Live Debate: Will unconventional gas become conventional?

Date: 24th June 2010
Location: Residence Palace, 155 Rue de la Loi, 1040 Brussels

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Post Debate Interviews

Lena Kolarska-Bobinska MEP - Interview

Dr. Jeffrey M. Seisler - Interview

Stephan Singer - Interview

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Simon Taylor

In the last five years you’ve seen a ramping up of unconventional gas production as the technology’s got to a point where it can be commercially applied and you can seriously make money out of unconventional gas. That’s partly to do with rising gas prices; it’s partly to do with increasingly effective technology at lower prices. So you’ve seen a situation by 2008, half of US gas production was unconventional, and in 2009 the United States became the largest gas producer on the planet, beating Russia, so replacing Russia as the number one gas producer.

Exploration going on – a whole series of European countries. Perhaps the most interesting is in Poland where you’ve got about 50 exploration licences operating in parts of Northern Poland. Currently the best estimate are about 1.5 trillion cubic metres of shale gas, that’s roughly about 100 years of Polish supply. Now whether that actually turns out to be exactly true or there’s more or whatever, we’ll find out in the next few months as more of the drilling takes place.

Philip Lowe

We have to make sure that the technologies are sufficiently developed to conditions in Europe, and the conditions are different. There are big areas of the US where you can place wells close to each other on a dense basis, whereas I would agree that in Poland and other countries there may be similar conditions but not quite as perhaps favourable in environmental terms, at least in terms of the visual impact on the environment and the impact on communities. If there are communities involved everything becomes more complicated in Europe including CO2 underneath cities in parts of Europe, which apparently is more dangerous than having storage tanks of natural gas underneath your cities. So there’s a public acceptability problem there too. And of course we have to make sure in the wider sense the effects on geological conditions are such that this can be carried out with some degree of security.

Lena Kolarska-Bobinska

The interesting thing is that we will know how big the sources of shale gas are in Poland in the future, but already these debates are shaping our politics of today. For example Poland was negotiating with the Gazprom the agreement on the supply of gas for the next twenty or thirty years, and in the middle of these negotiations of course opposition parties started to say, ‘Why are you signing an agreement with Russia for the next twenty or thirty years on such a high price if we have probably our own internal gas supplies?’ So this once again became debate. So we see how the hopes for the future are shaping today’s policies because the signing of the Gazprom agreement has been stopped or there are some unknown question marks going around it. So we have hopes in the regions, we have hopes in the countries, but also I think Europe is having hopes, thinking about, as you said, about different energy mix and diversification of energy sources.

Stephan Singer

What we know from the US is that shale gas exploration, although based on a carbon footprint, it’s comparably similar to conventional natural gas, in that respect it may help to replace coal, that’s fine, but with other environmental penalties which are heavy. It’s a water penalty. Fresh water consumption is huge. You can only afford that where you have sufficient fresh water resources. Go with that one to China and India and you will be dead on arrival. It’s not possible with that kind of water consumption. Second, there are quite aggressive composite mixes of chemicals required where I doubt they would be consistent and in compliance with the EU legislation on environmental safeguards, I have my doubts. Certainly shale gas is a different from conventional as what we know so far, there is some research on the way, it’s quite land intensive. It’s not just drilling a hole somewhere and having a big balloon which we then take the gas out of. It’s flat on the ground to some extent, where you need lots of land. Poland, as you said correctly, what I heard from Poland from our colleagues who work on R&D and research in that area, they’re very concerned because you would basically make lots of agricultural land uninhabitable and unfertile. You take that land out of food production for instance. Let’s keep that in mind.

Philip Lowe

In relation to the price of oil, I agree there is in the energy balance in the market as a whole necessarily a strong link between gas and oil, but there is not an automatic link of one price to the price of gas. There is gas to gas competition globally and in Europe now, and by the way that’s happened because of the development of LNG. So there is a small prospect that this could develop in a way which makes it cost effective, makes it environmentally friendly and makes it therefore attractive to use it for security of supply reasons, but that’s a lot of questions to ask and we have to be very cautious about it. All I would say is that at the moment we’re very sceptical about the idea of any public money going into it.

Alan Riley

The bigger point though is this issue of should we be doing this at all? And I think there is a question here. If all the hopes are correct and there is huge amounts of gas, we kind of have an existential problem, because if we have large amounts of gas and it’s all very cheap then you can see the natural human instinct to say well, isn’t this wonderful? We’ve got all of this cheap unconventional gas. Aren’t we fine? I think there is a dangerous situation if it turns out there is huge amounts of gas. I think there are two answers to that question. I think one of them is that if there is this level or scale of resource available. Then one question first of all is there is an immediate CO2 advantage in terms of a switch from coal to gas, because you can then get a significant cut in CO2 emissions, and I think if it turns out that there is so much gas, that’s something we should seriously think about. I think the second is that, and this requires a significant degree of political will and organisations like WWF to actually press on, is we need to say that this maybe a bridge to a low carbon future, but it’s only a bridge. And we must actually press on very hard to the next stage which is actually to decarbonise the economy. But I think there is a real danger, I can see, if it turns out it’s enormous and it is massively game-changing, then we could have a significant seduction problem where we can sort of relax, ‘it’s fine’, and a lot of the CO2 targets get abandoned.

Stephan Singer

You said, correctly so, let’s look at natural gas as a potential bridge to replace coal. Well in principle I would agree with you. The point is I have seen too many bridges to be put into place in the system. Everything these days is a bridge. A little bit of extension of nuclear, a little bit of CCS here and there, a little bit of unconventional oil, a little bit of unconventional fuel etc. It just doesn’t work. In the end the bridges itself become the supply of the future, and out of the window goes your climate target.

Alan Riley

But surely the perfect is the enemy of the good here. Let me just give you an example of this. A lot of the coal-powered power stations are going to have to go out of operation anyhow, because of the whole slew of EU environmental legislation. That provides you with an entire opportunity to replace them not with new coal-fired power stations but with CCGT, and you get this significant cut in CO2. Now my point about this is that the issue here is to be able to deliver rapidly CO2 cuts. That’s the first thing. And this is the one shock available, potentially, to do it, rapid CO2 cuts. And that seems to me what you want to do first. And then you have to push on to actually get CCS in place, to get the renewables in place and so on.

There’s one really interesting point about the link between coal and gas, and that is because there’s quite a substantial amount of unconventional gas base is actually in coal-bed methane, one of the potential possibilities which I think really could trump the Polish is the ability to actually drill for coal-bed methane you replace the coal jobs with coal-bed methane jobs and you defuse significantly the political impact of switching off the coal-fired power stations and switching to gas-fired power stations. I think that is really quite interesting and I also think it fits in also with an other issue, which is that one of the areas where I think Europe will develop … we’re talking about Poland and shale at the moment, but one of the areas where I think we will see very significant development fairly quickly is in relation to coal-bed methane, which we haven’t talked about very much. But you see the land is already despoiled in the raw or in the Yorkshire coalfields, it's much easier to drill for coal-bed methane and get through that, than elsewhere. And also you get the ability to switch much more easily where you’ve got domestic coal supplies, because politically you’re replacing one set of jobs with another in the same area.

Event Information

Recent developments in the gas sector in the US have the potential to change radically the energy situation in Europe. New technology has made unconventional gas resources available at competitive cost.

In North America, this sudden expansion of available gas has contributed to keeping gas prices low, despite ever rising demand. It has also helped the US to pursue its strategic objective of reducing its dependence on gas imports. Furthermore, the boom in unconventional gas in the US has changed the dynamics of markets for liquefied natural gas (LNG), with some supplies originally intended for the US being diverted to other markets including some in Europe.

As some European regions, particularly in Northern Europe, have similar geological structures to ones where unconventional gas has been found in North America, there are hopes that unconventional gas could offer the European Union a huge increase in domestic supplies. Energy companies have been rushing to explore the possibilities in these regions, leading to talk of a new ‘gas rush’.

For countries such as Poland, which are heavily dependent on Russian gas imports and rely on coal for most of their domestic energy production, unconventional gas could open a new chapter in energy policy. It would make domestic energy supply more secure, and reduce CO2 emissions since burning gas emits significantly less CO2 than burning coal.

A boom in unconventional gas would also have considerable implications for the EU’s energy policy. Abundant gas supplies – through increased domestic production or cheaper LNG imports – would make it easier to reach CO2 reduction targets and to electrify transport. It could also lower incentives to invest in some costly infrastructure projects, and make some technologies less attractive.

Sceptics warn of exaggerated enthusiasm, stressing that in a more densely populated continent than the US, public acceptance of projects that are likely to have heavy environmental consequences cannot be taken for granted. Unconventional gas extracted from European territory is not expected to come to market for at least a decade.

This event looked at the potential of unconventional gas to transform the European energy supply situation. It addressed the technological and economic challenges unconventional gas faces as well as the questions of public acceptance.

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Event Panel/Moderator

Philip Lowe
Philip Lowe was born in Leeds in 1947. He read Politics, Philosophy and Economics at St John's College, Oxford and has an M. Sc. from London Business School. Following a period in the manufacturing industry, he joined the European Commission in 1973, and held a range of senior posts as Chef de Cabinet and Director in the fields of regional development, agriculture, transport and administration, before becoming Director-General of the Development DG in 1997. From September 2002 he was Director-General of the Competition DG until he took up his current appointment as Director-General of the Energy DG in February 2010.

Lena Kolarska-Bobińska
Lena Kolarska-Bobińska is a Member of the European Parliament from the Lubelskie region, Poland. She sits on the committee for industry, research and energy. Prior to her election to the European Parliament, she pursued an academic career. A professor of sociology, she was an advisor on economic affairs to Polish president Lech Wałęsa from 1992-1995. From 1991 to 1997, she was also the director of the Centre for Public Opinion Research, a Warsaw-based public polling institute. In 1997, she became director of the Institute of Public Affairs, a Polish think-tank. From 2001 to 2005, she was also part of Polish president’s Aleksander Kwaśniewski reflection group and an adviser to Poland’s EU-accession chief negotiator. She graduated in sociological studies at University of Warsaw. Sequentially she acquired doctoral and postdoctoral degrees in sociology and philosophy. In 1993 she was named Professor of human science. She also is a member of the Polish Academy of Sciences and of the academic council of the Institute of Sociology at the University of Warsaw. She is the author of more than 150 scientific works: books, papers, studies and articles published in the Polish and foreign press.

Alan Riley
Alan Riley is a professor at City Law School, City University, London and an associate research fellow at the Centre for European Policy Studies, Brussels. He is a specialist in energy and competition law. He has a PhD in European Law from the Europa Institute, Edinburgh University, and is a Solicitor of the Supreme Court of England and Wales. He has worked in private practice in the City of London and in the European institutions. Professor Riley chairs the Competition Law Scholars Forum, see www.clasf.org. In addition to a significant number of papers in the field of competition law, Professor Riley has also written extensively on energy market liberalisation in Europe and the Russian energy markets. This includes a paper for CEPS entitled The Russian Gas Deficit: Consequences and Solutions; two papers for the European Parliament on the economic and regulatory viability of the Nordstream and Southstream pipelines and a recent paper for the Defence Select Committee of the House of Commons, De-Weaponising the Energy Weapon.
Presentation: Unconventional Gas by Alan Riley

Stephan Singer
Dr Stephan Singer is WWF’s global energy policy director, a position he has held since 2008. Based in Brussels, he is in charge of WWF’s global response on coal and other fossil fuels, carbon markets, transport policies, renewable and energy efficiency policies in particular. In the 1980s, he used to be an anti-nuclear and anti-acid rain grassroots activist. He then worked as a journalist (1987-1988) before moving to Hyderabad, India, to work for the German ministry of economic co-operation on development projects focused on soil fertility and carbon dynamics. During his time in India, he also worked with the World Bank on poverty alleviation projects. He joined WWF Germany in 1993, to head the Frankfurt-based climate policy unit. In 2001, he came to Brussels to head WWF’s European climate and energy policy team. He is a member of the board of the Renewable Energy and Energy Efficiency Partnership (REEEP) and a member of the management board of the Renewables Grid Initiative (RGI). He studied soil science, biology and chemistry at the University of Hamburg. He holds a Masters degree (1987) and a PhD (1992) in soil science.

Agnus Cassens
Agnus Cassens is chief advisor gas market development at Shell. He joined the company in 1980, and held several managerial positions Germany, The Netherlands and the UK. In 2001 he was appointed CEO of Oman LNG. In 2007 he became vice-president manufacturing Europe and Africa (refining). In June 2010 Agnus became chief advisor gas market development for Shell. He is German and holds a PhD in chemistry.

Moderator: Simon Taylor
Simon Taylor is European Voice's news editor, responsible for editorial content of the newspaper and website reporting to the editor, Tim King. Before being promoted to news editor in January this year, Simon was senior reporter at European Voice, covering political affairs and energy policy, from March 2006. He is a regular commentator on the BBC and other international media on EU affairs. Simon has also worked for the Sunday Times and Guardian newspapers. He is a graduate in French and German from Cambridge University as he speaks both languages fluently in addition to his native English.