Why shale gas will, and must, work in Europe

In the spirit of environmental sustainability,  forgive me for recycling this comment I made in response to an FT story that started out:

The jury is still out on whether the US shale gas revolution can be replicated in Europe.

Having had the best part of five years experience observing the shale energy revolution, and being cursed with a long memory, I can provide some context in dismissing the “conventional” thinking of why unconventional energy isn’t for the likes of us inexpert Europeans.

Over the years, various analysts at WoodMac have been wrong about shale gas first in the US, latterly in China and consistently in Europe.  I’ve seen others such as Ben Dell of Bernstein move on from being the bad news bears of shale energy to take up new positions promoting shale oil exploration in Europe.  One person’s opinion I’d love to hear more of would be that of the FT’s John Dizard, who has been consistently, and spectacularly, wrong since 2009.  In his Olympian “expert” voice, he first told us how shale gas, thanks to outdated depletion analysis was either doomed to failure in the US or would need gas prices over $6 as he confidently predicted in 09,10,11 and even 12. In 2013, he doesn’t answer e-mails.

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Return of the not so Satanic Mills?

The jobs issue around shale has been too narrowly focused on the actual process in the local area itself, while the true job creation  potential could be throughout industry all over the country - and Europe.  But in one yet another unintended consequence of shale gas, could a future of shale gas in Lancashire portend a return to the glory days of the North West’s industrial past?

That’s not at all unlikely. Until recently the UK North West and the Rust Belt of Pennsylvania and Ohio shared a dying industrial heritage built on coal. Ohio and Pittsburgh had a historical steel industry, Lancashire had it’s cotton industry. On top of the Marcellus and Utica Shales, US Steel Inc is coming back from the dead and European steel makers like Vallourec or even Russia’s Severstal are making investments in Ohio as Vallourec closes plants in France.  

Two key factors leading to the development of the Lancashire cotton industry were coal and rain, the damp climate being suited to cotton spinning. The industry died a lingering death from the 1920’s to the 1960’s, but this being England, what happened almost a century ago sticks in the national mind as if it happened last week.  

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Shale gas is not going away

The US Potential Gas Committee publishes updates every two years of US natural gas resources and their latest report is the third one covered here, which makes me feel almost like the Rip Van Winkle of European shale. A more apt description may be the Bill Murray character in Groundhog Day. It's deja vu all over again: The 2009 Report:

The report by the Potential Gas Committee, the authority on gas supplies, shows the United States holds far larger reserves than previously thought. The jump is the largest increase in the 44-year history of reports from the committee.

From 2011

The Potential Gas Committee (PGC) today released the results of its latest biennial assessment of the nation’s natural gas resources, which indicates that the United States possesses a total resource base of 1,898 trillion cubic feet (Tcf) as of year-end 2010. This is the highest resource evaluation in the Committee’s 46-year history, exceeding the previous record-high assessment by 61 Tcf

The Groundhog syndrome also comes from the common meme of shale gas as bubble about to burst: same stuff, different year. In 2009:

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The dog in the sinkhole and other controversies of shale gas

If people know much about shale gas in Europe, they know there has been environmental damage in the US significant enough for shale gas to be described in the press, and thus perceived by both policy makers and the investment community as being inherently “controversial”.

What is the exact reality of the damage?  I’ve pointed out on several occasions that we are long on anecdote but lacking in data. On the anecdote front the up to the minute Pennsylvania Alliance for Clean Water and Air List of the Harmed consists of 1123 cases of ‘harm’ several of which are, trying to be polite, somewhat tenuous:

Symptoms: Constant fatigue, headaches, nausea, fatigue and dizziness

Symptoms (animal): Lost cows to toxic oil and gas waste; testing of sick cattle from the area by the Texas Veterinary Medical Diagnostic Laboratory in 2005 found petroleum in the hair of 54 out of 56 cows

Symptoms: Weakness, dizziness, fainting, nausea, pain, burning skin and breathing difficulty; four of her grandchildren, who live on the same property, have asthma

Symptoms (animal): Dog has asthma

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