SHALE REVOLUTION
European Shale: Evolution or Revolution? Evolution
Revolution • Disappointingwell results
Geology & Resource Potential
Environmental& Social Factors
Fiscal & Regulatory Regimes
Energy Prices
• Reserves found to be uneconomical to develop
• Unsustainable production rates
• Results of studies into environmental impacts lead to restrictions/bans on use of fracking
• Increased public pressure on governments to halt development activity until impact is known
• Potential EU-wide regulations on shale gas development
• Inclusion of shale gas in EU fuel quality and emissions legislation
• Competition from LNG and pipeline gas from Russia and the Caspian region
• Limited spot market liquidity
• Incentives provided by individual countries to shale gas developers
• Expedited approvals process for developments
• Government support for shale gas R&D • Deregulation of gas markets
• Long-term, oil-indexed contracts not renewed
• Improved interconnectivity between markets
Gas Demand
Infrastructure & Service Capabilities
• Slower growth due to measures to support development of low-carbon economy
• Weaker Eurozone economy
• Limited supply of suitable equipment or skilled personnel
• Lack of funds available to invest in new gas supply infrastructure
• Increased demand for gas as a fuel for power generation
• Gas positioned as a transition fuel to a low-carbon economy
• ervice industry is fast to adapt to industry needs
• Technology developments that drive down costs
In Europe shale gas development will follow a more evolutionary path. A number of factors will influence the pace and feasibility of shale gas developments.
Source: Ernst & Young
shale gas exploration in the EU, suggesting a cautious approach to an issue that has divided EU Members. “Overall, we can conclude that the current legislation, especially in the field of environmental protection, already covers most aspects linked to shale gas activities,” the study said. It added, however, that “some adjustments to legislation should be further considered in order to improve its appropriateness and practicability with a view of regulating shale gas activities.” The report, praised by advocates
and criticized by environmentalists, came as the nascent shale gas industry picks up momentum. “While all environmentalists agree on the need to move away from coal, I don’t think you will find much enthusiasm for shale gas,” says Jesse Scott of NGO EG3.
60 March 2012 • Early exploration success
• Reserves potential proven to be greater than expected
• Rapid ramp-up in production
• Studies show that fracking is safe to public health and the environment
• Public desire for lower energy prices
The EU could still move to restrict
shale gas development. Energy Commissioner Guenther Oettinger said the report “confirms that there is no immediate need for changing our EU legislation. ... We take environmental concerns seriously and will continue to monitor the development of shale gas extraction in the EU.” “We are pleased that after careful
review the EU believes the existing regulatory framework for oil and gas exploration and production provides enough safeguards to ensure that natural gas from shale can be produced responsibly in its member countries,” announced John Claussen, Country Manager for Chevron’s operations in Poland. But environmentalists believe the
EU’s conclusion was premature and rued that shale gas would divert attention from important renewable energy investment. The IEA’s World Energy Outlook
2001 says that the growth of hydraulic fracturing “is challenging the adequacy of existing regulatory regimes.” As such, it plans to publish a report this year advising its members countries on best practice for regulating the industry. The debate about shale
exploration is at its hottest in Central European (CE) states. Poland is a classic example. With an overwhelming amount of electricity generated by coal, the prospect of gas supply dependence and its ability to meet EU emission targets is palpable. A recently released Polish governmental study found that hydraulic fracturing on Poland’s first shale gas exploration well has had no effect on the environment so far. The news will be welcome to Poland’s government, which has sought to make shale gas exploration attractive to foreign investors in its bid to become the “second Norway” as the Polish Geological Institute describes it. “Shale gas remains the only dependable alternate source for
the CE states,” according to Alan Riley, Professor of Law at City University London. It will also lead to cheaper gas, boosting the competitiveness of industry. “The economic and energy security benefits could be profound,” says Riley. He believes that to allay the concerns of governments and
environmentalists, the US should support the establishment of a Shale Gas Trust, which would seek to provide advice on shale gas exploration and production best practices. “It would offer assistance in drafting national regulations and certifying universities to educate the officials who supply the administrative capacity necessary to run production. The Trust would also undertake and commission independent research. It would be
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84