Unconventional gas has taken off in two areas of the world and in both – North America and eastern Australia – the gas market has been changed dramatically.
The rapid development of shale gas in North America that piggybacked of the earlier development of tight gas and CBM has dramatically increased supply, and the US could now be self sufficient. In eastern Australian the impact of CBM has had a similar impact, albeit the market is much smaller.
In many other areas of the world, and across all continents, unconventional gas has the potential to change the gas market dynamics. We currently model around 1,400 tcf of potential resources. Europe is attracting some of the hottest interest due to its relatively high gas price, widening supply/demand gas and accessible licences. But the deliverability of the sub-surface remains unproven. Above ground factors from the supply chain to land access issues will also slow development.
In our view, it is China that could be the next region with substantial unconventional gas production. But even here, the rate of development is unlikely to mirror that see in the US. The sub-surface still needs to be properly appraised and the government will play a key role in the development of this strategic resource.
Many companies have benefited from the dramatic rise of unconventional gas to date but others have been caught out. Watching the signals over the next few years for future developments will be critical for those with interests right across the gas value chain.