Europe Evolution

Shale gas in Europe:

revolution or evolution?

Geology — replicating the US experience?

2

Gas demand

4

Energy prices

7

Competition from LNG and pipeline gas

8

Environmental and social factors

Fiscal and regulatory regimes

12

Infrastructure and service capabilities

14

Evolution rather than revolution

2

10

16

| Shale gas in Europe: Revolution or evolution?

The US experience

Introduction

The transformative impact that shale gas

has had on the outlook for US energy

markets has been well-documented.

The shale gas success story in the US

has resulted in heightened speculation

over the potential for shale gas to

transform energy markets in other

parts of the world. The spotlight is

now on Europe, where early-stage

exploration is under way.

Driven by advances in technology, such as hydraulic fracturing and horizontal drilling, shale

gas production in the US has increased at a rapid pace. The country is now largely selfannual average growth rate in shale gas production was 51% over 2008–11. However, the

domestic gas price environment led companies to prioritize the development of liquids-rich

shale deposits. Figure 1 shows the rapid increase in US shale gas production and resultant

fall in natural gas prices.

Figure 1: US shale gas production and natural gas prices

Tcf per year

development across Europe will follow

a more evolutionary path. We identify

10

16

9

14

However, a number of issues indicate

that the experience in the US may not

be replicated in Europe. Furthermore,

the rapid growth in shale gas production

has resulted in a corresponding increase

in concerns about the impact of the

development processes on public health

and the environment. Opinion on the

environmental impact of shale gas and

its role in the future energy supply mix

has become increasingly polarized.

This report looks at the potential for

shale gas1 development across Europe

and...