European Shale Gas Round-Up
5th August 2014
Shale Gas Europe looks at the latest news from around Europe.
Faith Birol, Chief Economist at the International Energy Agency, announced at a conference in London that due to the shale gas boom in the US driving down the price of oil and gas, 30 million jobs are at risk in Europe. Energy intensive industries, including petrochemicals, aluminium, fertilisers and plastics, are leaving Europe and migrating to the US where operational costs are far lower. While the issue of competitiveness has been on the cards for some time now, this is the first solid evidence that the shale gas boom in the US is having a direct impact on Europe’s economic strength.
The Institute for Market Economics in Bulgaria has released a report estimating the social and economic impacts of shale gas development according to several different scenarios. According to the report, shale gas development could create 25,000 jobs in Bulgaria given a more conservative scenario, or as many as 39,000 if full potential is realised. It also states that shale gas production in Bulgaria could accelerate the annual average economic growth rate by 0.6% or EUR 238.4 million per year and potentially increase GDP by 20% in the long term. The report concludes that Bulgaria imports 90% of its gas, and indigenous reserves are depleting, so development of its own shale gas reserves could reduce long-term import dependency.
Just weeks after Danish local council Frederikshavn made the decision to allow test drilling for shale gas to take place for the first time in Denmark, the newspaper Jyllands-Posten and the research firm Wilke, released the results of a survey which announced that the majority of Danes believe that shale gas should be a part of Denmark’s future energy mix. Only a quarter of those asked were against shale gas development. Denmark is committed to promoting a sustainable energy programme and is a global leader when it comes to alternative energy, and this poll shows that shale gas can also play a valuable role in Denmark’s energy mix.
The shale gas debate remains on the agenda in France, despite the continued moratorium. Earlier in July the think tank Institute Montaigne presented twelve propositions to move the shale gas debate forward, including undertaking one or more pilot projects to show the technical and environmental implications of using hydraulic fracturing. The Think Tank’s aim is to avoid a simplistic ‘yes or no’ debate around shale gas and allow policy makers to make decisions in the most transparent and regulated way possible.
The same day, the Union des Industries Chimiques (UIC) unveiled the findings of an economic study on the competitive advantages of the chemical industry in the US thanks to the shale gas boom. UIC called for the French Government to put in place legislative measures to improve the supply of gas, including exploring the potential of shale gas. Philippe Goebel, President of the UIC, stated: “Energy is a key factor for our competitiveness – 40% of gas and 20% of electricity consumption in France goes to the chemical industry.”
This month Poland’s Lower House in Parliament voted on an important set of amendments to their existing Geological and Mining law from 2011. These amendments will clarify licensing procedures for investors as well as offer greater security. The new provisions should be approved in the coming weeks by the President and are then expected to come into effect on 1 January 2015. Poland is also looking into a new tax bill on shale gas development, which, in order to encourage investment in its nascent shale gas industry, will likely only be imposed in 2020.
Last Monday the UK launched its 14th licensing round for onshore and offshore petroleum licenses. This is the first licensing round for six years, and it is expected that licenses will be awarded in the next 12-18 months. The British Government has proved that it is committed to developing shale resources in the face of increasing energy prices and threatened security due to events in Ukraine. The UK’s new Business and Energy Minister Matthew Hancock commented on the licensing round, stating that “ultimately, done right, speeding up shale will mean more jobs and opportunities for people and help ensure long-term economic and energy security for our country.”
The announcement comes soon after the British Geological Survey released a series of maps that help to understand the relationship between groundwater and fracking. While the report acknowledges that water is a ‘resource that needs effective long-term protection’, the maps allow the public to understand the distances that separate shale gas deposits and water aquifers. The Bowland shale, for example, lies at least 800m below principle aquifers. This means it is highly unlikely that hydraulic fracturing could have any impact on aquifers since the micro fractures created by the process typically extend less than 180m upwards from the well bore.