Oil Majors Hunting for Shale Gas in Europe

Nearly all the major oil companies are looking across Europe for shale gas, an unconventional energy source that has transformed the U.S. energy market, industry researchers said on Thursday.

They warned, however, that it will be difficult to replicate the same success as there were not enough rigs available and Europe lacks some of the conditions that have made the shale gas boom possible in North America.

Rising shale gas production has raised hopes that the United States country will soon be able to cover all its gas needs domestically.

Europe relies mainly on natural gas supplies from Russia, Norway and north Africa and significant shale gas finds could make the continent less reliable on imports.

"There are at least 40 companies looking for shale gas in Europe," Florence Geny, a research fellow at the Oxford Institute for Energy Studies, told Reuters on the sidelines of an energy seminar in the Norwegian capital.

All the major oil companies are present on the market, she said, apart from Britain's BP, Royal Dutch Shell was looking in Sweden and Ukraine, Exxon Mobil in Germany, while ConocoPhillips and Chevron were in Poland.

Unlike in the U.S., however, Europe does not have as many as land rigs available to search for shale gas. "In Europe we have currently 20 land rigs. In the U.S., they have at least 1,500, maybe closer to 2,000," said Jarand Rystad, founder of a Norway-based research consultancy for the oil industry.

"The U.S. has a well-established big industry with a low-cost structure and with skilled crews. It will take time to develop the same industry in Europe," he told Reuters.

Another challenge is getting drilling permits in densely-populated Europe. "It is more challenging in Europe to get a license because of the local impact and the availability of water resources," said Geny.

The academic also said tax breaks introduced in the U.S. in the 1980s to stimulate drilling helped develop the industry and that the geology of shale gas is more complicated in Europe than in the U.S.  "Production in Europe is at least a decade away," she said.

Reported by Gwladys Fouche in Oslo

Source: Reuters