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An earthquake is winding up under the crust of European soil — not a conventional seismic one, but an energy temblor, with the potential to transform the Continent’s energy market and alter the strategic parameters of Russian-European relations. The prospect of the commercialization of shale gas has already generated a high-stakes debate within the European Union about how fossil fuels, nuclear power, solar and renewables should factor in its energy mix. Adding an American dimension to the problem, Europe’s debate on energy security also affects Transatlantic relations because of shale gas’s potential to link U.S. and European energy sectors and influence the wider Euro-Atlantic debate on climate change, regulatory requirements, emissions and supply sources.

A silent global shale gas revolution has been underway since 2001, thanks to improvements in hydraulic fracturing technology, or “fracking”, which uses large amounts of compressed water, sand and a small amount of chemicals to free natural gas from its geophysical reservoirs. Over the past decade, U.S. energy companies have leveraged “fracking” to increase domestic unconventional gas production from 1 percent of all gas extracted in 2001 to over 20 percent today. By 2035, almost half of all U.S. natural gas output is projected to come from shale.

With shale deposits distributed generously worldwide, Europe is beginning to catch the trailing edge of this game-changing moment in global energy production. Today the European Union is engaged in a crucial debate over whether and how to tap into its own shale deposits, which contain more than 17.5 trillion cubic meters (and with the recent discovery of a new major deposit in the United Kingdom, possibly as much as 22 trillion).

In Europe, Poland has led the way as the country with one of the largest deposits and with the greatest commitment to make unconventional gas commercially viable. Polish shale gas deposits comprise about 5.3 trillion cubic meters in all. To put this number in perspective, consider that in 2010 Poland produced domestically only approximately 4.2 billion cubic meters of conventional gas, the balance covered by long-term conventional gas contracts from Russia (64 percent or 9 billion cubic meters provided by Gazprom) and Germany (1.0 billion cubic meters of gas, or approximately 7 percent of its annual consumption). Poland also bought marginal amounts of gas from Ukraine and the Czech Republic. The current projection for 2011 is 4.3 billion cubic meters of domestically produced gas. Unofficial projections by several energy companies exploring for Polish shale gas have put their annual commercial production targets at 10–15 billion cubic meters of output. If one were to add what just two or three major companies currently drilling in Poland hope to produce, the projected annual output would surge to 40–50 billion cubic meters. This is ten times what the country produces today, and that is not counting other international and local producers that are working to carve out a share in the business.

The total annual demand for natural gas in Poland stands today at just under 15 billion cubic meters, and it is projected to reach 18 billion in 2015 when commercial Polish shale gas production is expected to begin. The possible volumes of unconventional gas thus transcend Polish circumstances. Even if Poland managed to absorb and store an additional 10–15 billion cubic meters of domestically produced gas, the projected volumes from the major companies alone indicate that Poland would need to become a net exporter for the project to be viable at scale. Intense lobbying in Europe these days is driven by the recognition of this potential sea change in European gas supply and pricing. It reflects the growing realization in Moscow, in particular, that shale gas produced in Poland would be significantly cheaper throughout Europe than Russian gas, posing a danger of significant market-share loss for Gazprom. But will any of this happen?

Today there is intense lobbying against shale gas in Europe, all intertwined with national interests of individual EU member-states or Europe’s energy suppliers. The most politically influential is the nuclear power lobby. In the wake of last year’s nuclear disaster in Japan, the nuclear power lobby is already mobilized for combat, especially in light of Germany’s recent decision to completely abandon nuclear power by 2022. The future of nuclear energy in Europe is tied to the question of unconventional gas. France is the largest producer of nuclear power in Europe, but smaller countries like Hungary and the Czech Republic have decided to grow their nuclear power generation capacity. All three, and possibly others, want to sell power to the Continent’s largest and soon-to-be nuclear-free energy market, Germany. But that prospect will diminish if shale gas becomes more economical than nuclear power, the cost of which may be pushed upward by political externalities if the nuclear lobby cannot prevent it. The question of what—and who—will supply Germany with energy is more than a simple euros-and-cents exercise, however. Supplier-consumer relationships with Europe’s key political and economic power have strategic implications both within the European Union and beyond.

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