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How Fast Can Europe Shale Production Ramp Up?

There are quite a few out there who think that European shale production won’t be a game changer for many years:  Wood Mac recently channeled Florence Geny’s report from last year:

Although unconventional gas development will not be a game changer for European gas markets overall it could have a significant impact in individual countries although probably not this decade.

There is much sense in both reports, but I think that they sell Europe short. Both reports are heavy on the idea that because there is little European service industry, shale will develop slowly, which seems to ignore the basics of supply and demand.  They also downplay the attractiveness of the European market.  I think that to quibble over details like infrastructure and regulation ignores the three big pluses Europe has:

  • Europe has the world’s largest gas market and shale resources sit literally underneath major demand centres
  • Europe has the strongest rule of law of any jurisdiction.  Once the regulatory regime follows reality,  this makes Europe far more attractive than any other location outside of North America and even some within it.
  • Europe will be able to take advantage of the many technological breakthroughs large and small that are developing in the giant shale laboratories of North America. Initial production, when it starts in 2013, will be at a giant step change from the technology used at the start of US production.

Will Europe be able to replicate the success of the Marcellus?  Europe is where the Marcellus was only three years ago, but let’s look at where the Marcellus is today and how fast it got there.

Production in Northeastern Pennsylvania recently passed 2 Bcf/d, up from just 0.4 Bcf/d at the start of 2010.
In Southwestern Pennsylvania, production is over 0.8 Bcf/d, more than three times the level at the beginning of 2010.
In West Virginia, production has grown over 40% since January 2010 and recently surpassed 1 Bcf/d.

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