BP to Focus on Gas

A report in The Telegraph says that BP plc's strategic plan will signal the global oil group's intention to rapidly increase the gas arm of its business, including shale gas.

The Company's  strategic plan to be unveiled for  investors this week will say that a "dash for gas" is necessary as it is far less polluting than oil or coal and is more reliable than renewable energy sources such as wind and wave power. Technological advances have made gas more readily available, which could also mean a reduction in costs for consumers.

Signalling BP's focus on gas, Christof Rühl, BP's chief economist, said that the successful extraction of gas from unconventional sources such as shale was a "game changer", particularly in the US market.

Writing in the latest edition of Foreign Affairs, Mr Rühl said: "In response to tight supplies and rising prices, technological advances, such as horizontal drilling [which eases access to layers of oil or gas] and hydraulic fracturing [which uses water pressure to release gas from hard rocks] were employed to make unconventional gas resources, such as tight gas, shale gas, and coal-bed methane, accessible on a large scale.

"As a result, production from unconventional gas deposits in the United States has almost doubled over the past decade, and the share of these deposits in total US gas production has reached about 50pc. "Unconventional gas resources may become increasingly available, including in the large consumer regions of Asia and Europe. These still untapped resources have the potential to become game-changers in global energy."

His views echo those of Tony Hayward, BP's chief executive, who has said that new gas exploration would radically change the shape of the energy industry.

Mr Rühl also revealed BP's caution over the role of renewable energy in reducing carbon emissions, particularly as energy demands from the emerging markets were often satisfied by increasing the use of coal.

"The problem is that the ability to generate a sizable amount of carbon-free energy is still very far away," he said.

"The question is whether a bridge fuel, such as natural gas, could help minimise carbon emissions in the meantime.

"Fossil fuels will be part of any solution to ensure energy security and stem climate change - and this will be true for much longer than many would like to think."

Source: The Telegraph