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  • bluecheese4u bluecheese4u Jun 5, 2012 2:13 PM Flag

    Exxon Mobil warns red tape risks snuffing out gas boom

    ENVIRONMENTAL CONCERNS

    The surge in unconventional supplies will see the United States overtake Russia as the world's biggest natural gas producer in 2017, the International Energy Agency said on Tuesday.

    The IEA expects total US gas production to rise from 653-billion cubic meters (bcm) in 2011 to 769 bcm in 2017.

    "Governing or setting policy and regulations based on the precautionary principle will stifle innovation and investment and bring development to a standstill," Tillerson said.

    Exxon and other energy companies such as Chevron Corp have faced calls for tighter restrictions on exploiting unconventional gas such as shale gas due to environmental risks.

    Energy companies use hydraulic fracturing, or fracking, to create fissures in rock like shale that allow oil and gas to escape. In the process water, sand and chemicals are pumped at very high pressures into wells drilled deep into the ground.

    France, which has some of Europe's largest shale gas reserves, last year banned the use of fracking on worries about environmental damage.

    About a year ago, South Africa also imposed a fracking moratorium on oil and gas exploration licences.

    A global framework for unconventional gas development for all members of the International Energy Agency is necessary to produce unconventional gas, IEA Executive Director Maria van der Hoeven told Reuters on Tuesday.

    "If there is no regulatory framework for the exploration of unconventional gas - well we have seen what has happened in France and in South Africa - then the gas will stay where it is. Underground," van der Hoeven said.

    US LNG EXPORTS

    Tillerson said Exxon Mobil is studying plans to export LNG from the United States. The United States has approved just one LNG export project, but 14 more have either filed for approval or are under consideration.

    US natural gas prices have hit their lowest in a decade and are expected to remain low for years because of increased output from unconventional reserves including shale gas, prompting developers to look for ways to export it to higher-paying markets in Europe and Asia.

    US gas futures were around $2.40 per million British thermal units (mmBtu) on Tuesday, while Asian spot LNG prices were about seven times more expensive at over $18 per mmBtu for July cargoes.

    Exxon is looking at building a new petrochemical plant in Texas to take advantage of cheap shale gas, but has not decided on the level of investment nor whether it would export petrochemicals, Tillerson confirmed.

    "We will see where the markets are for those chemicals," he said speaking on the sidelines of the conference.

    The plant could be online as soon as 2016, according to a US environmental filing seen by Reuters.

 
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