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IEA sets out the “Golden Rules” for unconventional gas; US, China and Australia major players

The International Energy Agency (IEA) has released a special World Energy Outlook report on the production of unconventional gas—“Golden Rules for a Golden Age of Gas”—intended to help stakeholders to work together to address public concerns about the associated environmental and social impacts. Among the findings of the report is that in the “Golden Rules” case, combined unconventional gas output growth from the US, China and Australia surpasses that of all conventional producers—mainly the MENA (Middle East North Africa) region and Russia.

“Fracturing the status quo”: natural gas supply growth in the Golden Rules Case. Click to enlarge.

The technology and the know-how already exist 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. The industry must win public confidence by demonstrating exemplary performance; governments must ensure that appropriate policies and regulatory regimes are in place.

—IEA Executive Director Maria van der Hoeven

The “Golden Rules” are principles that can allow governments, industry & other stakeholders to address these environmental & social impacts:

  1. Measure, disclose & engage
  2. Watch where you drill
  3. Isolate well & prevent leaks
  4. Treat water responsibly
  5. Eliminate venting, minimize flaring & other emissions
  6. Be ready to think big
  7. Ensure a consistently high level of environmental performance

They are “Golden Rules”, the IEA said at the launch presentation in London, because their application can ensure operators have a “social license to operate”, paving the way for a “golden age of gas”.

At their recent Camp David summit, G8 leaders agreed to review this IEA work on potential best practices for natural gas development.

To build on the Golden Rules, we are establishing a high-level platform so that governments can share insights on the policy and regulatory action that can accompany an expansion in unconventional gas production, shale gas in particular. This platform will be open to IEA members and non-members alike.

—Maria van der Hoeven

Applying the Golden Rules could increase the cost of a typical shale-gas well by around 7%, but, for a larger development project with multiple wells, investment in measures to reduce environmental impacts may in many cases be offset by lower operating costs.

The report argues that there is a critical link between the way governments and industry respond to these social and environmental challenges and the prospects for unconventional gas production. Accordingly, the report sets out two possible future trajectories for unconventional gas:

In a Golden Rules Case, the application of these rules helps to underpin a brisk expansion of unconventional gas supply, which has far-reaching consequences:

  • World production of unconventional gas, primarily shale gas, more than triples between 2010 and 2035 to 1.6 trillion cubic meters.

  • The United States becomes a significant player in international gas markets, and China emerges as a major producer.

  • New sources of supply help to keep prices down, stimulate investment and job creation in unconventional resource-rich countries, and generate faster growth in global gas demand, which rises by more than 50% between 2010 and 2035.

By contrast, in a Low Unconventional Case where no Golden Rules are in place, a lack of public acceptance means that unconventional gas production rises only slightly above current levels by 2035. Among the results:

  • The competitive position of gas in the global fuel mix deteriorates amidst lower availability and higher prices, and the share of gas in energy use barely increases.

  • Energy-related CO2 emissions are higher by 1.3% compared with the Golden Rules Case but, in both cases, emissions are well above the trajectory required to reach the globally agreed goal of limiting the temperature rise to 2 °C.



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