(The author is a Reuters market analyst. The views expressed
are his own.)
By Gerard Wynn
LONDON, March 21 Europe's shale gas was always
chiefly a bargaining chip for price negotiations with Russian
and other imports, and remains so after Poland found it was no
longer an energy behemoth - with reserves about a tenth of
Hopes of a shale gas revolution in the European Union were
over-blown. While shale gas became a game-changer to the U.S.,
flooding the domestic market, in Europe, it will supply a useful
The bloc hosts 31 test drills so far, the EU's executive
commission confirmed on Wednesday, compared with more than
25,000 operating wells in the United States.
It takes time to build out the infrastructure to drill and
operate wells and transport the gas, meaning a ramping up was
always a decade-long project.
Europe's gas supply is a more varied mix of domestic
production plus imports (from Norway, Russia and liquefied
natural gas from Qatar) compared with the United States.
The bloc's shale gas reserves will enable members to have
influence over the price of imports, rather than replace them.
In 2007, before shale gas changed the U.S. energy picture,
the United States produced some four-fifths of its total
domestic gas consumption.
The balance was imported from Canada and liquefied natural
gas (LNG) shipped from overseas.
The picture in Europe in 2010 was far more diversified. EU
natural gas production accounted for just over a third of total
consumption of 493 billion cubic metres (according to BP data).
Of the rest, Russia supplied some 30 percent (148 BCM), LNG
imports accounted for 18 percent (88 BCM) and the balance was
piped for example from Algeria and Norway.
Meanwhile, licensing and regulatory hurdles in the EU mean
the bloc was only ever likely to exploit a fraction of its total
reserves, already collectively barely half those in the United
First, in the United States, landowners own the exploration
rights to their natural resources which are typically owned by
the state in Europe and many other countries.
That forces companies in Europe to buy a licence from
regulators who then have an opportunity to enforce a considered,
rather than ad hoc, regime.
Second, in Europe the regulations limiting exploitation are
already present: existing environmental standards regulate the
impacts of engineering projects on groundwater and the wider
environment, as well as the use of hazardous chemicals and
For example, current EU chemicals regulation already require
disclosure of the content of liquids which drillers use to blast
natural gas from rocks deep underground, known as fracking
fluids, contrasting with a lack of transparency on the issue in
the United States.
Third, residents in some densely populated European
countries have a tradition of low tolerance to local disturbance
and vocal objection to engineering development.
The fact that U.S. landowners and communities sell the
licences and so directly profit from shale gas development
reinforces that contrast with local European objection.
Those environmental concerns have already seen a cautious
approach: France and Bulgaria have banned exploration, in
response to public concerns, while drilling is suspended in
Britain following an earthquake linked to shale gas exploration
in the northwest of the country.
France has now taken pole position in a European reserves
league table from Poland.
Polish reserves are less than 30 trillion cubic feet (tcf),
compared with a previous estimate by the U.S. Energy Information
Administration of 187 tcf, researchers from the Polish
Geological Institute, with the help of the U.S. Geological
Survey, said on Wednesday.
Warsaw still saw the reserves, together with conventional
gas, as enough to cover the nation's total domestic consumption
for 35 to 65 years.
According to EIA data, updated with the new Polish estimate,
Europe now has up to 480 tcf of "technically recoverable shale
gas resources", compared with 862 tcf in the United States.
That is still ample to help negotiate prices, diversify
supplies and reduce import dependence, good news as the bloc
looks to shift away from high-carbon coal, while limiting the
cost and risk of depending too much on less carbon-emitting
nuclear and renewable power.
(Reporting by Gerard Wynn; Editing by Elaine Hardcastle)