Shale Gas: Helping Asia Kick the Coal Habit

In a session entitled “The Shale Revolution – Impacts for Europe and the World” at Energy Security Summit 2014 in Berlin, Germany, Mr. Horst-Tore Land, CEO, TouGas Oilfield Solutions GmbH, addressed the question of just how hazardous shale gas production actually was, and offered why it may actually be one way of helping to mitigate global climate change.

He said that like every industrial technology, hydraulic fracturing needed to be done in a professional way. “You have to have your safety and operating menus in place, must have trained people, the operating procedures have to be there. If those requirements are met,” he explained, “there there's absolutely no indication that hydraulic fracturing poses any kind of exceptional risk to the environment.”

The few cases of damage that were documented, he said, were basically the result of sloppy operating procedures.

“At the end of the day, if we don't find a way to stop the big Asian economies – India and China – from burning these incredible amounts of coal, we are going to drive this planet over the cliff – there's absolutely no doubt about it,” said Mr. Land, who explained the CO2 emissions in Asia would overshadow any efforts at reduction which were made in Europe.

He added, “It doesn't matter how many windmills we are building in Germany – what happens to our climate ultimately will be decided in Asia and we have to help them to reduce the volumes of coal they use, and the only way to do that is to make large amounts of natural gas at a competitive price available to them.”

This, he said, made a case for hydraulic fracturing to contribute towards that sentiment, but it needed to be done with the smallest possible environmental footprint. Freshwater consumption was a big obstacle, “and particularly a non-starter in water-constrained regions like China, South Africa, Argentina.”

Mr. Land said his company, TouGas Oilfield Solutions, was helping the Chinese to address the issue, and it was no doubt for him that the country would do hydraulic fracturing on a large scale.

“I think we all, particularly in Germany and in Europe, would be well advised to keep a somewhat global context for this debate,” he opined. “Because at the end of the day CO2 emissions are not going to stop at the German border, and there is not distinction between a CO2 molecule coming out of a coal-fired power plant in Asia or from somewhere else in Europe.”

From his perspective, he said he saw hydraulic fracturing as simply an oil and gas producing technology like everything else, not posing any undue risks.

It was not only a shale revolution that the world was witnessing, according to Anne Lauvergeon, Chairwoman and CEO, A.L.P S.A., who said we were now also experiencing an energy revolution, of which there had not been many, like, for example, the domestication of fire, enabling coal and steam to create the industrial revolution; oil and electricity came later.

She said, “I think we have started a new kind of revolution, based of course also on the fact that everything has changed in the last 15 years in terms of complexity, speed.” Oil prices, she noted, were much higher. Developing countries were emerging, while CO2 constraints existed.

“We have this shale gas revolution, but I think we have much more than that,” she opined. “I think that we will need to deliver much more energy, at low cost because of competitiveness, with less CO2 emissions. When you see this equation, you need revolutionary solutions,” said Ms. Lauvergeon.

This, she explained, began with numerous efficiencies and savings, which could be facilitated by data and a greater awareness on the part of the public towards conservation.

Renewables, but also nuclear, would be essential.

Like any revolution, she offered, this one also needed intermediary stages, “And for me, shale gas is a way to finance the new revolution. Look at the US: it has changed the economic situation, but it has also opened the door to new revolutions.

She said that Europe deciding to say no to shale gas was primarily due to hydraulic fracturing. “If you look at the situation in France, we decided to give up because of fracking – it's forbidden by law.”

This meant that Europe needed to develop different methods, like stimulation by propane, she gave as an example, without water or chemical agents. Other technologies, she said, might very well receive public acceptance.

“Without shale gas, to organize the energy transition is very very tough,” stated Ms. Lauvergeon.

Session moderator Gunther Nonnenmacher noted that there was a bit of a different attitude in “new Europe” in Central & Eastern Europe, which had a more open approach towards developing shale reserves.

Jan Hamáček, Member of the Parliament of the Czech Republic, President of the Chamber of Deputies, reflected on the debate over shale gas in his country, offering: “I think it's symptomatic that a few years ago it was a non-issue. It was only debated by experts, but the attention of the general public was drawn towards it when there were debates about environmental aspects of shale gas extraction.”

He reported that there had even been a draft bill in the Czech parliament to ban hydraulic fracturing, but the government dissolved before it could be passed. That said, Mr. Hamacek said it was clear that the US was becoming self-sufficient when it came to gas, and could also for crude oil, making for a true game-changer. He noted the plans for constructing LNG export terminals.

“Where is that gas going?” he queried. “Europe is not being considered for exports; it's mainly Asia. It's a pity because the United States, once it is able to export oil and gas, would be one of the few countries with whom we share the same values, but at the same time they are able to export hydrocarbons, so this is something we should take into account,” he explained, adding that it was a shame some US politicians were unable to factor in the political aspects of the phenomenon.

Still, even if US exports didn't hit European shores, he said the US being self-sufficient meant more LNG would be freed up on the global market, improving negotiating positions.

Jurgen Grossmann, Chairman of the Board of Trustees, RAG Foundation (whose mission is to discontinue subsidized coal mining), said the US shale gas revolution had had a global impact that could be felt, like how Japan, in the wake of the Fukushima disaster, was able to opt out of nuclear power production because the US was not importing as much LNG as it previously had.

He added, “Shale gas in the US also contributed to the price of coal dropping – coal mines fighting for survival in the US. American coal production has not dropped, but is thrown on the world market at lower prices, which is why coal has become attractive for other countries.”

According to him, in this way the US had exported CO2 emissions, by switching from coal to natural gas, which was more favorable in terms of CO2 emissions – better than Europe as of late.”

This was food for though, he said, adding that his associates in the chemicals sector had told him they were investing where they had access to cheap energy, i.e. shale gas.

Germany's turn towards renewables was based on the paradigm that energy would become more expensive, he recalled, that at some point energy prices would get so high, that even outlandish investments into renewables would become market-ready - but shale gas had slowed that price development, even reversing the trend.

He commented: “If we keep banking on renewables we have to have long-term subsidies – this is a fact.”

Drew Leifheit is Natural Gas Europe's new media specialist.