The discovery of tremendous shale gas resources around the world has led many to proclaim the end of the world’s energy problems. But there has been one big problem: price.
Natural gas prices have been depressed since 2008. Among other reasons this is because the boom in supply.
In a presentation at the recent peak oil conference, former IEA director Jean-Marie Bourdaire discussed the economics of shale gas. Bourdaire drew three conclusions:
(1) In North America, aggressive shale exploration has created the infrastructure for a viable, but slow-growing industry.
(2) Europe lacks crucial legislation to develop shale gas — for instance, the French Parliament for instance voted yesterday to ban ‘fracking’. Bourdaire said: “If you try to drill for natural gas in France, I’m sure you will find a countryman who says I don’t want you to spoil my wine.” Meanwhile Europe lacks infrastructure and the economic incentive to build it.
(3) China and Australia won’t develop significant gas production for years, until the investment becomes more lucrative.
We’ve excerpted some key slides from Bourdaire’s presentation. You can see a video of it here.
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