Countries in Europe and Asia have expressed interest and even firm commitments in contributing more money to the fund. The U.S. and Canada, however, have said they won’t contribute any more cash to an effort EU leaders should be able to resolve themselves.
While we could hear more pledges over the course of the day, so far Japan, Switzerland, Poland, Sweden, Denmark, Norway, and the euro area have all made dollar commitments totaling $320 billion, according to Bloomberg:
Read more: BI
- Selected Headlines from Business Insider, April 19, 2012 (jhaines6.wordpress.com)
- IMF Director LaGarde responds to move to rescind U.S. tax dollars (humanevents.com)
- IMF Exploits Euro-Crisis to Create Global Money Power (mb50.wordpress.com)
As the unconventional gas “revolution” was quietly unfolding in the United States, its potential to transform the U.S. gas market, and the country’s national energy discourse, was not apparent until recently. It has now become clear that shale gas development is perhaps the biggest energy sector innovation for the United States in recent decades. For Europe, however, the role shale gas will play in transforming energy markets is far from certain. The old continent’s unconventional gas reserves are substantial, but the question is how fast and to what extent Europe will develop them.
Europe needs a clear roadmap for the prospects of unconventional gas in its energy future. The current situation calls for an approach that is based on realistic expectations about the pace of shale gas development, as well as a strategy that is well-informed about potential costs and benefits. Continuing uncertainty could not only hamper the flow of investment into potential unconventional gas reserves, but could also impede the development of informed plans about Europe’s energy security and ability to fight climate change.
To begin with, it is worth recognizing Europe’s limitations. The combination of factors that led to the unconventional gas “revolution” in the United States—favorable geology, developed gas markets, and until recently, limited regulatory and public constraints—is not easy to replicate. Geologically, knowledge of unconventional gas in Europe does not go much beyond rough estimates. Where exactly are the shale deposits located? At what depth? And in what type of formations? At what cost could they be extracted? Europe still needs to start mapping out its shale gas reserves—a process that started almost three decades ago in the United States. At this point all that is known is that there are sufficient reserves to transform Europe’s gas market. Estimates vary but they consistently put the European Union’s unconventional reserves well above its conventional ones. Knowing this alone, however, is not enough.
The cost of developing shale gas reserves will be a principal factor in determining the future of unconventional gas in Europe. The sharp growth in shale gas output in the United States owes much to the considerable cost reduction witnessed over the past decades. Europe stands at the beginning of that process. Lack of comprehensive geological knowledge about shale precludes a precise estimate, though costs are expected to be high not least because of the scattered nature of reserves in Europe. The absence of a vibrant services sector for the gas market presents another bottleneck. The European gas sector’s limited capacity to provide cost-effective equipment for shale gas development along with a shortage of qualified labor will undoubtedly lead to higher development costs than in the United States. Costs can certainly go down, just like they did in the United States, as the industry gradually reacts to the needs of the market. But initial costs will pose a challenge.
In its quiet “revolution,” America’s unconventional gas industry outpaced both the regulators and the public. By the time stringent environmental demands became part of the national energy discourse, unconventional gas had already assumed its transformative role in the U.S. gas sector.
In Europe, if this revolution is ever to be repeated, it will not be a quiet one. The rigorous environmental regulations that are already in place—particularly with regard to water use—are prompting investors to think twice about managing costs before they commit. With their high population density, many European governments are less willing to embrace shale gas before its environmental impacts become apparent. In many countries, particularly in Western Europe, governments ignore environmental movements at their own peril. More investment in shale development will almost certainly have to confront calls for even stricter ecological requirements.
The EU’s energy and climate policy needs to recognize these constraints. It would be unrealistic to expect shale gas to be a panacea for the Union’s growing concerns on energy security and climate mitigation. This is true at least in the short and medium term.
And yet, discounting the potential role of unconventional gas in Europe’s future would be a mistake. It is in the EU’s long-term interest to maintain a role for shale gas development. Most industry insiders argue that unconventional gas will not contribute in any significant form to Europe’s energy supply until at least the end of this decade. Its role beyond that point, however, is anyone’s guess. How fast Europe develops these resources depends on today’s policy choices.
European policymakers should give shale gas development a chance. First, as a latecomer compared to the United States, Europe is more likely to find a way to develop its unconventional resources in an environmentally friendly fashion. Stricter regulations and low public tolerance for potential environmental risks may slow the pace of shale gas development. They can, however, also ensure that Europe develops these resources in the right way, avoiding some of the mistakes witnessed in America.
Second, the benefits of shale gas development could be disproportionately large. European gas supplies are in decline, while demand is expected to continue to grow. The EU’s ever growing need for imported gas is compounded by its dependence on a rather small number of external suppliers—Russia, Norway, and Algeria account for nearly three quarters of Europe’s imports. It is not certain that unconventional gas can reverse the decline in domestic gas output. However, it could certainly enhance the position of European importers when bargaining with their limited number of suppliers. Most recently, gas sold at spot markets, which constitutes only a fraction of total gas imports in Europe, effectively served such a role. Even Gazprom, known for its firm bargaining position, felt the need to revise a portion of its contracts. Shale gas could play a similar role for European importers in the future by enhancing competition. Increased liquefied natural gas (LNG) imports could potentially have a similar impact. But, they will be need to be sourced from outside the EU, maintaining Europe’s dependence on global LNG market trends.
Even if unconventional gas is not a “game changer” for Europe as a whole, it could be a “game changer” for a select group of EU members. Ironically, some of the countries with greater prospects for shale gas development—Poland, Hungary, and Bulgaria—are among the most dependent on Russian gas.
At this point, the future of shale gas in Europe is very much in the hands of national governments. Legal competence for hydrocarbon development is mainly within the domain of these governments rather than Brussels. What they need is a well-informed national discourse on unconventional gas that involves all the main stakeholders. In effect, they need to avoid what France recently did—a rushed decision outlawing hydraulic fracturing—and instead attempt to fully assess the potential for developing shale gas while complying with strict environmental standards.
Brussels, on the other hand, does have a role to play. In addition to ensuring higher environmental standards, it could attempt to bring greater clarity about the future of natural gas in Europe’s energy balance. Mixed signals about its expected role have understandably preoccupied investors. Also, it could elaborate investment mechanisms for shale gas development that would serve its long-term decarbonization objectives by displacing more carbon-intensive sources of energy. Ultimately, Brussels should make certain that Europe does not miss this opportunity to seize the strategic potential offered by unconventional gas.
- Poland detains 7 suspected of shale gas corruption (reuters.com)
- IEA to make shale gas regulatory recommendations (business.financialpost.com)
- Shale boom in Europe fades as Polish wells come up empty (business.financialpost.com)
- Fracking could bring UK 50,000 jobs, says Browne (independent.co.uk)
New building vessel is continuation of the series of four units of the same type which has been started last year. She will be built according to the project elaborated by polish design office MMC Ship Design & Marine Consulting Ltd from Gdynia. The vessel will be equipped with Diesel – Electric propulsion system allowing most cost efficient exploitation, reduction of fuel consumption and lower emission of NOx and SOx to the atmosphere.
Working deck of 1000 m2 will enable to carry high-volume goods, which makes that vessel the biggest one in her class. Technically advanced vessel will operate the complex deep-water operations in the region of South America and Africa.
The vessel will be equipped with Class 2 dynamic positioning system and fitted to operations in world – wide sea areas, in each weather conditions. After completion of the construction and carriage of complex sea trials, the vessel will be delivered to the Owner in the fourth quarter of 2013. The contract includes an option to build another, sister vessel.
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- The Netherlands: Heerema Marine To Build Deepwater Construction Vessel Worth US$ 600-700 Million
- Norway: Northern River MPSV Sails to New Owner
- Norway: Bourbon Front PSV en Route to North Sea
- Germany: Second New Building Vessel Type 183 Almost Completed for SAL
- Norway: STX OSV to Build 4 PSVs for Island Offshore (mb50.wordpress.com)
- Norway: Ulstein Delivers Blue Fighter PSV (mb50.wordpress.com)
- Norway: Ulstein Launches New Platform Supply Vessel for Blue Ship Invest (mb50.wordpress.com)
- Apache Hires Ulstein Design PSV for Work in UK North Sea (mb50.wordpress.com)
- Edison Chouest Ship Attacked off Nigeria, 3 Kidnapped (gcaptain.com)
- Ukraine: Zaliv Launches Ulstein Design PSV Hull (mb50.wordpress.com)
- Shell to unveil massive icebreaker (seattletimes.nwsource.com)