European fracking boom 'doubtful'
18 October 2011
Will fracking make a big splash in Europe? 'Don't hold your breath,' says Ben van Beurden, head of Shell Chemical, the chemical wing of oil and gas super major Shell.
Fracking, or hydraulic fracturing, is used to extract gas locked up in underground shale deposits - gas that cannot be extracted by conventional means. The process uses water at high pressure, mixed with sand and chemicals, to break up the rock and release the gas. Fracking has taken off in the US in recent years, driven by high oil prices and concerns about energy security. But environmental groups have raised concerns about the potential for hazardous chemicals to leak into water sources.
- Ben van Beurden, Shell Chemical
Now, Europe seems to be looking to cash in on the 1.5 trillion m3 of shale gas that industry analysts say it is harbouring. Poland, which boasts the biggest share, has clearly signalled its intent to develop its reserves, but it is not alone. Most recently, Spain announced plans to invest €100 million (£87 million) of public and private money in exploration of 180 billion m3 of natural gas locked up in shale.
But, speaking at a press event in Amsterdam, van Beurden said that the chances of Europe embracing shale gas were slim because of a fundamental difference between the US and Europe. 'It works a whole lot better if the mineral rights to the gas actually belong to the land owners,' he said. 'In places like North America, the land owners love to see a drilling rig because it means money in the pocket. But in places like northwestern Europe, mineral rights are being held by the state so the only thing as a land owner you have is inconvenience. And therefore I think it will be more difficult to get these things permitted in places like Holland, Germany, France.' Van Beurden added: 'It may happen in places that are more at the economic periphery, like Poland.'
Shell is a big player in the shale gas game. According to its 2010 annual report, the company owns rights to shale formations spanning 3.6 million acres of North America. It was looking for shale gas in the Skåne region of Sweden from 2008, but it pulled out when drill data from three locations revealed limited reserves. The results have been better in eastern Europe. Ukraine recently assigned its first shale gas exploration contract to Shell in a deal worth up to $800 million (£510 million).
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