Europe is going through an extended disruptive economic period. Many people and institutions are greatly harmed in disruptive periods, but this is when nations are forced to develop new, efficient technologies to pull themselves out of this malaise.
Europe has large sedimentary basins with massive quantities of oil and natural gas. To develop many fields to extract these resources, it will require new technologies and favorable economics. There are potential transformative fracking and horizontal drilling technologies which could vastly change the economies of Europe.
In September, an independent UK oil company drilled into the English massive Shale Anglo Dutch Basin. Their lease is located in Lancashire. The estimate is they have 200 trillion cubic feet (tcf) of natural gas with 50 tcf recoverable. To put this in perspective, in the lower 48 US states, there are estimates in total there are 750 tcf recoverable, whereas in one small area in just one English Shale basin, there are 50 tcf of the 200 tcf gross.
The English Shale gas deposits are massive, to say the least. In Europe, natural gas currently is priced in the $8 mcf range. In the US, our natural gas currently is selling below $4 mcf. Even if, in the coming decade, natural gas prices in Europe fall to $5 mcf, the economic and political consequences are enormous, game- changing.
Development of Shale natural gas would mean Europe no longer would be dependent on expensive Russian natural gas and imported Liquefied Natural Gas (LNG). By switching to a natural gas economy, there will be substantially less imported crude oil.
This is important because the Germans are planning to shut down their nuclear power plants. Many European nations are planning to become less dependent upon coal fired power plants. The Shale basins can produce dry natural gas or wet natural gas with valuable liquids. The liquids often are a quality light crude oil. Shale liquids will further reduce the requirement for expensive imported crude oil. Development of shale basins in France alone could change France from the international 10th Gross National Product nation to the 5th Gross National Product nation.
Shale massive basin development will create substantial number of jobs and increase local, regional, and nation tax revenues. It will prevent the costly import of LNG, natural, crude oil, and refined products.
These shale basins have been known and studied for generations. They exist throughout Europe. These shale basins are extensive. In the 19th century coal was the source of reliable energy. In the coming decades shale natural gas and liquids could be the bed rock for a massive economic revival in Europe.
Will local, national, and international bureaucrats allow these shale basins to be developed? There will be countless permit hearings regarding environmental issues. The local, regional, and nation revenue offices will be tempted to levy massive taxes on the industry. We are watching this turmoil in the United States with our own shale development. Some states fully encourage the shale development and other states are still studying the potential good and bad aspects of it.
Energy is the key to economic development; the cheaper the cost of energy, the stronger a country’s economic development. It may take years of permitting discussions, but the potential of shale development could be transformative for the next generation of Europeans.
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