, the recently installed chief executive officer of TransCanada — a contender to build and operate either or both Arctic pipelines — predicted that an Alaska pipeline is likely to get built late this decade.
“When I look out at northern gas in Alaska and Mackenzie, those will become reality,” he said.
For Alaska, he said producers still seem to favor a pipeline to Lower 48 markets as a better option than shipping LNG from Valdez, doubting that there is sufficient gas to tackle both projects. He said a decision between the two is likely to be made by the end of 2010.
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