In a presentation at Gastech 2011 in Amsterdam today, Ben Hollins, head of gas research for Wood Mackenzie, U.K., told audiences that while there could be as much as 4,000 billion cubic metres (bcm) of unconventional gas resource in Europe, the economics are as yet unproven and additional challenges, such as securing access to pipeline infrastructure and buyers in an evolving gas market will need to be overcome before commercial production is realised.

"Unconventional gas in Europe, and in other key areas such as China and India, is very much still at an embryonic stage," said Hollins. "There is potential, and upside, but the economics are as yet unproven."

A comparison of the cost of projects in North America and Europe demonstrates that the cost of the majority of unconventional plays in Europe are currently above long-term expectations of European gas prices, which are between US$8-9.50/mmbtu, 2011 terms. Therefore costs would need to come down significantly to make these developments viable.

Wood Mackenzie’s presentation articulated just what developing this indigenous gas resource would mean to long term supply for the region: "Indigenous conventional production in Europe (excluding Norway) is declining, increasing future gas import requirements. In 2010, total domestic gas supply will be 175 bcm versus 550 bcm of demand. By 2030 we forecast demand could approach 700 bcm compared to current known domestic gas supply of less than 200 bcm."

"It looks as if Poland is most likely to make the most significant national contribution to future unconventional production," added Hollins. "With estimates of between 10 and 30bcm per annum of unconventional gas production by 2030, Poland could have enough gas to meet its own domestic requirements, and perhaps also be in a position to export. Poland also illustrates one of the biggest challenges: bringing the gas to market."

The paper concluded that access to pipeline infrastructure, be it gaining third party access or factoring in lead-times for securing capacity in new pipelines, is one of two key considerations for bringing this gas to market.

"Companies developing unconventional gas in Europe will also need to consider how to secure buyers in an evolving gas market, reconciling uncertainty of production volumes with the volume constraints of long-term contracts, and/or explore alternative commercialisation routes, for example into the power sector," said Hollins.