BRUSSELS May 28 Europe needs an EU-wide
framework if it is to tap into its shale gas reserves quickly
enough to reap the benefit, a senior executive at Chevron Corp
said on Tuesday.
European governments should also consider sharing any
profits with local communities in an echo of what is done in the
United States, where landowners benefit directly from shale gas
finds, Derek Magness, Chevron's general manager for Europe, Asia
and Middle East, told Reuters in an interview.
Debate is intense in Europe about whether shale gas, by
lowering energy costs, can provide the kind of economic boost
that it has delivered in the United States.
"There's a big unknown here," Magness said, saying that
Chevron was committed to exploring shale gas reserves.
The amount of available data for Europe is tiny compared
with the United States. In Poland, for instance, only one well
has been drilled in one concession, while for an area of a
similar size in the United States, there would be 4,600 wells,
So far, he said, Chevron was drilling a fourth well in
Poland and hoped to drill two more this year. It also plans to
explore in Romania and is in talks with the Ukraine government.
Magness said he could not comment on ongoing negotiations.
STAYING THE COURSE
While Chevron says it is staying, other companies, including
Exxon Mobil, have abandoned shale gas operations in
Poland. Some have cited uncertainty about the regulatory
environment, as well as poor drilling results.
The European Union's Executive Commission has said there is
sufficient EU-wide regulation in place for the exploration phase
of shale gas, though more might be needed to cover development.
It has said it will publish later this year a non-binding
framework to guide activity.
"We need that regulatory environment in place," Magness
said, arguing it could overcome confusion and share best
practice, with nations such as Britain providing a possible
British Prime Minister David Cameron, whose government is
advancing plans for its shale gas deposits, said at an EU summit
on energy last week that Europe could not afford to be left
behind as the United States gains a competitive advantage.
Magness said the question is "whether (the European Union)
can do it in a timely manner in order to take advantage of the
Benefits for the United States have included encouraging
re-industrialisation, as the chemical industry, for instance, is
drawn by cheap energy.
But for Europe the situation is complex. Opposition from
environmental campaigners is strong and geology and geography
are very different.
Analysts say the cost will rise as prices fell so far in the
United States that shale gas developers suffered a loss.
One catalyst in the United States has been the direct
financial benefit to landowners, which has overcome resistance,
whereas in Europe resources tend to belong to the state.
Magness said he had discussed with governments the idea of
handing some of the profits to communities.
"We would very much encourage the government to ensure a
portion of the profit would go to that community," he said. "At
least return it to the community in the form of a larger piece
of the budget."