Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
but does Europe even have extensive shale formations to worry about?
by tjbuff (timhess@adelphia.net) on Tue May 31st, 2011 at 11:02:36 AM EST

Poles apart in search for shale gas in Central Europe

An April report by the US Energy Information Administration (EIA) on shale gas resources outside the US put Poland's technically recoverable shale gas resources at 187 trillion cubic feet (cf), making them the largest in Europe. That compares with the 862 trillion cf of technically recoverable shale gas in the US

Wind power
by Jerome a Paris (etg@eurotrib.com) on Tue May 31st, 2011 at 05:21:40 PM EST
[ Parent ]
There are three major basins in Europe: Southern North Sea (offshore fracking - that's a non starter), Northern Germany, Poland (that's why some people in Poland are dreaming of becoming the next Norway). See this report (page 17) or this report by Eon. The latter report is especially interesting since it's by an energy major and says:

􀁹 Gas prices of $4/mmbtu (~€10/MWh) indicate that development, drilling and production is competitive

􀁹 Some studies (BENTEK) estimate breakeven costs below $3/mmbtu (~€7/MWh) for various shale plays possible

􀁹 Even conservative estimate (Wood Mackenzie) for breakeven cost lower than current gas forward prices of $7/mmbtu (~€17/MWh)

􀁹 Both investment and production decision with very short time lag


Estimates indicate that economical breakthrough requires gas prices above €25/MWh (~$10/mmbtu)

􀁹 European gas forward prices (NBP) currently at €13/MWh for 2012 (~$5/mmbtu)

􀁹 Optimistic estimates put breakeven cost at €14/MWh (~$6/mmbtu) in Hungary and at €25/MWh (~$10/mmbtu) in Poland

⇒ These estimates do not reflect uncertainties such as dry wells, Estimated Ultimative Recovery (EUR), assumed initial production

And thus...
Unconventional gas resources are 7 times smaller in Europe compared to North America 􀁹 Geology of unconventional gas in Europe is not well understood so far 􀁹 Access to resources more difficult than in North America 􀁹 Higher environmental constraints 􀁹 Services more expensive ⇒ Production will be later, slower and more expensive than in North America
They expect 10-15 bcm/year to be produced after 2020 but more and more (the vast majority) of the 600+bcm/year will still have to be imported. So "No 'unconventional gas revolution' in Europe."

Regarding Eon's assumption that "Gas prices of $4/mmbtu (~€10/MWh) indicate that development, drilling and production is competitive" one has to say that the question whether US plays are so easily economical is controversial. On the one side there are the industry guys who say it's abundant AND cheap. Then there are people like Arthur Berman who say that the manufacturing model has failed and the current glut keeps gas prices artificially low by draining shareholder equity for drilling. "It seems inevitable to me that it is sort of a bubble phenomenon; but bubbles can go on for 25 years or so, even though everyone knows that's what's happening. As long a capital markets continue to fund these things it's going to keep on going. I'm not saying that's even a bad thing, though I wouldn't put any money in it, that's for darned sure."

The US experience indicates that of those vast areas only a relatively small central area is economically viable for production. So this and more stringent environmental regulations (can't dump millions of liters of drilling fluids by 'surface disposal' and build roads at will) will ensure that Northern Germany probably won't look like this:

Schengen is toast!

by epochepoque on Tue May 31st, 2011 at 05:24:12 PM EST
[ Parent ]
and yet J's link shows Germany at 8 trillion cubic feet and Poland at 180. Do we have discrepancies here?

"Life shrinks or expands in proportion to one's courage." - Anaοs Nin
by Crazy Horse on Tue May 31st, 2011 at 07:02:24 PM EST
[ Parent ]
Shale basin doesn't mean there is gas (of exploitable quantity). It's one geological precondition for the resource to exist. Only parts of the basins have gas of consequential amount and only part of those areas are (in the long term) economical to drill in. Those Polish areas seem to have the best geology/potential/resource-whatnot - as far as that has been explored. But you can't really know the resource/reserves until real drilling has been done. The numbers Jerome quoted are estimates that point out the general direction. 'Technically recoverable' can mean anything at this stage.

From Schlumberger/EPIC

From MPI plasma physics

Schengen is toast!

by epochepoque on Tue May 31st, 2011 at 08:14:17 PM EST
[ Parent ]
Shell drilled for the shale resources in southern Sweden as indicated by the map, but gave up as the geology supposedly wasn't good enough. Also, there was strong local opposition. Probably has something to do with the Swedish mineral regulation which awards essentially all the profits to the extractive company without companesation to the landowner, and also make straight out land expropriation possible.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Wed Jun 1st, 2011 at 04:09:46 PM EST
[ Parent ]