Hydraulic fracturing (fracing)—the injection of fluid under high pressure into deep wells to fracture shale rock that holds natural gas—has transformed the energy market in the United States in recent years. While regulatory and legal issues remain to be worked out, it is widely accepted that large-scale fracing will soon be underway, moving the United States closer to the energy security and independence it has sought for decades.
On paper, fracing for shale gas, also known as unconventional gas, should also be moving ahead across Europe. Demand certainly exists—the European Union is the world’s second-largest natural gas market by consumption—and the need for domestic development exists as Europe is the world’s largest natural gas importer. Availability is not an issue as the countries of Europe sit atop an estimated 115 trillion cubic feet (tcf ) of recoverable shale gas, enough to meet Europe’s projected energy needs for the next 60 years. Moreover, the same political, environmental and economic issues that are driving the United States ahead on fracing also are at play in Europe: the political desire to reduce dependence on foreign resources, the environmental goal of developing greener resources such as natural gas and the economic imperative to support industries that will create jobs in a region where unemployment averages almost 11 per cent.
Yet, most of the European countries with shale gas lag behind the United States in developing those resources.
EU lawmakers appear somewhat divided on fracing, as reflected by recent draft reports from two parliamentary committees. The Energy Committee’s report emphasises the transformative powers of fracing in terms of energy security and greenhouse gas reduction, while the Environmental Committee’s report emphasises controlling fracing with regulations. While the two reports suggest a dichotomy of opinion about how fracing should be allowed to proceed, it is notable that both committees assume fracing will take place in Europe. The European Commission has not yet taken a formal position on fracing, but its Commissioner for Energy has been a proponent of the process and the need for EU-level oversight, given the divergence of opinions between countries.
Fracing in Europe is playing out much the same way as it has in the United States, where different states are taking different approaches to the process. Just as some states (e.g., Pennsylvania and Texas) have embraced fracing, several EU Member States (e.g., the United Kingdom and Poland) have as well. Just as some states (Vermont and New York) have passed bans or moratoria while they study the process or enact new rules, so too have several EU States (France and Germany).
In the end, the same economic, political and environmental drivers that make hydraulic fracturing a near certainty in the United States are likely to lead most, if not all, EU Member States to engage in unconventional natural gas development. Indeed, given Europe’s significant dependence on foreign natural gas suppliers, and the staggering volume of natural gas resources that lie beneath its member nations’ borders, the case for fracing arguably is stronger in Europe than it is in the United States. Europe trails the United States principally because it is watching how the regulatory and legal debate plays out. But just as fracing is almost inevitable in the United States, so too is it just a matter of time in Europe.
The Position Across the European Union
Despite being an early advocate for fracing, widespread protests in Bulgaria led the Government in January 2012 to ban the practice and revoke permits for exploration of the Novi Pazar field.
On 7 May 2012 the Government of the Czech Republic announced a two-year moratorium on all fracing permits until new mining rules are passed.
France is believed to have the second highest volume of recoverable shale gas in Europe (around 180 tcf), but the government banned fracing last year after strong lobbying by the nuclear power industry. Whether that ban will remain in place, however, is now in question with the election of President Francois Hollande, who has spoken positively about fracing.
Germany is estimated to have 6–14 tcf of shale gas resources and has granted permits for shale gas exploration to several operators. However, local opposition has been strong and several national government officials recently spoke out against fracing, citing environmental concerns. Nevertheless, drilling continues in several parts of Germany, changes to mining laws have been proposed to address environmental issues, and domestic politics are unlikely to hold back long-term shale gas production as nuclear power is being phased out completely by 2022.
Holland is estimated to have approx-imately 49–65 tcf of developable shale gas and has been one of the leaders in exploration. The Dutch Parliament approved three drilling licenses in early 2011, however, local opposition has been growing and threatens to thwart the national government’s efforts.
Hungary has embraced unconventional gas development—in large part because its conventional reserves have reached maturity (companies are spending more to recover less)—and is attracting much interest from exploration/production companies.
The world’s fifth largest oil exporter, Norway does not import any natural gas and already has in place the infrastructure necessary to export any of the estimated 72–150 tcf unconventional gas resources it possesses and might develop. Norway is currently in the early exploration phase for this gas.
Conventional imports from Russia and other former USSR countries account for almost 61 per cent of the total gas consumed in Poland. Poland is eager to reduce this statistic and is looking to its estimated 187 tcf of unconventional natural gas—the largest in Europe and enough to supply the country for almost 300 years—as its key to energy independence. The Government has awarded more than 100 different concessions to entice oil and gas developers. Poland does not currently have any laws regulating fracing specifically, but has proposed a new tax on hydrocarbons, expected to be finalised in Q3 2012.
In 2009 imports accounted for 100 per cent of the gas consumed in Portugal so the country would benefit greatly from developing its own gas resources. Portugal sits atop the Lusitanian and Peniche basins, which are known to contain considerable shale gas, but exploration has been slow and limited to the northern portion of the country.
Romania was an early advocate for fracing, but the new government (installed on 8 May 2012) has announced it will halt all shale gas exploration, putting both existing licenses and the future of all natural gas development in doubt.
With almost no domestic production, Spain imports the vast majority of its gas from Algeria and Norway. Various drillers are currently engaged in exploration activities, most in joint venture with the state oil company. Spain has touted itself as a good partner for fracing because national and provincial governments support it, and the environmental restrictions are manageable. According to an energy minister from Spain’s Basque Government, two wells will be fractured in 2012–2013 to evaluate production feasibility.
The United Kingdom has limited coal reserves and significant, but declining, conventional natural gas and oil resources. As the largest gas consumer in Europe, it needs to develop stable domestic and foreign suppliers. The Government has promoted efforts to access the estimated 10–30 tcf of recoverable shale gas underlying the United Kingdom, but was forced to suspend fracing for almost a year when exploration work triggered small earthquakes near Blackpool in April 2011. The Government recently enacted new rules and fracing operations have resumed.