US Shale Gas No Game Changer for Qatar

From The Peninsula Qatar

The development of US shale gas extraction to tap previously inaccessible reserves, the so-called US shale gas revolution, is not proving to be a game changer for Qatar, according to QNB Group. Fracking techniques — the process of forcing water, chemicals and sand at high pressure into shale rock deposits to extract high volumes of gas — have been refined only over the last decade to make US shale gas commercially viable. This has virtually eliminated the need for the US to import liquefied natural gas (LNG), including from Qatar. The drop in demand from the US, however, has been replaced by strong demand from Asia, particularly from Japan after the Fukushima nuclear accident in March 2011. As a result, QNB Group expects global LNG demand to remain strong over the next decade. Qatar is therefore unlikely to lose its leading role in the global energy market for years to come.

US shale gas production is estimated to have risen almost seven fold during 2007-13, reaching a forecast 8.7 trillion cubic feet (tcf) in 2013. This has pushed down US gas prices at the Henry Hub terminal from a peak of $13.6 per million of British thermal units (mBtu) in 2008 to $3.8 in November 2013. The US Energy Information Agency (EIA) expects shale gas to account for nearly half of total US gas production over the next two decades, compared with just over one third today. According to Citigroup, this shale gas revolution is likely to lead the US to energy independence by 2020, when it will no longer need to import gas or oil to meet its energy needs.

While the US is becoming energy independent, Asia continues to have ever-growing energy needs. Asian LNG demand has grown rapidly in recent years from both traditional buyers and new ones. This trend is likely to continue in the future.

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