Shale Gas: the situation in Europe

Energy , Natural Gas Apr 18, 2012 No Comments

Shale gas in EuropeAs France takes the path of experimentation on shale gas, many European countries have launched investigations for future exploitation. But Bulgaria, Germany and the UK recently froze all exploration.

After commissioning a study on the various regulations and procedures relating to the exploration and exploitation of shale gas in Poland, France, Germany and Sweden, the European Commission estimated that there was no need to introduce new regulations at European level.

According to the institution, in the four countries studied, laws already cover the various issues raised (legal, financial, safety, water, noise …). However, Günther Oettinger, European Commissioner for Energy, previously estimated that harmonization of standards is needed because the situation is very different from one country to another.

In Europe, gas fields and unconventional oil are spread over several basins: the North (Sweden, Denmark, England), central (Germany, Austria), East (Poland, Ukraine, Hungary, Bulgaria, Romania ) and South (France, Spain). Several European countries are exploring and/or already have operations while others have frozen any action pending scientific assessments and impact studies.

Eastern Europe: same situation everywhere except in Bulgaria

Shale gas in PolandPoland, heavily dependent on Russian gas, is the leader of pro-European shale gas countries. According to the French interministerial mission on non-conventional hydrocarbons, which calls for France’s experimentation and exploration, this country “has made the development of shale gas a crucial factor in its energy policy”. The Polish Foreign Affairs and Environment Ministries in October 2011 indicated that “the 104 existing licenses should lead, by the end of 2012, to between 100 and 150 drilling and hydraulic fracturing. The pace of current drilling (more than ten in November 2011, over a hundred planned for 2012) should soon shed light on the potential of shale gas in Poland “. Poland is considering a commercial exploitation of its deposits from 2014 to reach gas independence by 2035.

Polish Geological InstituteBut the country has recently disappointed. While the U.S. Agency EIA had estimated in 2011 the Polish deposit to 5,300 billion cubic meters (representing three centuries of exploitation), an official report published in late March by the National Institute of Geology (PIG) indicates that the deposit is only 2,000 billion cubic meters and that the real resources would fall most probably between 350 and 770 billion cubic meters (representing six decades of production). The country however still maintains its business objectives for 2014.

In the Hungary/Romania/Bulgaria area, the potential is estimated at over 500 billion cubic meters. In this region, the political choices are very different. The first borehole was drilled in Hungary in 2009. Many exploration permits and exploitation were granted in this country.

Romania has also granted several exploration and exploitation permits to Chevron on 2700 km2 on the coast of the Black Sea. Faced with public outcry, however, the company announced on April 2nd that it was stopping explorations for 12 months to carry out seismic surveys. In the north, permits were also issued to Balard.

In Ukraine, Shell signed an agreement to invest more than €500 million in shale gas exploration and production.

In January, Bulgaria, although very dependent on Russian gas, passed a resolution prohibiting hydraulic fracturing for the exploration and extraction of gas and oil and withdrew permits it had granted to Chevron only six months before.

Western European countries rather favorable to exploration

Shale gas in the UKIn the rest of Europe, most countries, like Ireland, Austria, the Netherlands, Sweden, Denmark or Spain, are open to exploration.

In the UK, explorations began in 2010 and Cuadrilla Resources began drilling in 2011 near Blackpool, Lancashire. After two seismic events, potentially related to the practice of hydraulic fracturing near a fault, the work was suspended. The company commissioned a study by an independent panel of experts, study that the British administration wants to analyze before making a decision on further work.

Germany has also stopped all work after the completion of six holes (one followed by a hydraulic fracturing) since 2008, pending the findings of a working group of scientists, industry representatives and government.

Pascal Blanc

Pascal has implemented numerous software solutions in the areas of procurement, sourcing, spend management, supplier evaluation and performance. His clients include Fortune 500 companies in Europe, Asia and North America. He is a co-founder of Source & Procure.

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