A View from the Green Side: Entering a New Dimension

“We’ve entered a new dimension,” remarked Stephan Singer, Global Policy Director at the World Wildlife Federation (WWF) in Brussels, referring to how oil and gas companies had been promoting natural gas these days.

“If you just look at the newly assessed reserves - those resources which are technologically and economically exploitable, including shale gas – it’s exploding,” he explained of supplies.

“So when companies like Shell and others talk about natural gas, they’re talking about it – not as a bridging fuel to renewables – but as a destination fuel. And we are hearing this kind of aggressive language from oil and gas companies, because the gas is basically unlimited, it may overtake oil, it’s cheaper and cheaper – that’s what economists are telling us as well.”

Those sentiments just don’t jibe with the WWF’s global campaign goal to promote 100% renewable energy by 2050, worldwide, according to Mr. Singer, who is not categorically against the use of natural gas, but believes it should not compete with renewables, making new, unconventional resources a potential foe.

“Gas is still a carbon polluter – much lower than coal and oil, I agree – but still would not comply with our goals of going for 100% renewables,” he said. “And given its cheap price, its cost decline in exploitation it may also compete quite substantively with renewables expansion. We have evidence of that in the US and in China and it may come to Europe very likely as well. That’s our concern, in principal.”

He explained that he first heard about unconventional gas about two years ago.

“This was supposed to be a non issue for Europe and the rest of the world,” Singer recalled, “but my hunch was ‘what’s happening in the US is happening in Europe and other parts of the world in the context of 2-3 years.’”

Then, last year he said he had participated in a panel discussion in Brussels, which included representatives from drilling services operator Schlumberger, ExxonMobil and others.

“They were coming over to Europe to educate us and have a debate on how wonderful shale gas was,” he explained. “There were government representatives from the UK, Poland and Hungary – mainly East Europeans – and they had brought their own NGOs and wanted to educate us. But we said ‘No, guys. We have to come up with our own opinions,’ and the Commission wasn’t up to speed.”

Now, Singer said, questions regarding shale gas in Europe had grown exponentially.

He explained: “I think most European countries and the populace are still digesting shale gas: ‘Is it an opportunity? A climate opportunity? Maybe only short term? What is it?’ I don’t believe people have made up their minds on that one.”

While he said he believed there was little structured debate on the topic, he found it interesting that Russia’s Gazprom was among naysayers in Europe, pointing out potential environmental threats.

As to whether he believed shale gas was categorically harmful to the environment, Singer said it depended on whose study one chose to believe.

“Different scientific sources have different assessments on the impacts of shale gas on carbon, with regard to the hydraulic fracturing processes, the venting, the losses over time, etc. My feeling is this is all caused by the various scientific institutes looking at different sites, so I could not say that one is wrong and the other is right. All the investigations are probably right, but they look at different geological sites.

“Each bedrock containing shale gas has its own environmental consequences once you exploit it – it’s a question of depth, mineral composition, age of gas, physical adherence, substrate, etc. So in some cases you may have a very high carbon burden to the atmosphere and in some cases you may have less.”

Still, Singer said he did see potential environmental threats from unconventional gas.

“Shale gas needs more land than conventional gas,” he pointed out. “You need about 6-10 more bore holes than for conventional, so it’s much more land intensive. Because you need to compensate the owners, the costs have not been looked at in detail.”

He continued: “The other thing is the water issue, the huge amount of freshwater needed. Pollution is another issue, one that can be solved if you have proper treatment of the sediment, and if you have proper legislation to disclose the chemicals.

“I think what the US is doing is completely irresponsible; it would not be legal in Europe,” he said of shale gas E&Ps’ refusal to disclose the chemical contents and/or amounts of them in hydraulic fracturing fluid in North America.

“The pollution side could be managed,” Singer admitted, “but not the freshwater usage. In order not to have an impact on this, the fracking process can only occur in regions where you have plenty of water.”

Even if shale gas were to replace coal in the power sector, he explained, which is in principal a good thing, the gas infrastructure that would be built would be around to stay, creating demand for more natural gas.

He remarked, “You wouldn’t expect a gas infrastructure, with power plants and LNG terminals, etc. to be replaced in 30 years for the sake of renewables, because there’s so much gas in the system.”

According to him, gas planning in Europe is completely dissociated from the overall trends in Europe.

“I was surprised to learn from the McKinsey study published this spring, with some gas companies – Qatari Gas, Gazprom, Shell, GDF Suez – on gas being the most economic and low carbon fuel. It was basically a pro gas sales study, and that’s fine. But then McKinsey also put in the study an assessment that by 2030, if all the gas investments taking place materialize, which are currently in the pipeline, we will have more than twice as much gas as even would be considered needed in a ‘business as usual’ scenario.”

Singer rattled off Europe’s pending infrastructure projects and sources of gas: “North Stream, South Stream, Nabucco, LNG facilities, additional gas coming into Europe, which was meant to go to the US, as it’s now the largest gas producer worldwide. “It’s a matter of time before it will be competing with Gazprom in gas exports on the world market.”

He explained, “In Europe, hardly anyone is aware of this and they are planning for lots of LNG facilities and old fashioned deals with Nigeria and Algeria, but that probably won’t happen because we’ll be getting all kinds of cheap offers from the US.

“And then we’ll have a huge gas glut, but we won’t need all that gas. We don’t have the demand for it,” he said of Europe. “And then here comes shale gas in Poland, because they don’t want to buy gas from Russia.”

Aside from the anti Russian sentiments in Poland, he said that the country likely saw the opportunity of being a pioneer in a developing industry like shale gas, which meant that Poland was likely creating a lot of they hype. 

Meanwhile, the threat of shale gas development in Europe had prompted Gazprom to express flexibility on the price of its exported gas as well as dropping the oil/gas price linkage.

What’s missing in Europe, Singer said, was an understanding of the situation and a comprehensive energy plan for the future.

“We need the European Commission to have an understanding of where gas development is going in Europe. My feeling is the energy policy in the EU is a complete mess in context of responsibilities, assessing what we support as Europeans, what do we incentivize – what we need and what we don’t need. Right now it’s ‘everything goes’.”

“Governments are insisting there is not European-wide agreed energy mix, because it’s an issue of national sovereignty based on the treaties, and that’s all fine,” he continued.

“My feeling is they want to have their cake and eat it too – it just doesn’t work. The Commission and member states have to agree, that if you want to strategically tackle the problems of climate, energy security, volatility of prices, and long term supply, among others, you need to have a combined and strategic joint energy policy in the Union, otherwise it does not work. 

As an example he pointed to the Germans deciding on the long term supply of Russian gas via North Stream, while GDF and others were doing private deals with Algeria.

“It’s unplanned,” he explained. “It’s chaotic. You need a more centralized agreement in order to be consistent and economic.”

Singer said that gas companies knew Europe wouldn’t be able have it all and that there would some losers.

In that context, if shale gas were still to be successfully developed in Europe, Singer hoped it would be under certain conditions.

“For one, I agree with what EU Energy Commissioner Gunther Oettinger said a couple of days ago, that we need any kind of shale gas exploration to comply with existing laws, so that means environmental land assessment, disclosure of the chemicals being used and discharged into waste water. There needs to be water balance assessment for the region; and no drilling in Natura 2000 areas. 

“Politically, we need to make sure that gas is there to replace coal and not replace investments in renewables, which you can never plan. The market and utilities will decide what they are doing.”

He added, “If we see that gas is increasingly replacing renewables because of the price going down overall, then we will turn even more against gas, unfortunately, despite the role that gas can play as a mid-term bridging fuel.”

As for WWF’s input into the shale gas debate, Mr. Singer reported that his organization had drafted a report assessing shale gas worldwide that should become available in the next few weeks.

He concluded: “It will include how we see shale gas, why we don’t like it, but how we believe natural (conventional) gas can play a role.”