Korea will seek to develop shale gas as a new major source of energy and expand the country's imports of the new fossil fuel to 20 percent of all natural gas imports by 2020, the government said Thursday.
The country will also take part in overseas development projects to further improve its energy self-efficiency with shale gas accounting for 20 percent of its self-developed energy supplies in 2020, the Ministry of Knowledge Economy said.
The move comes as shale gas is opening up what the ministry's vice minister Cho Seok earlier called "a new golden age of natural gas."
"Shale gas certainly has the potential to become a future source of energy," he told a press briefing. "It is clear that the importance of natural gas is growing and will continue to grow in the future."
Shale gas is natural gas deposited in shale formation. The existence of such a fossil fuel has been known at least since the 19th century, but the gas had been considered uneconomic as the shale formation is usually found at much lower depths than conventional natural gas and its extraction requires a difficult and expensive process known as hydraulic fracturing.
However, with dwindling natural gas reserves, along with recent technological developments enabling fracturing of shale formations, shale gas is now considered a new important source of energy with abundant reserves throughout the world.
Cho also noted an indirect benefit the country may enjoy from the development of shale gas.
"We cannot say shale gas is the only answer, but the development of shale gas may cause a balloon effect, causing the price of liquefied natural gas to drop along with the amount of money we spend on gas imports," he told reporters.
Development and supply of shale gas in the United States has led to a large increase in the overall supply of natural gas there, causing U.S. gas prices to fall from an average $9.01 per million British thermal unit (MMBtu) in 2005 to just over $2.3 per MMBtu at the end of March 2012.
Btu is a traditional unit of energy that is approximately the amount of energy needed to heat 1 pound or 0.454 kilograms of water from 39 degrees Fahrenheit to 40 F with 1 MMBtu roughly translating into 1,000 cubic feet of natural gas.
The vice minister said increased imports of shale gas may not warrant an immediate cut in the energy supply rate of nuclear power plants, a source of recent concerns over safety, but noted the country will certainly have to revise its long-term energy supply plan.
Currently, the most attractive market or subject of development for Korea is the United States, where available technology and funds are already making shale gas a marketable product.
State-run Korea Gas Corp. (KOGAS) signed an agreement with a U.S. firm in March to annually import 3.5 million tons of natural gas, including shale gas produced from an area near the Sabine Pass River on the border of Texas and Louisiana, for the next 20 years.
Korea National Oil Corp. (KNOC) has also purchased a 23.67 percent stake in an oil field in Texas that produces shale gas, along with more expensive natural gas liquids and condensate.
The government will increase the amount of development funds available to KNOC and KOGAS to allow them to more actively take part in overseas development projects, the ministry said.
Also to help develop related technologies, the ministry will set up what it called a "master plan" by the year's end that will help bring up the country's technology level to about 80 percent of that of advanced countries by 2020, it added. (Yonhap)
