Green Europe Falling Behind In Shale Gas Race
Across the Continent, both policy makers and the public remain wary of the potential environmental impact of technologies like hydraulic fracturing, or fracking, used to extract shale gas.
In eastern Poland, politicians are still hoping to join the shale gas energy revolution, but lately they have had to curb their enthusiasm.
“Poland is certainly not Texas,” said Kash Burchett, a European energy analyst at the consulting firm IHS in London. “Shale gas in Europe is unlikely to revolutionize the energy industry like it has done in the U.S.”
Across the Continent, both policy makers and the public remain wary of the potential environmental impact of technologies like hydraulic fracturing, or fracking, used to extract shale gas. The fact that Europe is much more densely populated than the United States also makes it difficult to win government approval to tap the new energy deposits, which are often near major cities. Further complicating matters are shortages of technical expertise and drilling rigs, and regulations that differ widely among countries.
“The opportunity is there, but the early exploration efforts have been disappointing,” said Stephen O’Rourke, a senior gas supply analyst at the energy consultancy Wood Mackenzie in Edinburgh, who estimates that European shale gas may meet a mere 5 percent of demand within the European Union by 2030. “There’s a lot of uncertainty.”
A slowdown in Europe’s efforts to exploit its shale gas reserves, roughly 10 percent of the world’s deposits, could not come at a worse time for Europe’s companies, which are already suffering from a continental debt crisis and anemic growth and are becoming increasingly uncompetitive compared with rivals in the United States.
In America, energy-intensive industries like manufacturing and chemical production have benefited from a drastic fall in fuel costs because of a domestic energy boom in shale oil and gas. Natural gas prices, for example, have fallen by almost 67 percent over the five years, and the United States is on track to become the world’s largest oil producer by 2017, according to the International Energy Agency.
Fuel costs for European companies, by contrast, remain roughly double those of their American competitors, while many countries, particularly in Eastern Europe, are dependent on natural gas imports from Russia. Also, the Continent’s fossil fuel production has fallen steadily over the last 10 years, even as global demand rises.
Although it has some of the largest deposits of unconventional gas in Europe, France banned fracking in 2011, and Bulgaria and the Netherlands have followed suit with similar measures. Political leaders remain concerned over the potential environmental harm from the technology, while campaigners also have questioned efforts to promote fossil fuels over green technologies like wind and solar power.
“Shale gas isn’t a long-term solution to Europe’s energy security issues,” said Antoine Simon, a campaigner at the environmental group Friends of the Earth Europe in Brussels. “We should be looking to develop our renewables sector.”
Even in countries that support unconventional natural gas, exploration has not been easy.
After early-stage drilling in 2011 caused small earthquakes near the seaside resort of Blackpool in northern England, the British government stopped the practice of fracking. The ban was lifted late last year, though analysts doubt whether British shale gas will be able to compete against natural gas imports, including potentially those from the United States.
The cost of extracting European shale gas, for example, is roughly double that of American reserves, according to Wood Mackenzie estimates, and other alternatives, like liquefied natural gas, which can be imported on ships from Qatar and elsewhere, also are a cheaper option for many of Europe’s energy-hungry companies.
Competition will only become more cutthroat. As American companies turn their attention to exporting domestic natural gas, Europe, with its higher energy prices, is seen as an attractive market. Last month, Houston-based Cheniere Energy signed a long-term energy contract — the first of its kind — with the British energy company Centrica to ship shale gas from Louisiana starting in 2018. Similar deals are expected to follow.
“Future gas supplies from the U.S. will help diversify our energy mix,” Britain’s prime minister, David Cameron, said in a statement.