The EU Provides Guidance on Shale Gas

The EU’s new minimum principles for shale gas exploration and production may pave the way for new industry activity.

The European Commission (EC) has decided not to propose legislation restricting shale gas exploration and production. Instead, it has opened the door to shale gas in Europe by publishing non-binding guidelines to provide greater clarity for the extracting industry. If Member States choose to permit fracking — they remain free to ban it — they are to comply with the EC guidance so as to ensure adequate environmental protection. However, the environmental agenda no longer trumps other policy objectives. Europe is facing high energy costs and shale gas may offer partial relief.

Shale gas potential in the EU -

The EU is a large consumer of natural gas and indigenous production is declining. The Europe’s high import dependency and the shale gas revolution in the US is exposing the EU to a significant energy cost disadvantage. In the US, natural gas prices are three to four times lower than in Europe. In addition, shale gas has the potential to help Europe reaching its emission targets by reducing the use of carbon intensive fossil fuels such as coal. These factors are causing Europe to warm to exploiting its unconventional hydrocarbon reserves. Among unconventional fossil fuels, production of shale gas appears to have the greatest potential, even uncertainty remains about which portion of these resources will actually be economically recoverable.

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