US shale gas fever – a potential pandemic?
New production technology has substantially reduced the production costs of shale gas. Natural gas is now competitive in terms of price compared to both oil and coal.
A continuation of this trend could transform the global gas market and also lead to changes in the global energy mix. In addition, the desire for energy independence and stricter environmental requirements support increased use of gas. Significant shale gas finds may contribute to influencing the market and price outlook also for coal and oil.
The US shale gas fever has not gone unnoticed by the major gas producers worldwide. Norway as well as other gas exporters may have to find new markets for their gas deliveries.
Lower gas prices will also put pressure on revenues from gas exports. But growing resource supply and lower prices may also create new opportunities for gas producers. More widespread political acceptance of gas combined with competitive prices could increase the overall use of gas – also in sectors where gas is not widely used today such as the transport sector.
China is under pressure to cut CO2 emissions but the country needs energy to underpin future economic growth. The goal is to increase the proportion of gas and reduce the use of coal. Could shale gas be a solution to the problem?
In the US, worries increasingly centre on whether shale gas production will pollute the groundwater.
Scepticism towards shale gas is consequently more widespread in Europe with its greater environmental focus. The potential also looks less promising. Even so, European gas consumers could benefit from shale gas production elsewhere in the world through increased supply of gas and lower prices. That could add to the pressures for changing the oil-linked pricing system for gas in Europe.
Shale gas nudges us towards a more global gas market – the shale gas fever could turn into a pandemic.
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