Source: Ernst & Young
In a report released today by Ernst & Young “Shale gas in Europe: revolution or evolution” indicates that while shale gas has had a transformative impact on the outlook for the US energy market, the impact on the European market may be more evolutionary in nature.
John Avaldsnes, Ernst & Young’s EMEIA Oil & Gas Sector Leader says “While exploration is underway in several countries such as Austria, Germany, Hungary, Ireland, Poland, Sweden and the UK, no shale gas play has yet been brought into production in Europe, and only a fraction of this resource base is likely to ever prove commercial and be produced. In addition, over half of all estimated European shale gas reserves, which accounts for almost 10% of the global total, are concentrated in just two countries, Poland and France.
“There are some difficult challenges that the industry needs to address,” comments Avaldsnes. “There appears to be no consensus across Europe on shale gas development and government attitudes vary, in some cases markedly. Public opinion on the issue is similarly divided, adding to pressure on governments to take action to either support or restrict shale gas development with most countries adopting a ‘wait and see’ attitude.”
The impact that shale gas will have on energy markets will vary widely from one country to the next, depending on the country’s national energy strategy, degree of import dependence, projected growth in gas demand and the cost and social acceptance of alternative and competing supply sources. The impact could however be transformational for the small to mid-cap independent companies that are focused on the nascent shale gas industry in Europe.
Avaldsnes believes that there will be opportunities for service companies to carve out new revenue streams and gain an early foothold in shale gas development activity in Europe. Research is not at a standstill, and new technologies will be developed that will drive down the cost of shale gas extraction and improve the efficiency of development and production activities.
Avaldsnes concludes, “The shale gas industry in Europe will be influenced in pace and feasibility by key factors such as environment and social factors, energy prices, gas demand and fiscal and regulatory regimes. It is increasingly clear that the shale gas debate is a contentious one; however there is no denying the economic benefit that the evolution of a shale gas industry could bring to individual countries in Europe.”
Ernst & Young: Shale gas in Europe - revolution or evolution?
Source: Ernst & Young