Policy: Environment & Energy

White House hopes for European shale gas face headwinds

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The White House wants Europe to frack to weaken Russia's influence over energy supplies on the continent. Translating that desire into action, however, will take time.

Officially, the White House has said it would help the European Union develop "unconventional hydrocarbons," a reference to shale gas, by sharing best practices with regulators, bureaucrats and whoever else is interested. But it has not used the term "hydraulic fracturing," or "fracking," in official communiques as the means for developing it.

Carlos Pascual, the top energy diplomat for the State Department, underscored the sensitive nature of promoting shale development abroad, which balances domestic pressure President Obama and European leaders face from Environmental groups over fracking and the administration's search for a geopolitical solution to Europe's energy relationship with Russia.

"What we're hoping is that rational choices will be made based on sound facts as opposed to let's say, some, at times hyperbole, some myth, about what the dangers of the development of shale gas might be," Pascual said at a Washington event hosted by the Atlantic Council.

Fracking is a drilling method that injects a high-pressure cocktail of water, sand and chemicals into tight rock formations to access oil and gas buried deep underground.

Environmental and public health groups say the process pollutes drinking water and have pressured the Obama administration to abandon the practice. But the practice has been credited with driving a U.S. energy boom, and the White House sees potential for the same across the pond.

Several European nations host sizable shale deposits. Poland, for example, is offering tax credits to spur development, and Chevron will spend $350 million to explore deposits in Ukraine.

But the public opposition to fracking is even greater in Europe than in the U.S.

A Ukrainian woman in the audience at the Atlantic Council event went so far as to say that fracking is something that "nobody wants to do in Europe" in a question posed to Pascual. Nations including France and Germany have permanently or temporarily banned fracking, largely over environmental concerns.

Fracking is also a complicated matter for some countries in Russia's backyard. Pascual noted that Russia's state-owned gas company, Gazprom, is the majority owner of Moldova's gas company, and has no interest in allowing fracking there. Russia also pressured Romania and Bulgaria to stop fracking when they started looking into the practice, he said.

Other avenues exist to promote European energy security, Pascual said. They include better integration of European gas pipelines, reversing flows of Russian gas, natural gas exports, energy efficiency and renewable energy.

Despite the potential, getting European nations to embrace fracking is "absolutely a hurdle" because of public opinion, lack of infrastructure and the inexperience designing regulatory and tax frameworks to support it, David Goldwyn, who started a State Department program aimed at sharing best U.S. practices regarding fracking, told the Washington Examiner.

Goldwyn also noted fracking faces a tougher road in Europe because mineral rights are handled differently than in the U.S. Unlike Americans, Europeans don't own the rights to whatever hydrocarbons rest under their land, which removes the incentive to allow drillers to operate on their property.

As such, interest from the private sector isn't as great as it could be, said Goldwyn, who now runs consulting firm Goldwyn Global Strategies and is a nonresident fellow at the Brookings Institution.

"The questions we got from the countries is, 'How come these companies don't want to explore here?' And the answer was they can make a lot more money with a lot less risk in the Permian Basin and the Bakken," Goldwyn said, referring to two prominent U.S. shale plays.

The State Department has only one fracking program, which is funded at about $1 million annually — the Unconventional Gas Technical Engagement Program, which Goldwyn started.

The program is designed to help countries develop best practices in tax and regulatory policies, but doesn't intend to promote fracking abroad, a State Department official told the Examiner.

"Countries can learn from the U.S. experience," the official said. "They'll make their own decisions."

That's how some lawmakers on Capitol Hill see the U.S. role as well.

"We don't usually tell other countries what to do. I think that, again, we can be an example," said Sen. Tim Kaine, D-Va., who sits on the Senate Foreign Relations Committee and the Senate Energy and Natural Resources Committee.

Added Sen. James Risch, R-Idaho, who sits on those same committees: "I don't know if a diplomatic push would be helpful on that. Those people are smart enough to figure out that they need to do that in order to get off of the Russian pipeline, and so I don't know that it's helpful that anybody reminds them of it."

Dan Whitten, a spokesman with industry group America's Natural Gas Alliance, said that European nations were warming to fracking chiefly because of energy security issues, along with potential economic benefits, such as lower energy costs for manufacturers.

"[W]hether or not countries there have banned hydraulic fracturing, I think there are a lot of people in Europe who feel that it would behoove them to allow responsible natural gas development," he wrote in an email.

Still, on the diplomacy side, Goldwyn said the State Department program has been poorly funded since it began in 2010. He said that the U.S. should be doing more to help foster fracking abroad.

"I think it will evolve over time, but certainly more slowly than it has in the U.S.," Goldwyn said.

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