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Fri, 21 Feb, 2014 03:55:35 AM
FTimes Report, February 21

Will the arctic hydrocarbon reserve give in to shale oil and gas? Arctic Business Forum is set to take the issue by the horns on March 12 in Rovaniemi, Finland.

A session styled “Energy from the Arctic or Shale Gas from the USA?”  In the conference of the Forum hosted by the Lapland Chamber of Commerce will scrutinise the ramifications of the US shale oil and gas development for Europe, specifically for the Arctic region, said the conference organisers.

Tim Boersma, a fellow at Brookings Institute, USA who brings with a rich research track in energy policy coordination, energy security, gas infrastructure and regulation, resource scarcity, arctic resources, and unconventional natural gas extraction, will present the keynote paper.

The participants of the session are also expected to examine the future of the stalled oil and gas projects in the Arctic to ascertain whether these would remain postponed indefinitely or would be dumped for good. 

According to the US Geological Survey’s 2008 Circum-Arctic Resource Appraisal, the region contains 412 billion barrels of oil equivalent or one-fourth of the world’s oil and gas resources. 

But arctic hydrocarbon exploration and production faces major competition from unconventional oil and gas resources and other alternative hydrocarbon sources, said a Rigzone report on February 13 referring to a conference on arctic technology in Houston.

Hydrocarbon exploration is not a new phenomenon in the Arctic. Approximately 500 wells were drilled above the Arctic Circle in the 1970s and 1980s. But the decline in oil prices in the mid-1980s prompted the oil and gas industry to abandon arctic drilling. 

Today, global oil and gas companies are refocusing their exploration and production efforts on the Arctic due to high oil prices in real and normal terms, the fact that oil and gas resources are becoming harder to replace due to resource nationalism, and incentives within Russia to encourage development, the Rigzone report quoted Edward Richardson, an analyst with London-based Infield Systems, as telling the Houston conference.

“Oil and gas companies are turning to the Arctic to fill their hopper with discoveries for the next generation of projects,” said Richardson.

Tim Boersma, in a recent publication, has tabled four questions relating to shale energy projects in Europe: 1) can the US shale gas boom replicate in Europe; 2) what is the most likely course of future shale gas or tight oil development in Europe, 3) what are the largest sources of uncertainty regarding future development in Europe; and 4) what is the state of analytical debate in Europe over the likely course of shale gas or tight oil developments?

He answers the first question in the negative, maintaining that a combination of factors have   contributed to the US shale gas and oil boom, namely favourable geological conditions, infrastructure, substantial public support, available service industry, broad political support, a large market, and a favourable fiscal climate. “In Europe the only correspondence with the US is that there is a large market.” 

In answer to the second question, Boersma says Europe is not going to see a revolution, as some have labelled the events in the US, but more of a bumpy evolution. 

He answers the third question saying that it depends on many uncertain factors including technology, regulation and legislation, and market functions.

To the fourth question, he says the debate within Europe mainly focuses on environmental concerns that have been linked to shale gas extraction, though increasingly industrial competitiveness has risen on the political agenda. “In general, it is my sense that the European debate is completely polarized, with both proponents and opponents grossly exaggerating their arguments.”

In sum, says the energy scholar, “Many uncertainties make it difficult to predict what the future of unconventional energy resources in Europe is going to be. What does seem certain is that an energy boom comparable to the one that has unfolded in the United States is not going to happen on the other side of the Atlantic Ocean.”

It now remains to be seen to what degree Boersma’s reasoning holds sway over the ABF conference participants next month.

 
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