‘Unconventional wisdom’: French think tank says shale revolution isn’t big for US and Europe
The shale boom the US has positively affected the gas industry and local economies, while the influence on macroeconomic growth was insignificant, according to an IDDRI report called “Unconventional wisdom: an economic analysis of US shale gas and implications for the EU.”
The dramatic reduction in US natural gas prices does not appear sustainable the long term. After the price collapse to $1.95/Mbtu at the beginning of the 2012 prices have climbed back to $4.69/Mbtu in January 2014. In the long term the United States will remain a big importer of crude oil, and the price for 1 Mbtu will reach $6-10, the study forecasts.
According to the IDDRI analysis the advantages for Europe will be even less, because of environmental concerns and restrictions on exploration.
"It is often overlooked, but the US shale revolution came after several decades of geological exploration which scaled up massively in the years preceding the boom," IDDRI said.
Seeking shale deposits the US drilled a total of 17,268 exploratory natural gas wells between 2000 and 2010, an average of 130 wells per month. In the EU it's much less with 50 wells in total, and it’s still in shale exploration infancy.
The study projects from 3 to 10 percent coverage of EU energy demand, coming from shale resources by 2030-2035.
"Shale gas should therefore not be seen as a solution to the EU's energy, climate and competitiveness challenge," the think tank said.
IDDRI believes the European Union should follow energy efficiency and eco-innovation strategy, use low carbon sources and maintain a more integrated internal market.
It added, "Shale gas could be a complement to this, in so far as it could contribute to a more liquid, resilient internal gas market, particularly in those member states currently highly dependent on polluting coal or Russian gas."