More study needed on unconventional gas-EU Commission

Wed Jun 16, 2010 6:12pm IST

Stocks

   

* Understanding of environment impact key for public support

* Drilling could be issue in densely populated Europe

* EU assessing if focus should be shale or coal bed methane

By Catherine Hornby

AMSTERDAM, June 16 (Reuters) - More study is needed on the environmental impact of unconventional gas projects to ensure their success in Europe, the head of the European Commission's unit for coal and oil said on Wednesday.

Unconventional resources such as shale gas, viewed as a game changer in the U.S. natural gas market, could also be vastly available for exploitation in Europe, though European environmental concerns are more acute.

A clear understanding about issues such as the use of chemicals and their effect on water sources will help ensure public acceptance for new projects, the commission's Jan Panek said at the Global Unconventional Gas conference in Amsterdam.

"We need to be much better informed about the environmental impact," said Panek. "Not only because we have much stricter environmental policies in the EU but also because the environmental impact is the key element for public support."

From Sweden to Poland, many oil and gas companies, including Shell (RDSa.L), Exxon Mobil (XOM.N), ConocoPhillips (COP.N) and Chevron (CVX.N), are hunting for unconventional fuels in Europe.

Panek highlighted some of the concerns of environmentalists, who argue the mix of water and chemicals in drilling techniques can contaminate water.

Unconventional gas flows less freely than gas from traditional reservoirs, and wells must be drilled closer together to exploit reserves, which could also be a problem in densely populated areas of Europe.

"We see limitations in terms of the environmental footprint and the infrastructure requirements such as the number of wells we have to build and the technologies that make it a bit challenging in Europe," said Panek.

"It's difficult to find the acreage to drill the number of wells you need."

Panek said the EU was also assessing whether shale gas was the best option to focus on, or whether coal bed methane might hold more benefits, such as its high presence across the border in countries such as Ukraine and Russia.

Europe's unconventional gas resources are currently estimated at about 35 trillion cubic metres, Panek said, of which roughly 45 percent is shale, 22 percent is coal bed methane and 33 percent is tight gas, which is gas trapped in difficult to access rock or sand. (Editing by James Jukwey)

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