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‘Europe Should Not Miss Its Shale Opportunity’ – Yergin

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Joshua Posaner, Interfax Agency

Europe should not miss out on an opportunity to explore for shale gas reserves, IHS CERA Vice Chairman Daniel Yergin told Interfax on Wednesday while discussing the prospects for an unconventional boom in the region to mirror the one seen in North America over the past decade.

Shale basins in Europe, as assessed by the Energy Information Administration.

Shale basins in Europe, as assessed by the Energy Information Administration.

Speaking to Interfax in Amsterdam on the sidelines of the IHS Forum, Yergin, author of The Prize and The Quest: Energy Security and the Remaking of the Modern World, said Europe would lose both “an energy option… and an economic opportunity” if exploration is not undertaken. He also warned its manufacturing base would lose its competitive edge, although he added that development would not happen overnight.

“The timing and the scale [of shale gas development in Europe] really comes down to government policy, public opinion and the nature of the resource. Only Dr Drill knows for sure and one of the key lessons is that not all shales are the same. It’s still very early days,” Yergin said.

“It took 20 years to establish the technology [in the United States and] to get to the commercial breakthrough of 2003, and then it took five years to build up to scale. For any impact in Europe it would take five to 10 years which is not a long time in energy terms – but it’s not tomorrow.”

So far, Poland, Lithuania, Romania and the UK have committed to shale gas exploration, while Bulgaria, France and the Czech Republic have launched moratoriums after fierce environmental protests. Politicians in the Netherlands, Germany and elsewhere are still deciding whether to approve the controversial hydraulic fracturing technique.

Development cycle

“I think it will be some years before we see large volumes [of production]. Europe doesn’t have the supply chain… In the UK, where you have more infrastructure in place, or the Netherlands, it could happen faster. But I think in Poland and Ukraine it’s still very early days. We see that cycle we saw in the Caspian of optimism, pessimism, then confidence again as it goes through the development cycle,” Yergin said.

“The thing I’ve noticed over the past three or four months is the private sector is really focusing in on the competitiveness issue,” Yergin added. Although a production boom would not mean prices would match those the US, it would “help Europe stay competitive”.

“Europe’s problem is its energy costs are getting higher, while its competitors’ are getting lower. I even find in China there is focus on shale gas and what it could mean for Chinese industry”, he said.

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