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Frack Alack
A Post-Mortem for European Shale

Europe has watched the American shale revolution with envious eyes these last few years, and a number of countries—from the UK to Poland to Lithuania—have attempted to replicate U.S. success. But no one has been able to manage to put together the unique set of circumstances that have helped shale flourish here in the states, and the momentum behind fracking operations is stalling across Europe. Bloomberg reports:

Despite Europe’s desire to loosen its reliance on Russian gas, the shale revolution has turned out to be a dud. Difficult geological conditions, fierce environmental opposition, cumbersome regulations and a bloody war in Ukraine have conspired to quash investors’ enthusiasm and wear down their patience. The collapse of oil prices to less than $50 a barrel in March was the final straw because the cost of much of Europe’s gas, including Russian imports, is linked to crude.

“The problem in Europe is that you never got a critical mass of wells for the synergies and cost efficiencies to kick in,” said Michael Barron, London-based director for global energy and natural resources at Eurasia Group. “It’s clear that here it will never be the game-changer it was in the U.S.”

Never is a long time, and it’s possible that as fracking technology advances operators will find ways to work with Europe’s trickier geology. But shale is already a high-cost resource, and with lower crude prices threatening American operations that already have a flourishing industry behind them, it’s hard to envisage Europe kick-starting its own boom in these market conditions. The U.S. “fracklog”, booming OPEC production, and sluggish global demand are all conspiring to keep prices down for the foreseeable future, and in so doing will likely keep European shale reserves in the ground.

Moscow is the only big winner here. Putin will be heartened to hear of Europe’s shale failures because it gives him more control over his Western customers and hamstrings their ability to find alternatives to Gazprom gas. For the time being, it looks like the only shale gas Europe will be consuming will be in the form of American LNG.

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  • Jacksonian_Libertarian

    “Moscow is the only big winner here.”

    Nonsense, Moscow is getting killed by low oil prices, and those prices are going to continue for years. The big winner is consumers and civilization which has replaced the muscle power of earlier ages with energy in all its various forms. Not to mention that American LNG is on the way to take Russian market share, and cut their income even more.

  • Kate Minter

    Rockman of Peak Oil fame, a 40 year geologist/driller predicted that other regions would not be able to duplicate the success of the American Fracking effort. He attributed it to the inherent infrastructure of the US, highways, roads, motels, cell phones, wireless, gathering systems, trucking and other transportation, and even the ubiquitous nature of 7-11 like stores close by to by refreshments and food. But an even bigger asset was the pool of oil field roughnecks and trained engineers. The inherent capability of those people is unsurpassed and unprecedented. There are individuals with the know how to keep stripper wells running by themselves. Many are jacks of many trades from mechanics to welding. No other region has this sort of ready workface that is not only mobile, but capable.

    • JR

      KAte, you hit the nail on the head. Human Capital is what keeps it humming. Yes, America is on a cutting edge of energy extraction R&D, but it is the oil workers and engineers who are actually there on the project that make that R&D become a reality!!! AMERICA!!!! Love this country.

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