Europe shale gas: As big as North America
- Published on 10 March 2011
- Written by Nick Grealy
I have often railed here against what I call the CW or Conventional Wisdom of UK energy experts, i.e. those who went through various stages during the shale journey. The CW are those who when they don't make a good living advising the government to spend huge amounts on money on energy, actually are in government themselves, as I used to be. The CW have a vested interest in maintaining the perception that gas is a big problem (cost, security, carbon): Simply put they don't provide anything as messy as solutions since there is easier and better money to be made spinning out the problem. That explains a lot of why while wilful ignorance on shale is rife in the UK, it's getting replaced by outright denial and hostility in some quarters.
But CERA are both mainstream and consistently cutting edge on shale. A lot of this must come from the corportate culture of Daniel Yergn's original company which is curious, open and hopeful, instead of close-minded and fearful and classic top down energy thinking.
So when CERA, who have always been realistic about shale but, like everyone else unable to come up with some numbers, actually come up with some numbers to put against European shale, they will be listened to.
The size of European unconventional commercial gas reserves rival that of North America, according to a major new study by IHS Cambridge Energy Research Associates (IHS CERA). The study, Breaking with Convention: Prospects for European Unconventional Gas estimates Europe’s total unconventional gas in place could be 173 trillion cubic meters (Tcm), or 6,115 trillion cubic feet (Tcf).
Breaking with Convention is the first of a series of essential analyses of the prospects for unconventional gas development in Europe and the world. Based on the systemic analysis of the key unconventional gas plays in Europe (both shale gas and coal bed methane) and drawing on extensive IHS proprietary databases, the study explores the extent to which the sizable potential of unconventional gas is likely to be realized and what it means for European gas markets.
“The technological revolution in unconventional gas has been the single most important energy innovation so far this century,” said IHS CERA Chairman and author of the Pulitzer-Prize winning book, The Prize, Daniel Yergin. “Its tremendous potential has already transformed North America’s energy landscape and may now transform the global gas industry.”
Do I agree with Daniel Yergin? I would replace "may" with "inevitably" in the last sentence. The CERA numbers attached to Europe surprise even a (rational) optimist like me, but CERA have access to some expensive proprietary databases. Being part of the establishment counts after all. More figures here:
Unconventional gas in Europe is likely to make significant contributions to supply in the next 10 to 15 years, the report says. IHS CERA estimates production levels ranging from a minimum of 60 billion cubic meters (Bcm)—less than half of current shale gas production in North America—to 200 Bcm around 2025.
Let's start at the minimum 60 BCM and compare it to the total European LNG imports in 2009 of 69.02 BCM. That means that LNG has some major problems if the European market evaporates in the way the North American one had. Cold comfort for the gas industry is that unlike in the US and Canada, no one is predicting European exports. At the other end 200BCM equal the entire demand of Britain, France and Germany combined or the most of the rest of the EU minus them. Which changes everything:
The impacts of the stabilization of domestic supply, though not as revolutionary (as in the US), could be substantial, the report notes. A stabilized domestic supply could alleviate current fears over security of supply and increase the level of comfort with higher levels of reliance on gas, including imports. European policymakers could then be faced with an important strategic choice between a domestic secure and relatively-clean unconventional gas and more costly zero-emission alternatives.
Cold comfort again for the CW, in that these figures won't come to pass for another 10 to 15 years. Suppliers, energy consultants, and their enablers such as Ofgem, can breathe easy, secure in the knowledge that high prices are around at least until they retire or find some other way of scamming people.
Or can they? We don't necessarily need this amount of gas here today not to impact prices. Who saves for retirement when they have a rich, loving 90 year old granny?
We need a few confirmed figures from actual producers. In other words we need to know that money is in the bank, even if it's ten years from maturity. Don't worry the figures are coming as I've been saying for two years, and CERA now intimates.
Once we do, it's goodbye to spending money on crazy things we have been told to save up for: Coal Carbon Capture and Storage, Off-shore Wind, Nuclear and pipelines like Nabucco. All this £200 BN to keep the lights on rubbish is consigned to the rubbish bin of history. We can invest some money on efficiency and using technology to supply reliable information on energy use so we use less anyway. We can have R+D investment in technology like energy storage, solar and small nuclear that holds promise to truly cut carbon affordably and quickly instead of using today's noble technology that is also very expensive or unproven or both. But the majority of that £200BN? We could spend it wisely on education or transport or medicine, but let's face it for most of us, it will be party time.