Trend: Is Shale Gas a U.S.-Only Phenomenon, or Does It Have Farther Reach?

The shale gas revolution has so far been a U.S. phenomenon. But hydrocarbon-containing Devonian shale formations are far from a U.S. or even North American phenomenon. Geologic forces didn’t follow political boundaries in the Devonian period 400 million to 300 million years ago. Indeed, the continents then were not where they are today by large measures; the Devonian shales are now widely distributed.

Does that mean that other areas where advanced technologies involving horizontal drilling and hydraulic fracturing can liberate hydrocarbon resources are likely to enter the market? While that might seem an easy proposition for any nation, it is not proving to be the case. Geologic surveys have identified likely shale resources in England, much of France and parts of Germany, Poland, and large areas of Russia, currently the largest natural gas producer in Europe. None of them appear likely to develop their considerable shale resources, although the shale prize in England is up for grabs.

In the U.K., the Conservative government of David Cameron is pushing shale development to replace declining North Sea production. Earlier, U.K. Chancellor George Osborne detailed plans for generous tax subsidies aimed at encouraging development of the U.K.’s shale resources. He said shale gas is “a resource with a huge potential to broaden the U.K.’s energy mix,” adding: “I want Britain to be a leader of the shale gas revolution.”

There are U.K. skeptics, though. BG Group, a leading liquefied natural gas supplier, says it’s unlikely the shale gas revolution will hit Great Britain for at least another decade. The Financial Times reports that the firm is “skeptical that’s going to be fully replicated anywhere else as quickly as we’ve seen it in the U.S.” But prospects for developing U.K. gas reserves through fracking have run into nasty local opposition, including death threats against Francis Egan, head of Cuadrilla, which has begun exploration in West Sussex. Cuadrilla is headed by Sir John Browne, former head of BP and the author of that company’s now-abandoned and much-maligned slogan “Beyond Petroleum.”

Indeed, in late August, Cuadrilla stopped some exploratory drilling in West Sussex—for oil, not gas, but the symbolism was still attractive to local anti-fracking activists—as a result of threats of violence.

In France, where nuclear power reigns supreme and ties between the government and the government-owned nuclear utility, Electricite de France, and its nuclear vendor, Areva, remain tight, the government has ruled out exploration for shale gas. Socialist president Francois Hollande has completely rejected fracking. According to the news service UPI, Holland has said, “As long as I am president, there were will be no exploration for shale gas.” But he may not be president for all that long, given his rankings in French polls.

Then there is Russia, a dominant European provider of natural gas from conventional resources, and possessing what could be major shale reserves. The country, under the leadership of Vladimir Putin, seems intent on protecting its legacy gas infrastructure against new competition domestically and from foreign gas suppliers.

In an interview with the Russian news service RT, Aleksander Medvedev, general director of Gazprom, the monopoly gas company with close ties to Putin, echoed France’s Hollande. “I would like to quote the president of France, who said that as long as he’s president, he will not allow the production of shale gas in France, and there are quite a number of reasons behind this opinion,” Medvedev said. “I’m rather sure that the French president was supplied with all the available information about shale gas potential and problems, and number one is that the cost of production of shale gas in Europe is incomparably higher than in the U.S. and also the situation with the environment is different, because in the U.S. its main production is in unpopulated areas, which are quite available in the U.S., but in Europe we can’t find such big unpopulated areas with reach to the water.”

The local opposition to fracking in England and the reluctance of France and Russia to upset existing energy players may work to the benefit of some traditional, non-shale gas suppliers, according to the Wall Street Journal. The newspaper reports that the reluctance of European countries to dig into shale “is potentially good news for countries that have bet large on gas but which are without shale reserves. One of these, Australia, has seen its appeal wane as high costs and delays hurt returns on investment, including the colossal Gorgon project, which aims to develop massive offshore reserves in Western Australia.

Kennedy Maize is MANAGING POWER’s executive editor.

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