Expectations Ahead of Reality

The development of shale gas in Europe is important to achieve more energy independence, but expectations exceed developments, according to private U.S. energy investment bank Tudor, Pickering and Holt.

Plenty of challenges in the development of European shale gas capacities remain, especially on the regulatory side, and because of public opposition, the bank's Co-President, Dan Pickering, told Reuters in an interview.

"Expectations for shale gas in Europe are ahead of reality at the moment; the industry is in the middle of a land grab phase," he said.

The firm, headquartered in Houston, Texas, is a leading advisor for U.S. oil and gas transactions in the United States.

Europe is far more densely populated than the United States, and European regulation on exploration and production (E&P) of shale gas is not well developed.

But another major challenge in the development of shale E&P is Europe's land ownership structure, according to Pickering.

"In the U.S., the landowner typically also owns the mineral rights; in Europe, this mostly isn't the case," he said, adding: "This means that in the U.S., if you find shale gas on your land, you can get rich. In Europe, you'll probably mostly get annoyed."

Still, European shale gas offered exciting prospects, Pickering said.

Some of Europe's biggest shale gas reserves are thought to be in central European countries, such as Poland, and there are political efforts to reduce energy dependence on Russia and its state-owned gas company Gazprom.

"The catalyst and incentive to invest into shale gas is domestic production which brings independence from LNG and Russian gas," he said, adding: "In this context, shale gas is clearly a threat to Gazprom."

Source: Reuters