Europe shale, coal-based natgas on rise, may rival N America - study

09 March 2011 21:46  [Source: ICIS news]

HOUSTON (ICIS)--Unconventional gas sources in Europe, such as shale and coal-bed methane, are likely to significantly boost supply in the next 15 years, potentially rivaling that of North America, according to a consultancy study released on Wednesday.

Europe’s total unconventional gas in place could be 173 trillion cubic metres (tcm), or 6,115 trillion cubic feet (tcf), according to the study by IHS Cambridge Energy Research Associates (CERA).

The study was released at the CERAWEEK 2011 energy conference in Houston.

By 2025, production levels could range from a minimum of 60bn cubic metres (bcm) to as high as 200 bcm, the latter of which would exceed current North America shale production.

However, the current European regulatory environment poses a challenge in that it is ill-suited to unconventional gas, according to the report.

“Regulations designed for traditional exploration and production have not been adapted to reflect the character of unconventional gas,” said Jonathan Parry, IHS CERA global gas director.

“There are significant challenges ahead, including uncertainties over length of tenure, permitting regimes and norms and water management, among others,” he added.

The delivery price of unconventional gas in Europe is expected to be higher than contract gas and present import sources, the report said.

However, the consultants believe unconventional gas will ultimately be on par with the long-term average price of contract gas, which would be linked to the price of oil.

Given comparative pricing, the unconventional gas plays are not likely to be as revolutionary as they have been in North America, according to the study.

But they could keep domestic supplies stable as conventional sources decline, the report said.

“Unlike in the United States - where the revolution in unconventional gas production has made the market nearly self-sufficient - unconventional volumes of gas in Europe are likely to keep domestic supplies stable in the face of declining conventional production,” said Jan Roelofsen, IHS global senior product manager.

Stabilised domestic supply in Europe could alleviate ongoing fears over security of supply and increase the level of comfort with relying on gas, including imports, the consultants said.

As such, European policymakers could then be faced with a strategic choice between a domestic secure and relatively-clean unconventional gas and more costly zero-emissions alternatives, according to the study.

“There is no question that substantial production of unconventional gas in Europe would have a major impact on the dynamics of Europe and Asian gas markets,” said Shankari Srinivasan, IHS CERA’s managing director for Europe and global gas.

A separate study released earlier in the day cited recent technology developments as boosting Europe's liquefied natural gas (LNG) supply, noting that part of European production would continue to serve the growing Asian markets.

The CERAWeek 2011 conference lasts through Friday.

By: Ben DuBose
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