Download Category: Gas

Europe has 15 TCM of technically recoverable shale gas resources according to an assessment from the EIA in 2013, which remains the best overview, almost ten years later. This data-file simply aims to provide a helpful overview of the different countries’ rocks and above-ground challenges, tabulating the main formations, TOCs, depths, thicknesses, clay contents and exploration history.

Our first conclusion is how much the world has changed since the early days of European shale exploration, a decade ago, including ten years’ proof that US shale has not caused an entire continent to die a mysterious death. Indeed, US industry, has seemed to gain a mysterious new life. While Europe is now so short of energy that we may need to scale our industry back at a time when we would rather be re-shoring strategic supply chains).

While Europe is  now trying to import vast amounts of US shale gas to Europe as LNG (note here), another complementary option, we think is to re-visit the possibilities of European shale; especially in Eastern Europe, which has large, high-quality shale resources, high continued reliance on coal (Poland, Bulgaria) and a growing desire to avoid Russian reliance.

Ukraine has the best shale resources in all of Europe: 4.5% TOC, 1.15% maturity (gas window), low clay and moderate over-pressure. Shell tested these rocks and obtained results good enough to sign a $10bn development agreement that could ramp output up to 20bcm per year. At the time, Ukrainian politicians stated the country could ultimately run a “gas surplus”. This was 2013. Just before Russia’s first invasion. And this Continent-leading Dniepr-Donets shale resource lies in the East of the country, bounded by Kharkiv and Donetsk, near to the current fighting. Which may or may not be a coincidence.

It is difficult to know to what extent Russia fomented broader opposition to European shale. Some of the hysteria seems almost farcical in retrospect. In Romania, in 2013, as Chevron signed an exploration contract, one town saw the largest protest in its entire history (16% of the population), as 8,000 people took to the streets with signs reading “Don’t kill our children”.

(We humbly submit that if you are writing this on a placard, you might not understand what shale gas involves. The simple goal is to produce energy safely, with 50-60% lower carbon than coal (note here) at a marginal cost of $1.5-2/mcf (model here)).

Other countries with good potential, held back only by sentiment are Romania, Germany, UK, Bulgaria and Spain. We remain more cautious on the potential in Sweden and Denmark (the Alum has expelled its gas), Netherlands (population density), Poland (clay makes the rock harder to fracture) and France (continuing to rely on nuclear is its best low-carbon option).

This data-file assesses 25 countries and regions’ energy consumption, as those countries have developed, over the past 50-years.

Specifically, we have cross-plotted GDP per capita versus total primary energy, total useful energy, total CO2 emissions and the relative shares of coal, oil, gas, nuclear, hydro, wind, solar and other energy.

Early industrialization is most energy intensive, as energy consumption rises 1:1 with GDP growth and mostly sourced from coal and oil.

Later industrialization is less energy intensive, with the ‘beta’ falling from to 0.6-0.8 and $10-30k pp pa GDP. And middle income countries start to prefer cleaner energy, especially natural gas (thus coal falls, chart below).

In developed countries, energy use per capita does seem to plateau, at around 25MWH pp pa, and this is also when decarbonization most steps up too.

The EU taxonomy is a set of guidelines that label some investments as ‘green’. Its purpose, the European Commission states is to “help investors identify economic activities in line with our environmental and climate objectives”.

Under new rules in February-2022, natural gas will be considered green if it clearly replaces higher-carbon fuels (coal) and has a CO2 emissions limit below 270g of CO2 per kWh (and meets other byzantine requirements).

Our goal in this data-file is to avoid politics, and simply present some numbers, for what it would take to reach 270g/kWh CO2 intensity.

Our first conclusion is that most conventional gas projects will not meet this hurdle, even if they use highly efficient CCGTs and burn ‘clear gas’ where all the Scope 1&2 CO2 emissions have been offset by producers.

What is most likely to accelerate based on the taxonomy is the use of CHPs, and possibly also some fuel cells, which can achieve higher efficiencies and thus attain 200-270g/kWh CO2 intensities.

Also potentially helped are blends of conventional gas plus landfill gas (c25%), nature-based CO2 removals (20-25%), blue hydrogen (30%) and CCS (c33%). Generally these blends do not look too bad on costs, inflating a marginal cost around 8c/kWh for conventional gas power to around 9-10c/kWh.

The purpose of this data-file is to aggregate the ramp-up rates of conventional power generation sources: both as they start up from “cold”, and then as they ramp up (in percent per minute, or MW per minute).

Hydro power and simple cycle gas turbines offer the best short-term performance, ramping immediately and rapidly. Next come combined cycle gas plants, then coal, then nuclear.

Nuclear is nuanced. It might take a day to cold-start up a nuclear plant. But the average facility is 1.1GW. So even a 1% ramp rate is equivalent to adding 10MW per minute, similar in size to the average utility-scale solar plant.