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Amid Ukraine Crisis, Europe Weighs Fracking

Amid Ukraine Crisis, Europe Weighs FrackingAmid Ukraine Crisis, Europe Weighs Fracking

Fracking has transformed the United States into the world’s largest producer of natural gas, and now Europe is weighing the pros and cons of the controversial technique as it seeks greater energy independence from its chief gas supplier, Russia.

An estimated 16 percent of Russian gas destined for Europe flows through Ukraine, and since Russia meets around a third of Europe’s demand for oil, natural gas and coal, the threat of gas supply disruptions through Ukraine has set off alarm bells in Brussels. Germany gets 40 percent of its gas from Russia; Finland, Lithuania and Bulgaria are 100 percent dependent, the Oil Price reported.

A draft 'emergency action plan' released by the EU says the 28-member trading bloc could attempt to break Russia's lock on European gas imports by developing domestic shale oil and gas reserves as well as investing into import routes that could bring Central Asian and Mediterranean gas to Europe.

The latter might mean increasing Europe’s liquid natural gas (LNG) capacity in order to tap supplies in Africa, the Middle East and North America, where a shale gas boom has changed the United States from a natural gas importer to an exporter within the past few years.

Europe’s concerns over gas supply instability are well-founded. Over the past decade, Russia has halted the flow of gas through Ukraine three times, directly affecting eastern and southern European countries most reliant on Gazprom, the giant Russian energy monopoly.

The continent certainly has ample shale supplies. According to Bloomberg, the European Union has enough shale gas reserves to free the bloc from reliance on Russian energy for the nearly the next 30 years. Sweden, Denmark, Poland, Bulgaria, France and Spain have the most shale gas; Sweden’s reserves alone could provide 250 years of domestic production.

The big question, of course, is whether any EU governments could gain enough popular support for extracting it.

Fracking, which uses a mix of water, sand and chemicals which isforced down a deep well in order to free shale gas and oil trapped between layers of rock, is controversial.

People living near fracking wells in the United States have reported methane leaking into the local water supplies. Environmental concerns over the amount of water and chemicals used -- highlighted in the documentary “Gasland” -- have also been cited. Some jurisdictions have banned the practice outright, including the Canadian province of Nova Scotia, which recently declared it will pass legislation to prohibit high-volume hydraulic fracturing.

Among Europeans, there is little support for fracking. France and Bulgaria have banned it, while Germany and the Netherlands are among countries that have issued moratoriums. In a 2013 EU study canvassing popular opinions on fracking, over four-fifths of respondents from France and over half of those in Germany said unconventional fossil fuels -- which includes shale gas and oil -- should not be developed under any circumstances.

The Christian Science Monitor recently reported that some concerns over fracking are unique to Europe. The continent has a higher population density than the United States, which means that fracking would likely take place closer to population centers. America has large expanses of unpopulated land containing shale reserves – places like North Dakota and Texas -- where fracking companies can “learn from their mistakes.” Also, most Europeans do not own the mineral rights to their land, meaning that unlike Americans, they would not receive royalties.

 

Financialtribune.com