Remarks by AIT Deputy Director Brent Christensen U.S.-Taiwan Natural Gas Development Summit -Supply/Demand, Price and Prospect November 14, 2013

OT-1313E | Date: 11/14/2013 (As Prepared for Delivery)

Deputy Minister Liang, Executive Secretary Chuang, Distinguished Guests, and friends,

It is a great privilege to be with you to welcome you all to this U.S.-Taiwan Natural Gas Development Summit. The American Institute in Taiwan has worked closely with the Bureau of Energy to bring this conference together, and we are pleased to see so many people interested in the topic of natural gas.

As many of you know, natural gas has become an increasingly important energy source around the world, with what many are calling an “energy revolution” in the United States and elsewhere. We are living in a time of dramatic change in the global energy sector. New technologies for developing natural gas have enabled us to reach previously inaccessible reserves that are transforming global markets. As the U.S. State Department’s Bureau of Energy Resources put it recently, “The picture of supply and demand for energy that most of us have in our head -- one where OPEC countries produce and developed countries consume -- has been shattered.” This has huge implications for both the United States and the rest of the world -- and particularly for economies such as Taiwan that import much of their energy.

Many experts are predicting a wide expansion of natural gas in global markets in coming years. Already, Russia has announced that it is seeking to increase production by 75 to 80 percent over the next 20 years. Australia and Indonesia are also hoping to greatly increase production. In the United States, the “shale gas revolution” has led to an increase in production of 25% over the past five years. Just a few years earlier, experts were projecting that the United States would have to import approximately 64 percent of its natural gas needs by 2035. However, due largely to the “shale gas revolution,” experts are now reporting that the United States has sufficient domestic gas supplies to last more than 250 years. Rather than talking about importing natural gas to help meet U.S. energy needs, the United States has now begun to export liquefied natural gas. We will need to ensure that these new supplies are developed in ways that are environmentally sound and sustainable, but if done right, it will also help to expand global markets.

Worldwide, natural gas markets are growing by 3% per year. And the liquefied natural gas market is growing three times faster, increasing the potential for global trade in natural gas and reducing the importance of monopolistic pipelines. In short, the international gas trade is becoming more fluid, creating opportunities for economies to either reduce their reliance on coal or to switch from coal to gas. This shift will have significant environmental benefits, since gas produces about half as much CO2 as coal.

We are already starting to see the first geopolitical impacts of the gas boom in the United States. Because of the shale gas revolution, the United States no longer imports the quantities of LNG that we anticipated from countries like Qatar and Trinidad and Tobago. Those supplies have instead been redirected to other markets, such as Europe. The result is that Europe now has greater energy security today than it did just ten years ago. This ripple effect may impact other regions as well.

Some have expressed concern that if the United States develops energy self-sufficiency it will become disinterested in global energy issues. These fears are unfounded. It is absolutely in the United States’ interest to remain engaged in discussions and efforts to further global energy security. The United States will remain engaged in global energy issues because if economies manage their energy sectors transparently and responsibly, it helps contribute not only to the stability of oil and gas markets, but also to the economic and political stability of entire regions.

Taiwan faces complex energy challenges in coming years as it seeks to balance energy security with economic concerns and environmental commitments. While difficult, these challenges also provide an opportunity to shape Taiwan’s energy mix toward more secure and sustainable sources. It seems likely that natural gas will be an important part of whatever energy future Taiwan chooses. I look forward to hearing what our speakers have to say about this topic.

Thank you again for joining us.