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Gould believes the US could begin exporting gas to Asia within the next three or four years, and says these cargoes may even have been pre-sold. But with so many LNG projects coming onstream does he foresee a glut in supply? “I don’t think so,” he says. “In fact, I think that the over-optimism in the forecasting agencies at the moment is a real problem. If you look at the EIA’s 2013 energy outlook, they have LNG from Western Canada and East Africa before 2020. It’s not going to happen! It won’t happen! Therefore, the danger is that people will postpone additional FID because they think there’s going to be a glut. In fact, you’ll get the opposite effect.”
“I also don’t believe personally that oil and gas prices are as reliant on each other as they once were. I don’t believe the argument that the LNG price level in Asia for new LNG contracts will only be driven by oil price levels is a true argument any more”
, says Gould. The LNG price will also be
driven by the marginal cost of new developments particularly those offshore in countries like Australia, Mozambique and Tanzania”.
The push for European shale
The UK and Poland remain committed to driving development of a European shale gas industry but Gould says the idea of cheap European shale is a myth. “Shale in Europe would probably be as costly as conventional gas, if not slightly more costly,” he says. “The conditions that made shale gas cheap in the US just don’t exist in Europe. Firstly, the amount of opposition to it is really high because the conditions that you have in the US, where the mineral rights are owned by the people who own the land and they get money out of letting people come and frack next door to them, just don’t exist.”
Gould identifi es further evidence that comparisons to the US model may be inaccurate. Having been drilling for around 100 years, America has accumulated a wealth of seismic data while newcomer Europe is still at the exploratory stage. Also, shale gas wells are poor producers and require numerous outlets – and greater expenditure – in order to generate suffi cient volume and compete with the Atlantic Basin gas price.
So is Britain wise to be so bullish about its plans for shale gas development? Gould believes it’s still too early to say for sure. “Should we look at the prospect? Yes. But should we make a huge commitment to it? It’s probably too soon to say. I have a theory as well that the shale gas should be used in local applications in places like the UK. It’s dead against our system of grids, but if you have shale gas in your village in Lancashire, let that shale gas provide the power for the village.”
The gas vs. renewables debate
Gould believes that approaching shale gas as though it were a renewable, and the quickest way to reduce emissions in a short time frame, could help soften opposition to gas extraction both in the UK and across Europe. Here Gould is keen to dispel what he considers is another false assumption, this one concerning the gas vs. renewables debate. “The equation in which you balance renewable subsidies against gas is a false debate at this point in time,” he says. “I don’t think there’s any doubt that more gas in the mix in the short term or the medium term would produce a much cheaper domestic energy price, even if that gas was imported; it is better for the economy, retail market and would help reduce emissions. I can never understand this fear that Europe and the UK have of Russian gas because
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