‘Fracking’ in Europe: Who’s in, Who’s out

by William Yeatman on May 12, 2011

in Blog, Features

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Two days ago, the New York Times reported that the French Parliament is “leaning” towards a ban on hydraulic fracturing, the American-made technological revolution in production that has vastly increased the known economically recoverable global reserves of natural gas. According to the article,

French lawmakers opened debate on Tuesday on proposals to ban a method for extracting oil and gas deposits from shale because of environmental concerns, throwing up the first serious stumbling block to firms that want to use the practice.

Looking with alarm at the experience in the United States, where shale gas is booming, even members of President Nicolas Sarkozy’s governing conservative party have come out against the practice, known as hydraulic fracturing, in which water, sand and chemicals are pumped deep underground under high pressure to free scattered pockets of oil and gas from dense rock formations.

The article, while interesting, misses the big picture. For starters, it’s unclear why French lawmakers would look “with alarm” at the U.S. experience. While there is some evidence that poorly built “fracking” rigs could lead to the escape of methane into local groundwater wells, this isn’t as disturbing as it sounds. Methane (ie, natural gas) does not make water poisonous, and there is no evidence that the fluids used in the process, which could be toxic, have leaked into well water. Much more importantly, there is ZERO evidence that the process affects water tables used for utility scale water supply, although environmentalist special interests are quick to try to conflate well-water methane contamination with water table contamination. The upshot is that hydraulic fracturing has been used in this country for fifty years, without harming public health and environment.

The article also omits mention of why France might be inclined to dismiss fracking: namely, because it isn’t needed. Since 1980, the French government has made nuclear electricity generation a policy priority, and, as a result, the country gets more than 75 percent of its juice from atomic power. That’s the most in the world—by far. For comparison, the U.S. generates about 20 percent of its electricity with nuclear, and Japan gets about a quarter of electricity generation from nuclear. In light of the government’s singular promotion of nuclear, France has a much lower incentive for other forms of electricity generation, like gas. It can afford to pass on the fracking revolution.

The situation is very much different in the rest of Europe. Spain, for example, uses much imported liquid natural gas for electricity generation, so it is more amenable to domestic hydraulic fracturing. About seven months ago, I had breakfast with a representative from an American gas company that was working closely with Spanish energy companies to develop the technology there.

Then there’s Germany. In that country, the Green Party is anomalously powerful, and their influence renders new nuclear and coal verboten. That’s a problem, because the only alternative to coal and nuclear is Russian natural gas. I won’t review 150 years of European history, but suffice it to say, many Germans aren’t keen on being increasingly dependent on the Russian Bear. The two countries have quite a past.

This applies to much of Central and Eastern Europe. Thanks to the European Union’s climate policies, new coal power is difficult. And thanks to the Japanese nuclear crisis, nuclear is out of favor, too. But for these countries, for whom the Russian yoke is all too fresh on the mind, dependence on Gazprom is out of the question. They are very much amenable to hydraulic fracturing technology.

I rarely sing the Obama Administration’s praises on energy policy, but I must give the President props for identifying the geopolitical opportunity inherent to fracking. The State Department has been actively promoting the technology in Europe, no doubt as a counter to the prospect of European reliance on Russian gas.

To be sure, I hate the way politicians in this country use “energy independence” to justify myriad stupid energy policies, but the gas market is very different from the oil market. Whereas the latter is a global market, the former is bound by the logistical infrastructure (ie, pipes). As a result, it’s relatively easy for Russia to play hardball and use gas deliveries as a diplomatic bargaining chip. It has done so with the Ukraine and Belarus.

France doesn’t need fracking; the rest of Europe does, because it’s much more attractive an option than the alternative, reliance on Gazprom or imported LNG. These geopolitical concerns will drive a European turn to the practice.

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