Natural gas is perceived as a clean source of energy. It is available in several areas, and there is strong competition to produce it, especially given the increase in demand for natural gas as a result of its favourable specifications. In fact, natural gas used to be incinerated several decades ago, when there were no clear uses for it. Unfortunately, natural gas continues to be incinerated in a number of Arab countries, albeit at a lower rate than in the past, due to the failure to build a comprehensive network for the collection and production of gas. This results in the waste of an otherwise important source of energy, and the loss of billions of dollars that could have been derived for the countries concerned. One of the main favourable features of the gas industry is the stable nature of the contracts, which are sometimes in force for 20 or 25 years. These long-term contracts, in particular in the liquefied natural gas (LNG) industry, provided some stability that made it possible to avoid economic fluctuations currently seen in the oil industry. The reason for this stability is that LNG projects are tied, over long periods mentioned above, to predetermined quantities and prices. It is now clear that the development of the shale gas industry has begun to alter this stable aspect of the gas industry, whether through increasing the volume of supplies globally, or in terms of the negative impact on prices. For instance, gas prices fell in the U.S recently, due to the development of shale gas extraction and the competitive price of the latter compared to natural gas, as the price of shale gas is not linked to the price of crude oil as is customary in most commercial [natural] gas agreements; this led to greater confusion in the natural gas markets. Years, even decades later, companies have become capable of producing large quantities of shale gas at commercially viable prices, and of reducing the costs of extraction down to a level that allows this new source of energy to compete with natural gas produced from both associated and non-associated gas fields. How is shale gas extracted then? In short, the process is done by injecting massive amounts of water (about 90 percent) with sand (approximately eight to nine percent) in addition to chemicals (one to two percent) in order to fracture rocks and release the gas trapped inside. But despite the success of fracturing in gas extraction, the U.S government is still studying the negative impact of fracturing on the rocks' surrounding environment and land. Currently, there are draft bills in the Congress seeking to limit the fracturing process, for fear of their possible environmental impact. Moreover, there are big concerns in certain states (Pennsylvania, for example) regarding the massive quantities of water required to fracture rocks, and the types of chemicals used to extract gas. The estimated quantity of water needed for injection in a standard well is approximately 400 thousand gallons during the first five days of production. In its report for 2010, the U.S Department of Energy estimates the extractable shale gas reserves in the United States by about 347 trillion cubic feet. The government agency also estimated that the United States produced around 1.48 trillion cubic feet of shale gas in 2008, and predicts that annual production will increase to about six trillion cubic feet by 2035. Compared to other gas sources, shale gas is forecasted to account for 34 percent of the total production of gas in the United States soon. These large quantities of shale gas are producing significant effects on natural gas prices in the United States in general, on the quantities of LNG imported, and on LNG gas contracts. According to the Energy Information Administration, the average price of American gas during this period will be around 10.4 dollars per million British thermal units (BTUs), but with shale gas production, this price drops to 7.6 dollars per one million BTUs. Also, the United States' annual imports of LNG are expected to drop by about 1.8 trillion cubic feet to 0.8 trillion cubic feet annually between 2020 and 2030, compared to the United States' imports of 12.8 trillion cubic feet in 2009. This is while the production of shale gas in the United States increased eightfold during the past eight years. Shale gas was thus able to undermine the stability of the global gas trade, and was also able to impose on the gas industry the conditions found in the oil industry in terms of instability and vulnerability to economic cycles. Nevertheless, some countries managed to hedge against such variables. In Qatar, for example, the petroleum authorities managed to expand the use of gas: in the petrochemical industry, aluminium, helium and methane, and in converting gas to liquid petroleum (GTL), and also in power generation and regional exports through pipelines, in addition to exporting LNG – in particular to Asian markets that boast high growth and demand, and where prices are not directly affected by the U.S market. This means that the technical advances in the production of shale gas will have a limited impact on the Qatari gas industry, given the fact that Qatar is active in all facets of the gas industry, where it is not limiting itself to exporting LNG to the United States. *. Mr. Khadduri is an energy expert
