Environmental regulations and investment are also neededThursday, May 22, 2014
US deputy energy secretary: having resources isn’t enough
Having plenty of shale gas and oil resources is not enough, countries also need investment and to exploit the resources responsibly, following environmental regulations.
That was the main advice from United States Deputy Secretary of Energy Daniel Poneman to Argentina in a short visit to the country to sign an energy agreement between the countries.
“Argentina has world-class shale resources and the potential is enormous. Having the resources is necessary, but not sufficient. Public confidence is needed,” Poneman said yesterday.
“Resources have to be developed responsibly, transparently and under predictable rules. We must be environmentally responsible,” he added.
As a new phase of a deal agreed to in 2010, Poneman yesterday joined Federal Planning Minister Julio De Vido in signing an agreement to extend cooperation between the countries on energy issues such as unconventional hydrocarbons, smart energy networks, nuclear energy, energy efficiency and renewable energies.
Argentina and the United States will share know-how on new technologies for the energy sector to develop affordable and safe energy, something that could help to speed up development at the massive Vaca Muerta formation. Bilateral cooperation on the recovery of non-conventional resources is a “strategic opportunity to strengthen economic and energy security,” according to the agreement.
“We analyzed the goals that have been accomplished in the last four years and agreed to work more intensively in specific areas,” Daniel Cameron, Energy Secretary, told the Herald. “We are exchanging experiences and regulations on shale, which we will adapt to the country’s context. It’s a sustainable activity if all regulations and inspections are fulfilled.”
‘It can be financed’
After meeting with De Vido, Poneman shared an event with Cameron at the University of Buenos Aires Law School, where he highlighted the potential of the country’s shale resources and the common bonds on energy between Argentina and the United States. The US official also met with Cabinet Chief Jorge Capitanich after the event, and will travel today to Vaca Muerta with government officials.
When asked about the funds that will be used to develop shale resources, Poneman said the country won’t have problems finding them and assured projects “can be financed.” Nevertheless, he pointed out the United States had to invest US$137 billion on shale technology from 1978 to 1992, a situation faced by Argentina.
“Companies will find the resources to exploit Vaca Muerta. They can take up debt or carry out equity investments. It can be financed,” Poneman said. “Both countries have been blessed with abundant natural resources and our interests are aligned. Hydrocarbons, wind and energy are abundant and there are many opportunities to exploit them.”
Analysts estimate the cost to develop a well at Vaca Muerta ranges between US$8 million and US$10 million compared to between US$2 million and US$3 million in the United States, where shale drilling is already key to energy supplies.That means Argentina will need to lure mammoth amounts of capital in order for the Vaca Muerta project to proceed more quickly.
While Poneman didn’t mention the environmental impact of fracking in the United States, where two weeks ago and for the first time a company had to pay US$3 million to a family over environmental damages, Cameron told the Herald such a scenario wouldn’t happen in Argentina, but opened the door to compensations through trials.
“Here, public interest prevails over private interest, something that doesn’t happen in the United States. But if there is environmental impact, there would be a legal discussion that could end up with compensation,” he said. “Each actor has to fulfill its part. Fracking is not risky, but there could be some cheaters, and because of that, all rules have to be fulfilled.”