energy markets | Shale gas
mental Management (CIWEM) concluded that: “Com- pared to other fossil fuels, the overall water use intensi- ty of shale gas is low and claims by some opponents that the shale gas industry represents a threat to the security of public water supplies is alarmist.” The same study also noted that: “Contamination of aquifers…is unlikely where shale plays exist at depth in the UK.” Of course, like many industrial endeavours, shale
gas exploitation can cause damage to the environment and risk to health and safety if it is improperly conduct- ed. But if we adopted an approach that blocked all industrial activities on such criteria, then none would ever be performed. Some oppose shale gas exploitation on production
Above: Protestors at Balcombe in the UK demonstrate against Cuadrilla’s fracking test drilling
tive advantage – not to mention that both regions are plagued by political instability. Russia already supplies almost 40% of Europe’s imports of natural gas and, given the ongoing confl ict in Ukraine, Europe is likely to want to decrease that share rather than increase it. The obvious solution is much closer to home. Like the US (and China), Europe possesses large reserves of shale gas (Figure 3). The difference is that, while shale gas has already revolutionised the US economy and China is decisively moving towards commercial exploitation, very little is happening in this direction in Europe. In 2013, the US produced more than 200bn m3 of shale gas. China has produced in excess of 200m m3 There is, undoubtedly, a strong anti-shale lobby in Europe. Some oppose the exploitation of shale gas on ideological grounds. Others, however, argue there are other, more tangible, reasons why shale ‘will not work’ in Europe. One argument frequently put forward is demography: it works in the US, some say, because the population is much sparser there. In densely populated Europe, however, there just isn’t room to set up the necessary facilities without huge inconvenience to large layers of the population.
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At fi rst glance, there appears to be some truth in this argument. The US does have a much lower population density, compared to Europe. But a more detailed examination shows that shale gas is not uniformly distributed in the US and nor is the population. The bulk of shale gas exploitation occurs in regions which are no less densely populated than Europe, or at least the European countries where most of the shale gas reserves are located (Figure 4).
An additional argument opposing shale gas exploita- tion claims that such activity presents a severe risk of causing earthquakes, soil pollution and aquifer contamination, or that it will require huge volumes of fresh water. Again, this is not borne out by the facts. An independent study published in January 2014 by the UK-based Chartered Institution of Water and Environ-
14 PIPELINE COATING | May 2014
economics arguments and there is some merit in this. The current production cost of shale gas in the US fl uctuates between $3 and $5 per million BTU but due to the different geology of shale and surrounding rocks in Europe, production costs are expected to be much higher, perhaps $8-$12 per BTU. However, Europe has often bought natural gas at prices in excess of that production cost, while experience and technological progresses are likely to drive European costs down. According to a recent study performed by Ernst &
Young: “Production costs in North America have declined markedly over time with advances in technol- ogy and knowledge transfer gained from the experience of large-scale production. Technologies for drilling and fracking are not at a developmental standstill. Growing recognition of the potential of shale resources mean that oil and gas and oilfi eld services companies will invest in research and development to improve the effi ciency and lower the cost of shale gas exploration and production.”
Opponents also claim that if shale gas exploitation does result in a lowering of energy costs in Europe, this
Figure 3: Shale gas Total Recoverable Reserves (TRR, 2012 best estimate)
Source: EIA
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