Lade Inhalt...

Influence of shale gas development in Europe on gas market trends

Seminararbeit 2011 22 Seiten



Table of Contents

List of Figures

List of Abbreviations


1 Introduction

2 Fundamental basics about shale gas
2.1 Definition and classification in the natural gas
2.2 Production process
2.3 Environmental concerns
2.4 Sources and potential worldwide

3 Shale gas developments in Europe
3.1 Overview over the European gas market
3.2 Sources and potential of shale gas
3.3 Selected ongoing projects
3.3.1 Poland
3.3.2 Eastern Europe
3.3.3 Germany
3.4 Influence on gas market trends

4 Conclusion


List of Figures

2-1 The geology of natural gas resources

2-2 Exploitation of shale gas

2-3 Shale gas resources estimates worldwide

2-4 Gas supply potential worldwide

2-5 Future shale gas development worldwide

3-1 Major trade flows of natural gas worldwide (billion cubic meters)

3-2 Gas markets will tighten progressively in the coming years

3-3 Shale gas basins and exploration sites in Europe

3-4 Future shale gas development in Europe

3-5 Major shale gas basins of Poland

3-6 Shale Gas Basins of Eastern Europe

3-7 North Sea-German Basin

3-8 Sources of gas supply in North America, Europe and China

List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten


In Europe, a “new” unconventional energy resource begins to be explored. The so called shale gas isn’t a new discovery, but its production has been too complex and expensive for a long time. Since rough quantities of shale gas have been exploited in North America, the global gas markets are changing. The European gas market is also affected by these changes which are characterized by an increasing gas supply and declining prices. Since Europe also has shale gas resources, the production of this unconventional gas might be attractive now. The present report investigates and evaluates the shale gas potentials in Europe. Against the background of energy policy targets like supply security and carbon emissions reduction, the option of shale gas as solution approach for these targets has to be evaluated. Although the production is meanwhile mostly profitable, active exploitation in Europe is not yet carried out because environmental concerns and the “green” lobby are countering. Nonetheless, shale gas is most likely to take a significant share of the future energy mix.

1 Introduction

Natural gas sources worldwide are sufficient to meet the primary energy demand over the coming five or six decades. Despite of this relatively optimistic forecast, Europe is strongly dependent on natural gas imports which can endanger the supply security in European countries. Russia and Iran carry the largest natural gas sources with a share of more than 40 percent of the worldwide total natural gas sources which leads to a geopolitical dependency. In addition to this, rising transportation costs and increasing primary energy consumption by China and India increase the uncertainty about a long-term availability of natural gas for Western Europe. To mitigate future supply bottlenecks, explorations of unconventional gas resources, the so called shale gas, could be a transitional solution. Shale gas already makes up ten percent of the current domestic gas production in the United States. In Europe there is also a potential but so far, there has been only little attention to this option. First exploration activities started currently now. (cp. Schulz/Horsfield 2010, p. 6)

In recent years, growing uncertainties, price volatility, rising demand and increasing costs pressurized the global energy industry. In order to reach and to maintain secure, sustainability and an affordable supply of energy, the focus has been shifting to alternative and promising resources like e. g. shale gas which seems to be abundant and almost globally available. (cp. World Energy Council 2010, p. 3) Regardless to this assumption, activities in Europe concerning shale gas production are still reluctant due to the environmental concerns about the production process and associated political oppositions.

The present report aims to introduce shale gas as a potential “new” and unconventional fossil fuel in the European energy mix and to assess the resource concerning its future potential. After a brief introduction, fundamental basics about shale gas are presented in chapter two. Shale gas is initially defined and classified in the natural gas sector. In context with the production process, environmental concerns are discussed. Subsequently, the production process is described and worldwide shale gas sources and potentials are demonstrated. Chapter three is about the European gas market and how shale gas is developing in this country respectively how it is influencing its gas market. To this purpose, European sources and potentials are demonstrated and several ongoing projects are selected to be presented. In chapter four, the key findings of the report are summarized and a brief outlook is given.

2 Fundamental basics about shale gas

2.1 Definition and classification in the natural gas

Conventional natural gas as well as unconventional gas is generated in source rocks due to high heat and pressure. Conventional gas is stored in conventional respectively tight gas reservoirs as it is shown in figure 2-1 (“Conventional non-associated gas” and “Conventional associated gas”). In contrast, shale gas remains in place and is stored in nano-pores of the source rock. Its reservoirs, the so called gas shales, are deeper situated than conventional reservoirs as it is clearly seen in figure 2-1 (“Gas-rich shale”). (cp. De Viviès 2011, p. 3) Unconventional natural gases also include coal-bed methane (CBM), tight gas and methane hydrates. Gas shales are formations of organic rich shales, a sedimentary rock containing clay, quartz and other minerals. (cp. World Energy Council 2010, p. 7). Differences between conventional and unconventional gas do not concern the usage but quality and composition of the gas that differ from shale to shale and from region to region due to geological particularities as it is known from conventional gas, too (cp. Schulz/Horsfield 2010, p. 6). The attractiveness of a shale gas resource compared to another is defined by its in-place concentration measured in Billion cubic feet per square mile (cp. eia 2011b, p. 6).

Abbildung in dieser Leseprobe nicht enthalten

Fig. 2-1: The geology of natural gas resources (eia 2011a)

2.2 Production process

The production process of shale gas is more complex than of conventional gas. Compared to conventional natural gas, shale gas cannot escape freely from the borehole. Therefore, the well runs horizontally once it reaches the gas-containing layer. In addition, water must be injected in order to produce cracks in the shale. Thus the rock becomes porous and the gas escapes better. (cp. Rüth 2010) The used technologies are hydraulic fracturing to generate permeability and horizontal drilling to unlock tighter shale gas formations. They are combined with each other as two steps in one process. During the hydraulic fraction (“fracking”) a fluid and a propping agent are pumped into the rock in order to fracture it. Equipment and technology of horizontal drilling is similar to those of vertical drilling. (cp. Tyndall Centre 2011, p. 11 f.) The figure below demonstrates the process of exploitation.

Abbildung in dieser Leseprobe nicht enthalten

Fig. 2-2: Exploitation of shale gas (IFP Énergies nouvelles 2011)

The efficiency of the process depends greatly on the mineralogy of the shale, particularly its relative quartz, carbonate and clay content. Those with a relative high percentage of quartz and carbonate tend to be brittle, so that eliciting gas is easier compared to shales with relatively high clay content which tend to be ductile and to deform instead of shattering. A variety of further complex geologic features influencing the gas recovery efficiency exists. For further information, it is referred to the specified source of the U. S. Energy Information Administration (eia). (cp. eia 2011b, p. 2-17 f.)

Against the background of the massive water demand during the drilling, water consumption represents another criterion in the assessment of the efficiency of the production process. Nevertheless, Mantell claims that shale gas is one of the most water efficient raw fuels. Since it is domestically and regionally produced, additional environmental impacts of transporting the fuel as well as the net energy loss associated with transporting (fuel is needed for transport) are mitigated. This is why shale gas isn’t just water efficient but also efficient from an energy perspective. The exploitation of shale gas requires water primarily during the drilling, but produces an enormous amount of natural gas over an approximate 20-year lifespan of the gas well. Compared to other fossil fuels, it is by far the most water efficient energy resource. Especially when used for power generation in a NGCC power plant, shale gas contributes to the most efficient ways of generating electricity. Furthermore, compressed natural gas is one of the most water efficient transportation fuels available today. (cp. Mantell 2009, p. 13)

Despite of the high water and energy efficiency, shale gas exhibits economical disadvantages over the conventional gas production. The productivity of shale gas wells is lower and the recovery declines rapidly during the first couple of years. For compensating this drawback, a larger number of wells is necessary. With the requirement for horizontal drilling and hydraulic fracturing, shale gas wells are relatively expensive. The precise expensiveness technically depends on the shale characteristics as it is described above. Concerning the final costs, contrary opinions exist. While shale gas promoters claim costs of $5/MMBtu and below, skeptics estimate the costs at $7/MMBtu or more. Compared to the current gas price in Europe, this margin is between the long-term oil-linked contracts and the traded gas prices which makes shale gas quite competitive. (cp. Gas Strategies 2010, p. 5)

To exploit shale gas reserves it will be necessary to develop an adequate infrastructure including a pipeline system for storage and distribution. Today, only a few of the proven basins possess an existing infrastructure. In the remaining basins, large investments are required which may result in delaying new production coming online or make the exploitation uneconomic. Nonetheless, each shale formation has to be evaluated on its specific merit. For strategic or other reasons, the formation may be still worth to exploit. (cp. World Energy Council 2010, p. 3)

2.3 Environmental concerns

Due to the environmental concerns, shale gas production is controversial. The Energy Watch Group denounces the land use and above all the high water demand for the removal of shale gas. Provided economically feasible shale gas deposits in Europe, accordingly environmentally friendly mining techniques must be developed. (cp. Rüth 2010) Another concern about shale gas production is the risk of groundwater contamination due to the chemicals used in hydraulic fracturing which are supposed to be carcinogenic and radioactive. However, experts bring forward the argument that the exploitation runs in such a deep, that the rock absorb the pollutants. (cp. RIA Novosti 2011) Titz also writes in his article, that most experts believe the risk of groundwater contamination is remote and cites the advantages for the climate. The combustion of gas produces less CO2. In addition, gas-fired power plants can be readily combined with renewable energy sources. Furthermore, the former deposits of shale gas are potentially capable for carbon storage. (cp. Titz 2010) Both the consumption of such large quantities of water and the risk of contamination of the groundwater are playing a larger role in the more densely-populated Europe than in the United States where shale gas is produced in remote areas. (cp. Gas Strategies 2010, p. 5)



ISBN (eBook)
ISBN (Buch)
2.1 MB
Institution / Hochschule
Universität Leipzig – Institut für Infrastruktur und Ressourcenmanagement
influence europe



Titel: Influence of shale gas development in Europe on gas market trends