Saturday, 17 September 2011

New study: Shale gas "likely to have a significant impact on current European gas supply dependency on Russia"

A fresh report by a Polish think tank confirms what this blog has been saying already for months (see here, here and here): The shale gas revolution will be a gamechanger in Europe putting a stop to Putin´s ability to blackmail countries dependent on gas imports from Russia:

The EU gas market could undergo significant changes over the next 10 years due to an "unconventional gas revolution", according to a report Friday by Polish think tank The Kosciuszko Institute.

The report, compiled by 20 academics and scientists for the Krakow-based agency, said the development of the unconventional gas sector in Europe, chiefly shale gas, could lead to increased energy security, lower gas prices and reduced CO2 emissions.

Even if European shale gas exploration and production costs are 50% higher than in the US, gas prices may still be lower than Russian gas, which currently accounts for a quarter of the EU's supplies, the report said.

"Unconventional gas is likely to have a significant impact on current European gas supply dependency on Russia. Once the European unconventional gas industry has developed to scale and has properly got its costs under control, it will be very competitive against both Russian gas, hauled all the way from Siberia, and LNG," Professor Alan Riley from City University in London said in the report.

Marcin Tarnawski from Krakow's Jagiellonian University said that large-scale industrial exploitation of unconventional gas in the US, Europe and Asia could seriously upset the balance of power between existing gas exporters and importers.
"It may lead to a situation where new investments in the trans-European pipelines, such as Nord Stream and South Stream, will not prove to be economically viable," he said.

The report estimates that Poland, with resources estimated as high as 5.3 trillion cubic meters and considered one of Europe's most promising shale gas plays, may deliver up to 100 billion cu m/year of production in 10-15 years, although a more probable scenario is 20-30 billion cu m/year.

But that would more than cover the country's current annual consumption of 14 billion cu m and transform Poland from a country which relies on Russian supplies for two thirds of its consumption to a gas exporter.

Mariusz Ruszel, The Kosciuszko Institute's energy expert, said Poland could begin to export gas to neighboring countries such as Germany, Czech Republic, Slovakia and Lithuania, and even further afield

Read the entire article here

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