New reserves of natural gas found in shale rock are a "big deal" and a "game changer."
That's the message Thursday from oil company executives at the World Economic Forum in addressing global concerns about rising dependency on oil and the need to develop cleaner energy to slow climate change.
New extraction methods have opened up large reserves of gas embedded in shale rock in North America. The potential for tapping shale gas reserves elsewhere is not yet clear, but Europe is set to benefit from greater supplies as liquefied natural gas originally intended for the United States is redirected to European markets instead.
The surge in gas supplies, combined with new technology, could also reduce the need for oil to fuel the world's automobiles.
The new gas supplies, however, have negative implications for Russia, whose state-controlled company Gazprom provides Europe with about 20 percent of its gas and depends on European sales for the bulk of its profits.
"We underestimate what it could do to the world in the next 10 to 20 years," Peter Voser, chief executive officer of Royal Dutch Shell PLC, told other business leaders. "It's a big deal and necessary — globally."
Natural gas is used mainly as an alternative to coal in power generation, and it could help reduce dependency on oil for transportation as development of electric car batteries moves forward.
Ninety-five percent of the growth in global oil demand comes from the transportation sector, said Fatih Birol, chief economist at the International Energy Agency.
Gas burns 50 percent cleaner than oil.
Tony Hayward, chief executive of BP PLC, called unconventional gas "a game changer" in the U.S. "It's yet to be seen whether it can be applied globally."
Daniel Yergin, chairman of Cambridge Energy Research Associates, said the industry began to pay attention to unconventional gas in 2007 but the broader public only sat up and took notice in the final months of 2009.
"The biggest development of the first decade of the 21st century is not solar, not wind, but unconventional gas," Yergin said in an interview on the sidelines of the forum.
Robert Hormats, U.S. undersecretary of state for economic, energy and agricultural affairs, spoke Wednesday about the "transformation" shale gas is causing in the United States and predicted the U.S. experience would prove applicable in other countries.
Hormats, one of the few U.S. officials at the annual meeting of global political and business leaders, said gas could serve as a "bridge fuel" to help the world move from high-carbon to renewable sources of energy.
In a further boost to the world's gas supplies, Azerbaijan's President Ilham Aliev said during Thursday's panel discussion that his Caspian Sea nation plans to more than double gas production. Azerbaijan exports to Russia and Iran.
Birol predicted that the world will see a gas glut in the next four to five years, which he said would have huge implications for gas exporters such as Gazprom.
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