As he opened the Tight and Shale Gas Summit in Budapest, Hungary, Thierry Rouad, General Secretary of Cedigaz, an international organization that analyzes worldwide data on natural gas, stated that in terms of unconventional gas, Europe had a lot to learn from the US.

David Aron, Managing Director at Petroleum Development Consultants (PDC), an independent international oil and gas consulting company based in London and Aberdeen in the UK, said he disagreed with that sentiment. His talk was entitled Shale Gas: Key Policy Developments and Regulatory Considerations.

Explaining his dissension, he said, “That may not be the case. There’s a lot of experience in the States with unconventional gas, with many wells drilled but there are major and significant differences between the US, Canada and the rest of the world.”

For one, the subsurface rights being owned by the landowner in the US.

“In all other places they are owned by the state. But it was through drilling many many wells, that’s how the industry was developed, and something that won’t be repeated in other places,” said Aron, who said unconventional gas in Europe would be about many fewer wells and a lot more about technology and science.

He gave conventional activities in the North Sea as an example.

“In developing North Sea platforms we decided to install water injection facilities at the same time as the main facilities as retrospective installation of water injection facilities would have been very expensive. This was not the conventional US practice as water injection there was generally introduced after a number of years of ‘primary production’,” he recalled.

Differences in business culture were also evident.

“The US is par excellence the country of mass production,” explained Aron. “No other nation could have universities to study the production of McDonalds. They can mass construct and drill hundreds of wells on the same field.”

He said things were different in the North Sea, where developments occurred after drilling a small number of exploration and appraisal wells. Future international unconventional developments could follow a similar pattern where a small number of expensive technical and scientific based wells would be required followed then by factory style drilling.   

Aron noted: “The subject is so rapidly changing, regulations and counter regulations are happening every single day. In terms of where things might go, we certainly can look at the US and Canada.”

He said he’d finally seen Gasland, the anti fraccing movie from the US, which included people being able to light their taps, which may have been due to fraccing, or maybe not. 

“What was interesting is that the industry actually didn’t make any comment on it,” he said

“Already we see the negative views of the industry, particularly in France. The industry has to catch that debate at an early state.”

Then, Mr. Aron gave his take on EU Policy towards unconventional gas.

“The laws and regulations are rather undeveloped in Europe and there’s going to have to be much development. We have much tougher regulations,” he said of Europe, “and hydraulic fracturing is likely to be challenged.”

He cited the Marcellus shale in the US, noting that there was greater problem with opposition in the state of New York than in Pennsylvania where there was greater eagerness for jobs.

“Security of supply is a major issue for Europe,” stated Aron. “For the US it has provided a big boost to security of supply.

He said he doubted that EU wide licensing regulations for unconventional E&P would be acceptable, as such measures for conventional E&P had always opposed by the UK and other EU producers. However there could be some acceptance of common environmental rules within the EU.

Mr. Aron offered brief mention to countries with shale potential, like Austria, where he said there were very strict protection laws on water. In Bulgaria, he noted, there were no specific regulations, while in the Czech Republic were proceedings going on over a couple of the concession applications.

“In France the parliament has voted to ban fraccing and probably it was the first nation to do it,” he said. “Now the companies that have licenses were required to state that they won’t do fraccing. Three licenses didn’t meet that specification and have been suspended.

“France has been taking the leading role in that opposition,” he added.

Meanwhile, in Germany, there were questions in some of the states regarding hydraulic fracturing. “That might make it unprofitable in some states in Germany.”

He noted that as Germany had gone against nuclear, it could go against unconventionals as well.

Mr. Aron mentioned the tax incentives in Europe for unconventional gas, saying there were no plans yet in Italy, even though the country could see a great benefit from pursuing its shales.

“In the Netherlands in general they have come out in favor. Landowners and tenants could profit there,” he remarked. “The use of deviated wells from a single well pad could reduce the amount of land take. The Dutch have suggested a financial incentive for the owners.”

In Poland, he said there was a new geology and mining law. “Even for conventional hydrocarbons, it was rather old. There will be a more fundamental review of O&G regulation.”

Natura 2000 and decisions being taken at a very local level in addition to water and mining regulations, were issues in Poland, according to Mr. Aron.

In the UK, management of wastewater, and population density meant unconventional gas would have to have a different route.

Not to mention that authorities had recently pointed the finger at one E&P company there, determining that hydraulic fracturing was the cause of some seismic activity.

Mr. Aron explained: “Cuadrilla Resources was fraccing in Blackpool and there was an earthquake of 1.5. It appears that they fracked where there are some weaknesses in the subsurface structure.

“It’s a good case in point,” he continued. “I have a sneaking suspicion it’s more about the ability to measure something. How many natural tremors of the same level occur in the UK every year?”

He gave mention to US/Canada regulatory considerations, and regulatory issues, offering a chart which showed the main shale gas plays, like the Marcellus. 

“The state of New York is more hostile to the oil and gas industry,” he said, contrasting the situation with the Horn River basin in Canada. “They are very active in going out and talking to the community, to provide a better model of how it might be done, with the participation and involvement of local people.

According to him, it was more likely that shale gas would be developed in Eastern rather than in Western Europe, taking into consideration things like replacement of natural gas supply from Russia.

Poland, he said was a particular case, with an undeveloped gas transport system, and low usage of gas, “So any shale gas industry is going to have quite a difficult job. It can replace conventional gas, but needs to replace coal.”

Water management was a really big issue, according to Mr. Aron. “I think I’m much more sympathetic to environmentalists’ stance on this,” he said regarding the issue of disclosing chemicals used in hydraulic fracturing fluid. 

“There’s no competitive issue, because they all know what’s in each others fracturing fluid,” he said of players in the industry.

“We are going to spend a lot of money on our exploration and appraisal wells,” concluded Mr. Aron speaking of tight and shale gas production in Europe. 

Meanwhile, he said, Petroleum Development Consultants had recently completed a study for the government of Colombia preparing a review of how conventional production sharing agreements would need to be modified in order to be able to handle shale gas and coal bed methane. PDC also developed technical regulation for both shale gas and coal bed methane.