Concerns about fracing are causing Europe to miss out on shale gas boom

Europe’s loss is the United States’ gain with respect to shale gas production, says the chief executive of the world’s largest petrochemical group. Mohamed al-Mady, head of Saudi Arabia’s Sabic, recently told the Financial Times that Europe will likely lose new petrochemical investments to the US and other countries because of its concern about hydraulic fracturing and its failure to allow shale gas development to proceed. Canada, China, and the Middle East also will be beneficiaries, he added.

France is one European nation that has already banned fracing technology due to its concern about water contamination and other environmental issues. Other countries appear reluctant to allow shale development as well. This is occurring despite the fact that much of Europe currently is over-dependent on natural gas from Russia, which controls pricing and delivery and has a virtual monopoly on gas in some European states.

Meanwhile the abundant supply of domestic natural gas in the US has driven down prices and created a demand for cheap gas to generate electricity, which also helps power generators meet federal environmental standards.

In addition, some US shale gas contains ethane, which can be converted into ethylene to make numerous petrochemical products, including plastics.

The United Kingdom and Poland seem to be bucking the European trend against shale gas development. The government of the United Kingdom said Dec. 13 that it will permit the resumption of shale gas exploration, including horizontal drilling and hydraulic fracturing, which are essential to the economics of shale development.

Ed Davey, the UK’s energy and climate change secretary, said the government will allow shale development to resume, but that any fracturing activity would be subject to new controls aimed at mitigating the risk of seismic activity (i.e., earthquakes) in the surrounding area.

Exploratory fracing has been suspended in the UK since May of 2011 after two small seismic tremors were detected near the country’s only fracing operation in the Bowland Basin, east of Blackpool in Lancashire, northern England. The British Geological Society recently reported that the area around Blackpool may hold as much as 300 trillion cubic feet of gas, at least 50% more than was previously thought.

In his Dec. 13 announcement, Davey said that shale gas represents a promising new potential energy resource for the UK and could contribute significantly to the nation’s energy security and reducing its reliance on imported gas.

“My decision is based on the evidence,” said Davey. “It comes after detailed study of the latest scientific research available and advice from leading experts in the field. We are still in the very early stages of shale gas exploration in the UK and it is likely to develop slowly. It is essential that its development should not come at the expense of local communities or the environment. [Fracing] must be safe and the public must be confident that it is safe.

The government of Poland has also been active in encouraging shale gas development within that Eastern European nation. However, exploration to date has not been encouraging, and some multi-national firms, including Exxon Mobil Corp., have withdrawn from the country.

Although Poland and the UK are hopeful, it remains unclear as to whether either will enjoy the widespread economic benefits of shale gas development that are occurring in North America. 

Related Articles

Shell postpones Norwegian subsea gas project

04/14/2014 Shell is postponing a project to provide subsea compression at the North Sea's Ormen Lange, the second-biggest Norwegian gas field, despite objections of a key license partner, according to a Reute...

GOM consolidation, Canadian revival mark recent upstream M&A activity

04/11/2014 The Period from February 17 through March 16, 2014 saw 42 upstream transactions in the US, totaling $4.5 billion, with Energy XXI's $2.3 billion acquisition of EPL Oil & Gas dominating the mont...

MIDSTREAM NEWS

04/11/2014

UPSTREAM NEWS

04/11/2014

Duvernay - The Golden Canadian diluent play?

04/08/2014 Growing Canadian production of oil sands bitumen requires diluent to blend it to pipeline flow specifications. The resulting demand for diluent exceeds local Canadian supply from plant condensate p...

More Oil & Gas Financial Articles

Shell postpones Norwegian subsea gas project

Mon, Apr 14, 2014

Shell is postponing a project to provide subsea compression at the North Sea's Ormen Lange, the second-biggest Norwegian gas field, despite objections of a key license partner, according to a Reuters report.

GOM consolidation, Canadian revival mark recent upstream M&A activity

Fri, Apr 11, 2014

The Period from February 17 through March 16, 2014 saw 42 upstream transactions in the US, totaling $4.5 billion, with Energy XXI's $2.3 billion acquisition of EPL Oil & Gas dominating the month's activity.

MIDSTREAM NEWS

Fri, Apr 11, 2014

UPSTREAM NEWS

Fri, Apr 11, 2014

Duvernay - The Golden Canadian diluent play?

Tue, Apr 8, 2014

Growing Canadian production of oil sands bitumen requires diluent to blend it to pipeline flow specifications. The resulting demand for diluent exceeds local Canadian supply from plant condensate production – leading to imports from the US of more than 150 Mb/d in 2013 – a figure expected to grow to 460 Mb/d by 2018. That expectation for future import growth is based on the assumption that Canadian condensate supplies would remain relatively flat at about 140 Mb/d. But could the developing Duvernay gas shale play in Western Alberta turn those estimates on their head? .

Most Popular

Oil & Gas Jobs

Search More Job Listings >>
Subscribe to OGFJ