Shale gas more of a hit in U.S. than Europe

LONDON (Reuters) - Shale gas, viewed as a game changer in the U.S. natural gas market, is likely to have less of an impact in overcrowded Europe, companies attending the Reuters Global Energy Summit said.

The fuel -- natural gas trapped in layered rock rather than porous reservoirs -- accounts for a rising part of U.S. gas output and companies are stepping up a search for deposits in Europe that could reduce dependence on imported supplies.

While deposits of shale gas in Europe could be vast -- Royal Dutch Shell (RDSa.L) has said there may be enough in Sweden to make the country self-sufficient in gas for a decade -- European environmental concerns are more acute.

"It's being seen as a U.S. phenomenon. There was a view shale gas was going to be a major factor in European supply and demand," Peter Aitken, head of coal global risk at energy trading firm Vitol, said at the summit.

"I'm not sensing people are so enthusiastic. I think the environmental concerns are more serious."

In Europe, many oil and gas companies are hunting for the unconventional fuel, including Shell in Sweden, Exxon Mobil (XOM.N) in Germany, while ConocoPhillips (COP.N) and Chevron (CVX.N) were looking in Poland.

"It's a little bit of a bandwagon, shale gas," Brian O'Cathain, chief executive of Irish oil and gas independent Petroceltic (PCI.L) (PCI.I) and not a player in shale gas, said at the summit on Tuesday.

"It's very unlikely shale gas will ever come into play in Europe to the extent it has in the U.S."

Shale gas flows less freely than from traditional reservoirs, and wells must be drilled closer together to exploit reserves, resulting in a larger footprint.

The drilling technique, hydraulic fracturing or "fracking," injects millions of gallons of water, sand and a mix of chemicals underground where it breaks open fissures in the gas-bearing shale to allow gas to be extracted.

Environmentalists have argued the mix of water and chemicals contaminates water.

Shell's hunt is under fire in Sweden, where the opposition says it will stop the search if it wins elections in September.

RIGS, WATER

O'Cathain of Petroceltic said Europe's relative lack of drilling rigs and water access were two issues that may slow shale gas development in Europe compared to the United States.

"You don't have same number of rigs around or the same number of fracking crews, it's more difficult to get access to ground water, it's much more difficult to get permission to dump water after you've used it," he said.

Analysts have said Europe has the advantage of an extensive existing pipeline network to get any shale gas to market, something many shale producers in the United States crave.

But in the view of Carlo Malacarne, chief executive of Snam Rete Gas SpA (SRG.MI), that pipeline network may not work in the favor of shale gas.

"I think it's a U.S. phenomenon. I know that a lot of companies are trying to develop shale gas in Europe," he told the summit.

"In Europe, where we have pipe connections with Russia and North Africa, I don't think shale gas will create competition in Europe."

(Additional reporting by Jackie Cowhig, Barbara Lewis and Christopher Johnson; Editing Sue Thomas)