COLUMN-Shale gas transforms energy picture: John Kemp

-- John Kemp is a Reuters columnist. The views expressed are his own --

By John Kemp

LONDON, Nov 11 (Reuters) - Nothing illustrates technology's power to transform the energy outlook more clearly than the development of the Barnett shale gas deposit under the city of Fort Worth in Texas. [ID:nLB663660]

The resulting increase in U.S. gas output has made a decisive contribution to the "unexpected boom" in North American gas production and the emergence of a worldwide "gas glut," cited by the International Energy Agency (IEA) in its World Economic Outlook (WEO).

It may be hard to remember now, but it is less than five years since the Hirsch Report, prepared for the U.S. Department of Energy, warned that previous optimism about gas supplies "turns out to have been misplaced" and "supply difficulties are almost certain for at least the remainder of the decade."

"Gas production in the United States now appears to be in permanent decline," according to senior analysts cited in the report. Hirsch urged policymakers to learn lessons from "peak gas" and be ready to deal with the disruption caused by "peak oil" (here).

Instead, dry gas production has soared from 18.5 trillion cubic feet (tcf) in 2005 to 20.4 tcf in 2008, and is on course to hit 21 tcf in 2009 (the highest since 1973-74).

Much of the surge has come from rapid growth in shale gas. While total U.S. gas production rose 1,288 billion cubic feet (bcf) between 2007 and 2008 (6.7 percent), the shale component leapt by 838 bcf (70 percent) and accounted for two-thirds of total growth.

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