The expected emergence of unconventional gas as a prime energy fuel will depend on public acceptance of hydraulic fracturing.
Back in the early 1970s the world consumed four times as much oil as it did gas. Today that gap has more than halved and the appetite for gas continues to grow. Over the next 20 years gas is expected to continue to develop, but most of that growth is on the back of unconventional or shale gases.
However, the production of unconventional gases – shale gas, coal-bed methane and tight gas – comes with major environmental reservations, and unless these can be overcome its future will be uncertain. In an effort to improve the image of unconventional resources the International Energy Agency (IEA) last month launched its 'seven rules for unconventional gas' – a blueprint for governments and regulators.
The main reason for the potentially more serious environmental impact of unconventional gas operations is the nature of the resources themselves: unconventional resources are less concentrated and do not give themselves up easily. In contrast to conventional gas reservoirs shale gas reservoirs have very low permeability, which means that gas does not flow easily out of the rock and low porosities. There are, therefore, relatively few spaces for the gas to be stored. This results in low recovery rates because the gas can be trapped in disconnected spaces within the rock due to the fine-grained nature of the original sediments. The answer is more wells and the controversial technology of hydraulic fracturing (fracking).
One feature of the greater scales of operations required to extract unconventional gas is the need for more wells. Whereas onshore conventional wells usually require one well per 10km2, unconventional fields might need a well every 1km2.
Shale rocks themselves are geological rock formations rich in clays, typically derived from fine sediments, deposited in fairly quiet environments at the bottoms of seas or lakes, having then been buried over the course of millions of years. When a significant amount of organic matter has been deposited with the sediments, the rock can contain organic solid material called kerogen. If the rock has been heated up to a sufficient temperature during its burial part of this will turn into gas or oil.
According to the IEA's World Energy Outlook, gas will supply one-third of the world's incremental energy needs. "Gas is the lucky fuel," Maria van der Hoeven, executive director of the IEA says. "It may not be the ideal choice of policymakers, society or media: that first choice is often renewable energy, domestic coal or nuclear, depending on the political context. Indeed, gas is rarely the cheapest, cleanest or most secure energy source – but its key advantage is that it is a good combination of compromises."
The reasons are apparent – gas is cleaner than coal, less geopolitical than oil. That it is gaining favour within the power generation community is well documented.
But, despite that seemingly rosy outlook, there are some serious challenges ahead for gas. Conventional gas production in North America and Europe is in terminal decline and with production concentrated in the former Soviet Bloc and the Middle East; security concerns blighted the potential for gas. That, though, was before the advent of unconventional gas, which has laid the foundation for what commentators have dubbed the 'Golden Age of Gas'.
"Unconventional gas has in some ways been an unexpected arrival on the energy scene," van der Hoeven says. "These resources have been known [about] for decades, but have been largely untouched as they have been widely considered to be too difficult and too expensive to develop. But now technology is unlocking these reserves, both visibly in North America where the surge in shale gas production over the past decade has had dramatic consequences for the energy markets, [and also] around the world."
According to the IEA's Medium-Term Gas Market report, demand for natural gas will increase at around 2.7 per cent a year for the next five years. "We think that conventional gas will grow in the next 25 years, but the main growth will come from unconventional gas," IEA chief economist Fatih Birol explains. "Global demand is predicted to grow by 55 per cent, with about two-thirds of this increase coming from unconventional gas. So if there is to be a golden age of gas it will be reliant on a substantial growth in the unconventional gas market. This, we believe, will depend on the industry following the rules that we have laid out."
However the future for unconventional gas is far from certain, clouded as it is in a fog of public concern about its environmental credentials and safety aspects of fracking. The way that unconventional gas is produced has much in common with conventional gas, but more wells are usually required to produce the same amount of gas and techniques such as hydraulic fracturing are often needed.
These gas resources are often located in areas that have no recent history of large-scale oil or gas production. This is one of the key attractions because it means in many cases there is the possibility of developing a local resource with positive implications for energy security and the domestic economy. But it is also a source of concern as it can mean the arrival of a new industry in areas that may not have expected it and frankly where the regulatory framework may not be ready for it. Now countries all over the world are looking to emulate the experience of North America with unconventional gas. China and Australia are leading the way, but there is also interest from other parts of the world – including Europe, Latin America and elsewhere.
"We see that this boost to gas supply could bring a number of important benefits: greater energy diversity, more secure supply in countries that rely on imports to meet their gas needs as well as global benefits in the form of reduced energy costs," van der Hoeven says. "But let's be honest, alongside these potential economic and energy security benefits there are also legitimate public concerns."
These concerns centre around the potential social and environmental impact of unconventional gas production – these include the implications on the water resource, land use and disruption to local communities and they also include the potential serious hazards of water contamination, air pollution and greenhouse gas emissions. The technology and knowhow already exists for unconventional gas to be produced in an environmentally acceptable way, but if the social and environmental impacts are not addressed properly there is a very real possibility that public opposition to drilling for shale gas and other types of unconventional gas will halt the unconventional gas revolution in its tracks.
"It's up to industry to win public confidence by demonstrating exemplary performance and it's up to governments because they must ensure that appropriate policies and regulatory regimes are in place," van der Hoeven says. "We have set out in our report a number of golden rules. These are principles that can help governments, industry and other stakeholders to address the social and environmental issues.
"Natural gas does have some advantages from the perspective of emissions and local air quality when it replaces other more carbon intensive fossil fuels. Natural gas, including unconventional gas can play an important role, but on its own natural gas does not provide the answer to the challenge of climate change.
"Governments around the world need to introduce much stronger policies and measures than they currently envisage driving forward investment in efficient low-carbon technologies to make energy supply more secure and prevent potentially catastrophic climate change."