Europe’s shale gas was always chiefly a bargaining chip for price negotiations with Russian and other imports, and remains so after Poland found it was no longer an energy behemoth — with reserves about one 10th of previous estimates.
Hopes of a shale gas revolution in the EU were overblown.
While shale gas became a game-changer to the US, flooding the domestic market, in Europe it will supply a useful diversification.
The bloc hosts 31 test drills so far, the EU’s executive commission confirmed this week, compared with over 25,000 operating wells in the US.
It takes time to build out the infrastructure to drill and operate wells, meaning ramping up operations was always a decade-long project.
Europe’s gas supply is a more varied mix of domestic production plus imports compared with the US.
The bloc’s shale gas reserves will enable members to have influence over the price of imports, rather than replace them.
In 2007, before shale gas changed the US energy picture, the US produced some 80% of its total domestic gas consumption. The balance was imported from Canada and liquefied natural gas from overseas.
The picture in Europe in 2010 was far more diversified. EU natural gas production accounted for one third of total consumption of 493bn cubic metres, according to BP data.
Russia supplied some 30% (148bn cubic metres), LNG imports accounted for 18% (88bn cubic metres) and the balance was piped from the likes of Algeria and Norway.
Meanwhile, licensing and regulatory hurdles in the EU mean the bloc was only ever likely to exploit a fraction of its total reserves.
First, in the US, landowners own exploration rights to their natural resources, which are typically owned by the state in Europe and many other countries. This ownership structure forces companies in Europe to buy a licence from regulators who then have a chance to enforce a considered, rather than ad hoc, regime.
Secondly, in Europe, the regulations limiting exploitation are already present: Existing environmental standards regulate the impacts of engineering projects on groundwater and the wider environment, as well as the use of hazardous chemicals and planning permitting.
For example, EU chemicals regulation already requires disclosure of the content of liquids drillers use to blast natural gas from rocks underground, known as fracking fluids, contrasting with a lack of transparency on the issue in the US.
Thirdly, residents in some densely populated European countries have a tradition of low tolerance to local disturbance and of vocal objection to engineering development.
The fact that US landowners and communities sell the licences, and so directly profit from shale gas development, reinforces that contrast with local European objection.
Those environmental concerns have already seen a cautious approach: France and Bulgaria have banned exploration in response to public concerns, while drilling is suspended in Britain following an earthquake linked to shale gas exploration in the north-west.
Polish reserves are less than 30 trillion cubic feet, compared with a previous estimate by the US of 187tn cubic feet, researchers from the Polish Geological Institute, with the help of the US Geological Survey, said on Wednesday.
Warsaw still saw the reserves, together with conventional gas, as enough to cover the nation’s total domestic consumption for 35-65 years.
According to US data, updated with the new Polish estimate, Europe has up to 480tn cubic feet of “technically recoverable shale gas resources”, compared with 862tn cubic feet in the US.
That is still ample to help negotiate prices, diversify supplies and reduce import dependence, good news as the bloc looks to shift from high-carbon coal.