The need to develop unconventional sources of gas, such as coal seam gas, is increasingly important to meet the rising demand from Asia and an expected surge in gas-fired power stations over the coming decades, an executive at U.S. oil giant ExxonMobil Corp. (XOM) said Thursday.
Australia is well positioned to meet the demand for gas, although it risks dulling its competitive edge with tax and other policy decisions by its government, said Emma Cochrane, vice president of Asia Pacific and Africa for ExxonMobil's gas and power marketing.
In the text of a speech to the American Chamber of Commerce in Melbourne, Ms Cochrane said the Asia-Pacific region will account for almost a third of total worldwide gas demand by 2040 while demand in the U.S. and Europe will be flat to slightly lower.
At the same time, Australia's importance as a supplier of liquefied natural gas is growing and it is expected to provide a fifth of global supply by 2020, she said.
"A global market is emerging with the Asia-Pacific region poised to become the largest global gas market," Ms Cochrane said. "In some respects, the emergence of unconventionals--the Shale Gale, as some call it--could not come at a better time."
Worldwide demand for gas for power generation, meanwhile, is projected to rise 85% over three decades from 2010 levels and will represent nearly half of total gas demand, she said.
Natural gas is cleaner-burning, affordable and abundant. And natural gas power plants can be built quickly and cost effectively.
"With today's improved turbine technology, natural gas power generation can provide a significant source of flexibility and reliability to a power grid, responding to rapid changes either on the supply or the demand side," Ms Cochrane said.
Advances in technology have allowed more than 15,000 shale wells to be unlocked in the U.S. between 2008 and 2011, but in the rest of the world fewer than 100 shale wells have been drilled, she said. Australia in the same time period has drilled more than 1,000 coal seam gas wells in eastern Queensland, and more are expected over the next 20 years.
However, Ms Cochrane said while the coming years will present enormous opportunities for Australia, there are also genuine challenges for the energy industry.
"I note with some concern recent policy drifts which, taken together add significant cost to our industry and potentially lessen incentives for long-term investment," she said.
The country specifically has introduced a tax on carbon emissions, as well as changed a range of other taxes that are applied to the industry and supported an environment of tough labor relations policies, Ms Cochrane said.
"Only with the right regulatory framework will Australia and other countries in the region capture their share of demand growth," she said.
-By Robb M. Stewart, Dow Jones Newswires; +61 3 9292 2094; [email protected]