The development of shale gas projects continues to drive massive investment in B.C.’s economy, but a new report said the long-term viability of the unconventional gas market remains in question.
“It’s possible we could be onto something big, but there are many underlying uncertainties including growing environmental concerns, technology challenges, water availability and land issues,” said Barry Munro, leader of Ernst & Young’s (E&Y) Canadian oil and gas practice.
His comments came after Ernst & Young released a new shale gas report Monday at the World Energy Congress in Montreal.
Munro said the state of the economic recovery and expanded long-term use for new natural gas production has created uncertainty in the market. The report also said more clarity is needed around supply.
That could come in the form of more support for reduced carbon emissions, which proponents say would drive demand for natural gas as a clean alternative to coal.
E&Y said global gas demand is forecasted to grow 1.5% per year through 2030. B.C.’s oil and gas sector experienced $6 billion in investment activity last year.
But a glut of shale gas development in the eastern U.S. has driven natural gas prices down recently, and caused some analysts to issue bearish reports on the commodity (See “Victoria sinks $115.6m into gas sector amid supply glut” – issue 1089; September 7-13).
“At a global level, the immediate risk is that the current low price environment dissuades natural gas players from investing in new projects,” Munro said. “This initiates a cycle beginning with underinvestment by exploration and production companies, and ultimately resulting in not enough gas to meet demand.”