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Demeter Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Nov-30-11 07:32 AM
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32. Fracking here, fracking there
http://www.economist.com/node/21540256

SHALE gas has turned the American energy market on its head. Production has soared twelvefold since 2000, to 4.9 trillion cubic feet, or a quarter of the countrys total gas output. By 2035 the proportion could rise to half. As the shale gas flows, prices have come crashing down. Not long ago, America depended on imports of liquefied natural gas. Now it is likely to become a gas exporter. These benefits have not gone unnoticed in Europe.

The old continent has nearly as much technically recoverable shale gas (natural gas trapped in shale formations) as America. Europes reserves are 639 trillion cubic feet, compared with Americas 862, according to Americas Energy Information Administration, a government agency. But technically recoverable does not mean economically recoverable, notes Peter Hughes of Ricardo Strategic Consulting. Costs are higher in Europe, for several reasons. First, European geology is less favourable: its shale deposits tend to be deeper underground and harder to extract...Second, America has a long history of drilling for oil and gas, which has spawned a huge and competitive oil-services industry bristling with equipment and know-how. Europe has nothing to compare with that. In 2008, at the height of the gas boom in America, 1,600 rigs were in operation. In Europe now there are only 100. Americas more cut-throat market drives costs down. A single gas well in Europe might cost as much as $14m to sink, three-and-a-half times more than an American one, estimates Deutsche Bank...Third, Americas gas industry faces fewer and friendlier regulations than Europes. Call it the Dick Cheney effect. And fourth, in America wildcat drillers, if they strike it rich, enjoy access to a spiders web of existing pipelines, so they can get their gas to market. Europe has no such network nor open-access rules.

Some European countries are keen to replicate Americas shale-gas boom. Poland, which may have Europes largest deposits, has issued exploration licences to more than 20 firms. Test wells have been sunk. But Polands prime minister, Donald Tusk, reckons that commercial production will not get under way until 2014. Other European countries are less gung-ho about shale gas, often for environmental reasons. France has potentially abundant reserves, but has imposed a moratorium on hydraulic fracturing (or fracking), the technique for winkling gas from rocks deep underground, while the dangers are assessed. These include the possible pollution of groundwater by the chemicals in fracking fluids, and the leakage of methane, a gas that aggravates global warming. Another fear is that fracking may cause earth tremors. Recent seismic activity near a test well in Britain has been linked to it. Such concerns are real and widespreadin August South Africa followed Frances lead and slapped a moratorium on fracking. More studies will be needed before the public is reassured.

Americans worry about the environmental impact of fracking, too. But Europeans worry more, not least because western Europe is far more densely populated than America. Extracting shale gas is more disruptive than hoicking other hydrocarbons out of the groundfar more wells must be sunk than are needed to produce the same quantity of conventional gas. Fracking requires oceans of water, brought in by fleets of noisy tankers. More people will live close to a typical European drilling site, so opposition to drilling permits is likely to be louder...The legal framework is different, too. In America, mineral rights belong to the landowner. In Europe, they usually belong to the state. So when American propertyowners see drills, they see dollar signs. European landowners just see big, ugly drills. (The situation is different in America if the gas lies under federal land. If so, getting leases can be trickier.)

MORE FASCINATING FACTS AT LINK
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