Thursday, March 27, 2014

WSJ: Shale gas can free Europe from reliance on Russia; windmills cannot deliver energy security

Energy Seriousness for Europe
Shale gas, not windmills, can free the continent from reliance on Russia.

Updated March 27, 2014 7:16 p.m. ET THE WALL STREET JOURNAL

Russia's invasion of Ukraine has at last focused European minds on the need to reduce their dependence on Russian energy. One solution lies right underfoot.

British Prime Minister David Cameron offered what should be an obvious fix: tapping some of the trillions of cubic feet of shale oil and gas that are estimated to be locked under the European surface. Speaking to reporters on Tuesday in the Hague, Mr. Cameron called the invasion of Crimea "something of a wake-up call" for Europe. "Energy independence, using all these different sources of energy, should be a tier one political issue from now on, rather than tier five."

He should know. U.K.-based Cuadrilla Resources first applied for an exploration permit in Lancashire in 2008, under the previous Labour government. Cuadrilla says it has found 200 trillion cubic feet of gas-in-place in Lancashire's Bowland Basin alone. With the U.K. consuming roughly 3.4 trillion cubic feet per year, even a fraction of that gas could make a dramatic difference to energy prices and prospects in Europe.

Since 2008, Cuadrilla has conducted some testing and exploration; met with local land-owners in its prospective drilling sites; prepared more applications for planning and health and safety approval than we can list here; and waited out a string of government-commissioned consultations and studies—all of which have so far concluded that hydraulic fracturing poses no serious risk, albeit with myriad recommended rules governing the process.

A Cuadrilla spokeswoman tells us that if the company's plans remain on track, it expects to begin exploratory drilling in Lancashire next year and that commercialized production "could begin before the end of the decade." For an idea of the hold-ups Cuadrilla has already experienced, see the company's explanation for rejecting a site last year: "The background to this decision includes technical constraints related to wintering birds," according to Chief Executive Francis Egan's statement.

That has to change. Lithuania, Finland, Estonia, Latvia and Bulgaria are almost completely dependent on Russia for their natural gas. Poland, Slovakia, the Czech Republic, Austria and Greece source more than half their gas from Russia. Germany gets more than 30%.
All this should put the usual reservations about hydraulic fracturing, or fracking, into a more sober perspective. France and Bulgaria have banned fracking in a fit of environmentalist hysteria, and Germany has placed a moratorium on the practice. Policy makers in Brussels are still fine-tuning the EU environmental regulations they want to require of shale prospectors.

European reluctance to develop fossil-fuel resources at home was a problem long before the Ukraine crisis: Cheap domestic gas would have helped ease the EU's recent and ongoing economic troubles. Moscow's invasion of Crimea has now forced European governments to finally admit, among other inconvenient truths, that taxpayer-funded windmills will not deliver energy security, much less improved geopolitical leverage against Moscow. There are few silver linings to Russia's revanchism, but perhaps a serious European energy policy might be one of them.

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