ESSAY: SHALE GAS IN EUROPE

The last findings of shale gas in UK as well as the well-known reserves in Poland, Germany, France and other European countries bring in the limelight the discussion about the exploitation of unconventional natural gas in Europe. The exploitation of unconventional gas has advantages and disadvantages but up to know remains weakly regulated. The uncertainness in the predictions on the well sizes, the challenging extraction technology and the need for further environmental impact assessment avoid finding a common agreement among the member states.

Introduction

Shale gas is a non-conventional gas that in the recent past is catching the attention of the energy markets. Shale gas is still a natural gas, but it is trapped in sedimentary layers with low permeability or porosity and requires special extraction methods, including horizontal drilling over long distances and artificial manufacturing of the parent rock.

These deposits are rather well distributed geographically, but today they are only best known and exploited in USA, whose production already accounts for 12%. Some predictions foresee that world reserves may represent more than four times conventional gas resources and in Europe new and large reserves in UK and Poland, as well as other much more smaller in southern France, Germany, Hungary, and Turkey were found. However, in Europe the feasibility of the exploitation, the economic benefits and the environmental costs of shale gas are still open questions and the main targets of this essay.

Shale gas properties and technology of the extraction

Two main obstacles for the exploitation of shale gas in Europe are the business model and the environmental impacts. The European reserves are well spread out and the exploitation would require a large number of boreholes which means high environmental impacts in the regions where the reserves are located. Moreover, these platforms require a large land space to be operated that seems to be an additional disadvantage due to the high population concentration in Europe.

From the technological point of view, the extraction of the European shale gas is much more challenging. Shale gas is extracted using a hydraulic process where water and chemicals are injected at high pressure into a well to fracture rocks and release trapped gas. Typically the area that should be drilled before finding the well is quite large. This means that a greater number of wells are required compared to conventional gas production and consequently that the costs of the extraction are much higher. Extraction rates and cost of production depend on a range of factors such as the quality of the area to be drilled, the technology used and the quality of the operator. For example, the production is higher if the area is dried, the horizontal drilling extends further out, the well is not deep or the operator is efficient.

Global gas prices play an important role in determining the economics and hence, overall levels of unconventional gas production. Estimations foresee that European extraction and production costs will be higher than those of other gas supply sources and that the shale gas is unlikely to make a significant contribution in meeting gas demand in UK by 2020 although other European countries, as it is the case of Poland that has the potential to produce larger amounts of gas.

Apart from the economic restrictions (commented below) other factors can limit the development of shale gas in Europe:

- the availability of the gas sites that can be found in protected areas

- the geology of the sites, that are deeper and further away than those in USA

- the lack of a flexible, ready available sector in Europe to support shale gas operators

- the local opposition concerning the impacts of drilling on the local community and in particular concerning the contamination of ground water

- the water scarcity in the drilling site where water should be injected and the environmental restrictions

- the higher concentration of the population in Europe making impossible the model of multi-spot drilling

- the difficulties in transportation to market as the amount of gas to be delivered would increase notably into the pipelines. One solution is the generation of electricity where the gas is produced and transmitted as electricity

Environmental impacts

The environmental impact of the shale gas should be assessed through a LCA method. An LCA assessment estimates and evaluates the environmental impacts of a product in each of the product's phases. The product's phases for the shale gas consist in the extraction, production, distribution and use phases.

The whole life-cycle of the shale gas is characterized by unavoidable environmental impacts. Firstly, the shale gas extraction is a high land occupation due to drilling facilities, equipment, gas processing and transportation facilities. Secondly, there are major environmental impacts due to the air emissions of pollutants, groundwater contamination due to uncontrolled gas or fluid flows due to blowouts or spills, leaking fracturing gludi, and uncontrolled waste water discharge. Fracturing fluids content hazardous substances, and flow-back in addition contains heavy metals and radioactive materials form the deposit.

The fugitive emissions form hydraulic fracturing processes can have a huge impact in the GHG balance. Existing data consider that the emission of methane from shale gas relative to its energy content are as low as those of conventional gas transported over long distances or as high as those of hard coal over the entire life cycle from extraction to combustion. Moreover, the methane intrusions of aquifers are not yet assessed but if considered, the GHG emissions along the entire fuel chain are expected to be higher than coal and oil.

Results are communicating by using several indicators. In each selection one weighting is followed and consequently slightly different results can be obtained. Carbon footprint is one indicator based on the emission of CO2 and compounds based on carbon that are released to the atmosphere. There are several equivalences to account the environmental damage of the emission of others gases different from CO2 and it is especially useful to evaluate the environmental friendliness of fossil fuels. In this sense, several authors reported that if methane leakages from hydraulic fracturing are including, along with emissions from forest clearing and water transport the carbon footprint of shale gas is slightly worse than coal. However, these results depend on multiple parameters and further investigations are needed.

The substitution of coal by shale gas seems not to have no obvious potential in terms of environmental benefits. The latter may occur in the case of more strongly polluting fossil resources, notable coal and oil and in the case that shale gas extraction proves to have lower environmental impacts.

Economic impacts

As commented in the introduction, there are several important reserves in Europe that, for the better and worse, are seen as a new era for the European gas market. These findings came across with the inauguration of the Nord Stream pipeline that takes natural gas directly from Russia to Germany under the Baltic Sea and bypassing Ukraine, Poland and the Baltic States and consequently bypassing the disputes that have periodically halted the flow of Russian gas to the rest of Europe.

Depending on the resources, the estimated amount of shale gas can play a more or less significant role in the European gas market. Drilling for shale gas is controversial, especially from the ecological point of view and the fear to cause subsidence and contaminates ground water. The technique, anyway, is only in the past decade that it has become economically and technologically viable and today there is a fear that new, and exploitable, supplies of gas could reduce prices to the point where investment in alternative cleaner energy sources, such as renewable sources does not make economic sense.

Poland's shale gas

The resources discovered in the recent past in Poland are estimated to be enough for the next 300 year Polish domestic consumption and seem to be the largest ones in Europe. Poland is in the side of the shale gas exploitation and it is regarded as the chance to turn Poland and to a less extent Europe partially independence from the gas producers countries such as Russian or the Golf region. Becoming partially independent and especially in the Western Europe would bring the Russia's business model into question. This change has to an extent already starting. Almost without anyone noticing, the European gas market has been changing, not in Russians favor. When Ukraine stopped the flow of Russian gas westward in the winter 2009, a combination of existing European contingency and emergency plans were set up. Britain has now a terminal for LNG and reduced demand for imported gas in the US; thanks to the development of shale gas there, has increased stocks of LNG for delivery elsewhere. The opening of Nord Stream adds a further dimension, with the potential to increase reliability of supplies and keep prices down, can be seen as enhancing Europe's security. This combination can hardly be welcome to Gasprom as it could force lower prices and fewer customers.

However, although the exploitation of the polish shale gas can bring some benefits there are some barriers to be overcome, especially if compared to the shale gas production in US. In this sense, large shale gas resources do not necessarily mean large scale production due to technical and economic factors. Assuming large scale productions, the overall gas supply will increase, which can have a similar effect that the discovery of large amounts of conventional gas reserves, having similar impacts of the policies.

This fact has already had a large effect on global European and US gas prices. Although it is difficult to isolate the impact of increasing shale production on global gas prices from other factors such as demand reduction due to the recession, the promotion of renewable energy resources and/or the increase in LNG liquefaction capacity, it is likely to have played a role in reducing gas prices. In addition it is likely to have an impact on the policies to secure the gas supply although it is not certain due to the high energy demand from developing countries, such as China and India. Finally, it will be necessary new regulations, particularly environmental ones concerning the usage and disposal of water, that may be delayed the production of shale gas in Europe.

UK's shale gas

As commented previously, depending on the estimations of the size of the wells shale gas, the impact on the gas market would be significantly different, at least in the near future. As shown in this essay, the positions of the countries owing shale gas reserves are considerably different and it is partially due to the uncertainty over the likely levels of unconventional gas production.

UK's shale gas estimations are considered to be large enough to cover the British domestic consumption for the next 19years. This fact means that British shale gas production will not avoid the natural gas dependence and consequently these findings are not seen as a solution to become more independent. However, the question now is what these findings can have an impact on the renewable energy sector. Recently UK government prioritized the investments on nuclear and renewable energy sources, but the investments in renewable are not stable. Offshore wind is expensive and returns are only achieved in long term. The exploitation of shale gas can make investments on gas facilities much more attractive shifting the current investments from renewable to gas sources stopping its development.

Policy

The current policy tools do not cover properly the specific risks of hydraulic fracturing. Therefore, the development of a coherent and strict European legislation, before allowing the extraction of these wells is highly recommendable. Nine major gaps can be identified:

1.      Lack of a mining framewok directive

2.      Insufficient threshold in the environmental impact assessment directive for NG extraction

3.      Declaration of hazardous materials not mandatory

4.      Approval of chemicals remaining in the ground not required

5.      No BREF on hydraulic fracturing

6.      The waste water treatment requirements are insufficiently defined, and the capacities of water processing facilities are probably insufficient if underground injection and disposal is to be banned

7.      Insufficient public participation in decision-making at regional level

8.      Effectiveness of water framework directive insufficient

9.      LCA not mandatory

Discussion

More general questions of shale gas production is framed in geopolitical issues. Should Europe import natural gas or should we develop these new types of operations? Nowadays, there is no a general agreement on the European shale gas exploitation. On one hand, some voices raise in favor of developing these new technologies as the possibility may have a significant impact on the dominant position held by certain oil and gas producing countries, particularly in the Golf region and Russia.

On the other hand, the environmental impacts of the extraction is relative high in comparison to other fossil fuels and the low social acceptance and economic considerations make the extraction of shale gas to be thoroughly evaluated.

A decrease in the gas prices, caused by the higher amount available in the European market, can increase  the demand of this energy source increasing, consequently, the GHG emissions and compromising the European objectives by 2020 (20% reduction of GHG emissions). In addition, the decrease in the gas prices can shift current investments on renewable energies towards gas investment decelerating the development of these technologies and postponing their implementation in our society

But over the long term, despite the unfavorable environmental impact assessments related to the exploitation of this unconventional gas, the constantly rising demand for energy, the persistence of tensions related to security of supply and the geographic distribution of the deposits all but ensure that these reserves will be extracted.

Conclusions

Shale gas extraction and production is becoming an issue of concern in Europe. The last news about the new reservoir discovered in UK and the technologic advances that made the extraction and production of shale gas possible bring into question the future European gas market.

Shale gas is characterized by higher environmental impacts than other fossil fuels, due to the land use, the use of chemicals for the extraction, the location of the reservoirs and the cracking produced in the soils. Ground water contamination is the main fear of this technology.

However, the opportunities that the shale gas exploitation brings to ensure, at least until a certain extent, the energy security in supply in Europe and to decrease the gas prices are the main driving forces that ensure that these reserves will be commercialized.

Sources

Publications parliament of UK 20/01/2011

Impacts of sale gas and shale oil extraction on the environment and on human health

Independent: Poland's shale gas dilemma for Europe 27/09/2011

Other news published at EU level: ENDS, European voice, etc…

 

ESSAY: ENERGY STORAGE

The energy storage is mainly an economic decision. Without storage, an industry must develop and maintain an entire delivery network capable of meeting the highest peak of the year at any given moment. It means that the generation and consumption of the energy would be ‘just-in-time’, whereas with storage the industry must build up just what is considered to be a heavy but possible load.

Although electricity can not be directly stored, it can be transformed in other forms and converted back to electricity when needed. The additional value of the electricity during the peaks of demand must, therefore, cover the cost of the storage. Therefore, not all the systems for storing energy are suitable at any point.

As the electricity demand is expected to continue growing up, storage can be a key point to give flexibility to the electricity market. In addition, energy storage plays an important role in the development of the renewable energies. The production of renewable energy is desirable because of the environmental improvements, the increase in the energy security (supply becomes more independent from third countries with low political stability) and the improvement in the competitiveness. However, renewable energy resources have two problems. Firstly, most of the renewable energy sources usually take place in locations far away from the centers of consumption (especially those concerning to wind farms) being necessary the construction of new grids. The construction of the grids takes much longer that the construction of the wind farms and this Lag-time opens a door to the storage technologies to use locally the energy generated. Secondly, the generation of power, generally speaking, occurs when the power demand is low.  By storing this power, it can be released during the peaks of demand. Both facts will make renewable energy more cost-effective and promote its acceptance in the coming years

Without storage, the electricity market is threatened with

a)      Raised volatility: higher and more unpredictable prices which lead to reduced investment by manufacturing and service industries in that region

b)      Reduced reliability: lower assurance that high quality power will be continually available rises the cost of the electricity and the risk of damaging the facilities

c)       Threatened security: problems of secury of supply where backups are much likely to occur and increase the damage of sabotage

However, if the energy storage technologies are further developed and successfully applied, those previous challenges can be overcome and a more efficient market that costs less to operate and that is more responsive to market changes and reliable in the event of disruption is achieved.

As commented, not all the locations should be provided with the same energy storage. At present, a number of technologies are commercially viable, while others are expected to be in the next future.

Pumped-hydro storage is the oldest and largest of all the storage technologies. It consists of two reservoirs, one located at a low level and other at higher level. During the off-peak the water is pumped from the lower reservoir to the higher one, where it is stored. During the on-peaks, water is released producing electricity in the water-turbines placed under the waterfall. Due to the high construction cost, long construction times and the requirement of large amounts of land, this technology is only suitable in certain locations.

Compressed air energy storage consists in compressing air into a underground reservoir during the off-peaks and releasing this air during the on-peaks. The air goes through a gas turbine generating the electricity. This technology together with the pumped-hydro storage is the only one that is commercially available to provide large capacity of storage

Regenerative fuel cells are capable of storing and releasing energy through a reversible electrochemical reaction between the two electrolytes. In this technology the electricity is stored into chemical energy and the release of the potential energy occurs within an electrochemical cell with a separate compartment for each electrolyte (separated by an ion-exchange membrane).

Battery is a technology used as utility-scale energy storage and that relies on different electrochemical reactions. However, all of them are composed of two electrodes separated by an electrolyte. During the discharge, ions from the anode (first electrode) are released into the solution and deposit oxides on the cathode (second electrode).

Superconducting magnetic energy storage is an emerging technology where the energy is stored in the magnetic fields created by the flow of direct and current in a coil of cryogenically cooled, superconducting material. It has a high operating cost and therefore best suited to provide constant, deep discharges and constant activity.

Flywheels stores energy through accelerating a rotor up to a high rate of speed and maintaining the energy in the system as inertial energy. Advanced composite materials needed to lower the weight of the rotor. The energy stored in the rotor is proportional to its momentum but the square of the angular momentum. The advantages of this system are the compactness of the system and the lower operate and maintenance costs.

Thermal systems are high-technologies based in the storage of energy either as ice-based systems to cool down commercial and buildings during the high temperatures or as a molten-salt based for steam production. Both kind of systems are not yet fully developed and seems to be the most suitable ones to extend the ability of solar and other renewable energy resources.

Hydrogen is still in the development stages as well, but will be an integral component of any future economy. The hydrogen can be stored in a gas, liquid or carbon-based form, which is then released through a chemical or physical reaction to power a fuel cell. Most storage systems can be used for both stationary and vehicle applications.

Independently of the energy storage technology they bring competitiveness to the market. Especially the large scaled storage facilities are expected to improve the reliability of the grid, allow a faster recoup of the investments and decrease the market risks. Due to the capacity of absorb energy during the off-peaks and release while it is needed the beneficial effects of the energy storage technologies will be accumulated as long as they are incorporated into the market. These benefits will be, among others:

-          Better energy management allocating the energy between the low-cost off-peak and the high-cost peaks

-          Provide power to assure a continuity of service during the switch-on and switch-off of the power facilities

-          Maintain the grid stability, voltage, power quality and reliability

To sum up, the development and implementation of the most suitable energy storage technology for each location is a must in the coming years. This implementation should be carried out at the same time that the energy network is renovated or construction and it will bring down the electricity prices by improving the management of the energy market, increase the security of supply and its quality in terms of stability, power and reliability, and allow the development of the renewable energy sources.

Acknowledgement

I thank all of you who want to post a comment!! ;-)

Sources
Enery storage, ESC white paper of the energy storage council, 2002, among others...

ESSAY: Europe's energy infrastructure

The development of a future low carbon economy in Europe is based on a new Europe’s energy infrastructure. Future low carbon economy in Europe relies on the achievements proposed by 2020. The well-known 20, 20, 20 objectives consist of an increase of the final energy consumption from renewable sources until 20%, a reduction of the greenhouse gas emissions by 20% and an increase of the energy efficiency by 20%. Moreover, Europe should ensure secuity of supply to its citizens at affordable prices against the increasing competitiveness of the word resources.

Previous bad experiences, such as the disruptions of gas in Eastern Europe or the impossibility to accommodate the electricity produced in the Northern Seas and Baltic areas or in Southern Europe pointed out the needs for investments in Europa energy infrastructure. In addition, the importance of the fossil fuels in the present and coming years due to the increase of the European population and increasing electricity demands confirm this necessity. (Comment 1)

The European energy infrastructure based on the electricity, gas and oil networks as well as in new technologies such as carbon capture and storage ones (Comment 2) should face several challenges in order to become more competitive and achieve the following objectives:

-          Decrease the costs towards low carbon economies

-          Ensure secure of supply to its citizens and help to stabilize the prices of fossil fuels

-          Ensure affordable energy prices

-          integrate the European networks with the neighboring networks.

In order to reach these objectives, some priorities are required depending on the network or technology under study. These priorities and challenges are discussed in the next sections.

Electricity grids
Electricity grids must be updated and modernized. They should be able to accommodate the increasing electricity demand (Comment 3) as well as the increasing electricity production from intermittant renewable sources. The electricity demand has an increasing trend due to the increasing number of appliances and technologies that rely on electricity as energy sources. Moreover, the increasing population (Comment 4) as well as the increasing life quality make that the overall electricity demand will be significantly higher in the coming years.

On the other hand, the fast increasing off-shore wind farmers in the Northern Sea Europa and Baltic area as well as the increasing production of renewable energy in Southern Europa should be successfully accommodate in the future electricity grid. These renewable sources are located far away from the center of consumption or storage (Comment 5)and therefore not only the absorption of the generated electricity but also an efficient transportation of this electricity will be key points.

The current antiquated electricity grid should become more flexible and well-interconnected in order to be suited o previous needs renewable energy. Moreover, the electricity grid should become smarter and include storage technologies. The development of smart grid needs of investments and research but it will allow consumers to consume the energy at lower prices and in a much efficient way. Smart grids will increase the competitive retail market as the electricity prices are expected to decrease, provide well functioning energy services, integrate the renewable energy generation and distribution with the electricity demand and allow new types of demands.
On the other hand, to ensure an efficient consumption of the renewable energy generated in the further locations in the centers of population, a new high-voltage long distance network and new storage electricity technologies are desirable. Providing the electricity grids with efficient high voltage long-distance networks the losses due to the transportation are significantly reduced and it will become more secure.
Consequently, the priorities that concern the electricity grid are the integration of the off-shore grid in Northern Sea, the improvement of the connections South/West Europe to accommodate the electricity coming from renewable sources, the improvement of the electricity grid located in the Baltic region and last but not least the development of smart grids.

Gas and oil grids
As commented previously, the increasing European population together with the increasing energy demand per capita point out that the importance of fossil fuels will not decrease in the next years. (Comment 6) For this reason, the necessity of well-interconnected networks for gas and oil is a priority.

Regarding natural gas, the dependence of Europe on Russia, north of Africa and other third countries will continue. At present, natural gas is provided by three main routes. Eastern Europe is provided by Russian natural gas, Western Europa by African natural gas while Nordic Countries have their own reserves. Due to bad experiences in the recent past, when some gas disruptions happened in Eastern Europe with dramatic effects on the overall European economy, one of the priorities related to gas grid is the diversification of the supplier. The diversification of the supplier can be achieved by including different kinds of natural gas, such as liquid natural gas and compressed natural gas, the construction of bi-directional pipelines (Comment 7) or the enhancement of storage capacities (Comment 8) of the gas grid.

The diversification of the gas suppliers implies the abolishment of the current monopolistic market, where each European region is supplied by only one supplier. The diversification will enhance the competitive between the suppliers decreasing the instabilities on the prices and the dependence of the gas prices on oil prices (Comment 9). This is one of the priorities for the coming years. However, it implies the construction of new and very well-interconnected pipelines in order to have at least two different suppliers for each European region and guarantee the gas supply from one region to another one.

Regarding the oil network, it would be desirable the supply of oil by pipelines. Oil pipelines will avoid the current vessel transportation of the oil by only one route and decrease enormously the possibility on environmental hazards. (Comment 10)

Carbon capture and storage
Finally, energy infrastructure includes new technologies that will help to reach the 2020 European objectives. Among the current technologies under development or pilot scale, those concerning carbon capture and storage should be considered. The CCS technologies will allow to continue using fossil fuel for electricity generation without emitting CO2. The technologies present risk and benefits that are still being testing through pilot plants.

Due to the fact that the potential CO2 storage sites are not well distributed across Europe (Comment 11) and the fact that some MS, considering their significant levels of CO2 emissions, have only limiting potential storage within their national boundaries, construction of EU pipeline infrastructure spanning across states border and in the maritime environment, where most of the CO2 reservoirs are planned,  become necessary.

Obstacles
Although the needs of constructing updated and well-interconnected networks of mainly electricity and natural gas but also of oil and CO2 are highlighted, there are some obstacles that should be overcome in advance.

The construction of pipelines and networks implies the necessity of investments. The evaluation of the investments required to renovate the obsolete energy infrastructure is usually evaluated by the regulators at national level while the impacts of their decisions on the EU internal market are at EU level and beyond. In this sense, the key infrastructure connection projects among the member states are taken at national level and thus tend not to approve the necessary rate of return and tend to be postponed or considered not of high importance. In this way, the evaluation of the benefits of the investment should not be limited to national level but consider the benefits and the returns that can bring across EU.

The strengthen and extended ETS where there will be a unified EU carbon market can help to shift the optimal electricity supply mix in favor of fossil fuels as they become low carbon supply sources. This fact will avoid the further development of the renewable energy sources as well as the development of the storage technologies in the electricity grids. Similarly the regulation on security gas supply will enhance the EUs capacity to react to crisis simulations but can also promote the dependence of EU to this fossil fuel.

Finally, the control of the systems of distribution of energy risks at espionage and terrorist attacks as well as political instabilities. The control of the energy distribution systems is done by IT. The protection of these systems and the investment on new technologies is unavoidable to protect citizens from environmental hazards and terrorist attacks as well as to ensure an efficient supply.

Conclusions
The update and modernization of the European energy infrastructure is a necessity to ensure the secure of energy supply to the citizens at affordable prices, a reduction of the cost of low carbon shift economies. These objectives will be achieved by a technical improvement of the present technologies, greater efficiencies and higher flexibility. The investments required in the energy infrastructure should be considered at EU level since their benefits are across the borders of the member states.

The investments required in the European energy infrastructure are both physical and related to the control and management. Both kinds of investments will have a great impact on the economy since energy is the foundation of the current economy, will allow the accomplishment of the 20-20-20 European objective, set up a low carbon economy. But, without any doubt, these investments ensure the secure of supply to citizens at affordable prices.

Regarding the electricity grid, the priorities are the development of well-interconnected and smarter networks and the integration of renewable sources as well as storage technologies to accommodate the increasing electricity demand.

Regarding the gas grid, the current priorities are the diversification of the suppliers, providing at least two suppliers to each European area, increase the flexibility requirements of LNG and CNG, provide Europe with bi-directional pipelines and enhance the storage capacities of the grid. These objectives will reduce the current monopolistic market and consequently increase the competition among the suppliers stabilizing gas prices independently from oil prices. The construction of an oil pipeline network will avoid the transport of this kind of fossil fuel by vessels on an only route and decreasing the environmental hazards.

Acknowledgment
The author thanks to P.D. for his fruitful comments and corrections and all the friends for all support, opinions and comments received. They have been carefully evaluated!!!!

Sources

- Energy infrastructure: priorities for 2020 and beyond ─ A Blueprint for an integrated European energy network – DG Energy

- Notes from Bucharest summer university 2011. Notes taken after long party nights….

- Ideas that came to my mind during the three hours that took me to write this essay….