Unconvetional gas in Europe, Global implications and consequences.

1. SHALE GAS IN EUROPE:
A REVOLUTION IN THE MAKING?
MAXIMILIAN KUHN (Maximilian.kuhn@kcl.ac.uk)
European Centre for Energy and Resource Security (EUCERS)
Department of War Studies, King‘s College London
SWP-PISM Expert Round on
Gas Supply Security: Polish and German Perspectives
Berlin, 2 December 2011, 9:00-13:00
© Maximilian Kuhn. No Courtesy of USGS (Brenda Pierce)be reproduced, reused, or otherwise distributed in any form without prior written consent
Background picture portion of this presentation may

2. Terms of Use
The accompanying materials were prepared by Maximilian Kuhn [EUCERS] and are not to be redistributed or
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Some information used in this presentation may be obtained from sources that the author believes to be reliable but
are in no way warranted as to accuracy or completeness.
The author does not claim to own rights on provided content and information, including but not limited to graphs,
charts, tables, figures, and data, unless otherwise stated. It is being pointed out that this presentation may contain
content subject to intellectual property rights of third party. The presentation is based on public available data and
original sources are disclosed.
In no event shall EUCERS, or the author, be liable for any damages whatsoever in connection with the information
or material provided in this presentation, including but not limited to actual, consequential, direct, exemplary,
incidental, indirect, punitive or special damages.
Containing forward-looking statements are based on current assumptions and forecasts based on information
currently available to the author. Various known and unknown risks, uncertainties and other factors could lead to
material differences between the actual future results, financial situation, development or performance of the
company and the estimates given here. The author does not intend, and does not assume any liability whatsoever,
to update these forward-looking statements or to conform them to future events or developments.
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent

3. EUCERS STRATEGY PAPER - Key findings:
STRATEGIC PERSPECTIVES OF UNCONVENTIONAL GAS:
A GAME CHANGER WITH IMPLICATIONS FOR THE EU’S ENERGY SECURITY
Volume 01, Number 01, 01 May 2011 - Maximilian Kuhn/Frank Umbach
Facts and Findings of the EUCERS Strategy Paper about Unconventional Gas and its Implications:
1. Gas prices are becoming de-linked from the oil price through a combination of three factors
(recession, US unconventional production, LNG capacity), contributing to the de -linkage of the gas prices from the oil price.
2. Unconventional gas has partly become cheaper to produce than most conventional gas, especially if it contains natural gas liquids (NGL).
Thus making gas the most compatible available energy source to the consumers and the best bridge towards a renewable and sustainable energy
system.
3. The unconventional gas resource base is bigger than the conventional gas resources and is located occurs abundantly worldwide.
It may extend the gas availability up to 250 years worldwide and at least 60 years in Europe.
4. Europe´s regulatory framework, its fiscal and pricing mechanisms, and market structure, and environmental policies are keys to determine if
unconventional gas production will take place to a greater extend.
5. Unconventional gas is a political asset. As a major domestic fuel – similar to renewables - it increases Energy Security and reduces import
dependencies while it also can help fulfill political agendas and solve regional and local development issues.
6. Unconventional gas has the potential to change the industry structure. The oversupply of gas helps in addition the liberalization process of the
European market. Therefore it has major implications for conventional gas suppliers – like Russia – and the European Union as well.
7. Public acceptance is crucial for unconventional gas development. Education, involvement and engagement with the public are needed to
understand the risks and benefits.
8. Groundwater contamination in the U.S. is unlikely to have occurred due to fracking itself. The likely cause is drilling fluids or fracturing fluids
spilled on the ground surface or overflowing / leaking storage pits from were it infiltrate downwards to shallow groundwater and pose a risk. But
good oil field practices and state-of-the-art cementation and fracture monitoring techniques which should prevent drilling fluids, hydraulic
fracturing fluids, or natural gas from leaking into the permeable aquifer and contaminating groundwater.
9. With further technological improvements the potential to develop more environmentally friendly drilling technologies will offer a way to cope
with the many water issues related to drilling, reducing these obstacles over time. Moreover, in comparison to the U.S. European rock strata
containing unconventional gas resources are generally located more deeply in the earth and beneath the groundwater.
10. Regardless of how the outlook on European unconventional gas development looks in concrete perspectives, and despite of whether or not
unconventional gas becomes affordable and sustainable in the mid-to-long term in Europe, shale gas has already changed the European market;
even before a single well has been drilled, or a single molecule of unconventional gas has been than in the US produced from the European basins.
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent

4. Agenda
1 Myth and Truth about Unconventional Gas
2 Europe´s Energy Challenge and Global Development
3 Discussion
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent

5. Unconventional Gas – A Primer
Geological definition: What Is Typical Unconventional Gas?
Shale gas is one form of unconventional gas extracted from
source rocks such as shale, coal and sandstone and needs to be
stimulated to flow at economic rates.
• Shale is a common form of fine-grained sedimentary rock laid
down as mud in relatively calm seas or lakes.
• Black shale is shale that was laid down in especially anoxic
conditions on the floors of stagnant seas and is rich in organic
compounds derived from bacterial, plant and animal matter.
• Conventional gas is gas that has migrated, usually from shale,
to permeable reservoirs, predominantly sandstone.
• Shale gas is gas that remains tightly trapped in shale and
consists chiefly of methane, but with ethane, propane, butane
and other organic compounds mixed in..
• Coal-bed methane is gas trapped in coal seams that can be
tapped by similar methods to those used for shale gas.
• Tight sand gas is gas held in sandstone reservoirs that are
unusually impermeable; it can be extracted by fracturing the
rock.
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent Sources: own analysis, BNK, GWPF (Matt Ridly)

6. Unconventional Gas – Here, There, Everywhere
Europe (in bcm)
France 5 097
Germany 226
Nederland 481
Norway 2 350
UK 566
Denmark 651
Sweden 1 160
Poland 5 295
Turkey 424
Ukraine 1 189
Lithuania 113
Others 538
South America (in bcm)
Venezuela 311
Columbia 538
Argentina 2191
Brazil 6399
North America (in bcm): Asia (in bcm) Qiile 1812
USA 2441 China
Uruguay 594
Canada 1784 Indie 1 783
Paraguay 1755
Mexico 1444 Indonesia 1444
Bolivia 1359
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent Source: own analysis, EIA, World Annual Outlook 2011, EUCERS Strategy Paper

7. Unconventional gas – A game changer
What changed the game? Gas Shales: What’s the Big Deal?
• “Shale Gas is the most important energy development since Already
the discovery of oil” used
reserves
Fred Julander,CEO of Julander Energy
• “Mission Critical: Can Shale Gas Save the World?”
ASPO, September 21, 2009
Known Conventional
reserves
• “Shale Gas Blasts Open World Energy Market”
Gas
The Sunday Times, November 1, 2009
• “Unconventional gas will transform the entire energy production
landscape in the United States.........and alters the U.S. energy
Resources
outlook for probably a hundred years”
Tony Hayward, January 2010, Davos, CH
• “A lie gets halfway around the world before truth has a chance
Unconventional
to get is pants on”. reserves
(UCG)
Winston Churchill’s Unconventional
Unconventional Gas
 (R-)evolution of Oil & Gas production techniques:
resources
• Hydrodraulic fracture stimulation
(Gas hydrates)
• Horizontal drilling
 Understanding about resources
 Market changed (UCG + LNG + economic crisis = oversupply) Renewable gas (SNG)
 Global market emerging / price developments (decoupling)
Magnitude of available gas
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent

8. But why talk about gas? A new understanding of gas –
Conventional gas vs. Unconventional gas understanding
• Biogenic Gas - Generated from the transformation of organic matter by tiny microorganisms - A small percentage of
gas fields through-out the world are biogenic
• Thermogenic Gas - Generated as a result of heating processes - these types of fields are more abundant (e.g. - Most
North Sea fields, most Russian fields, shale gas fields such as Barnett, Woodford, Fayetteville, Haynesville, Marcellus
and others
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent Source: Robert A. Hefner III (2007), The Age of Energy Gases. Page 12-13; BNK presentation.

9. Europe’s Unconventional Gas Resources
60 5
Tcf Tcf
150
Tcf
Source: Statoil, Aurelian Oil & Gas PLC
NOTE: Numbers show ultimate recoveries to date
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent

10. Truth and Myth about unconventional gas
Truth Myth
Triple A*** - Arguments for Gas: 1st Myth – Unconventional gas exploration is to expensive
• Abundant
• Affordable  Polish wells are much less expensive than originally thought
• Acceptable 2nd Myth – Europe does not have adequate rigs and services
 Chicken-and-egg problem/ European engineering technology
Three E’s promise of unconventional gas:
• Energy Security 3rd Myth – Surface Footprint
• Economy  well-pad drilling small footprint
• Environment
4th Myth – Groundwater contamination and additives disclosure
• Increases Energy Security and potential independence  No documented cases of groundwater contamination
• Helps domestic industries
5th Myth – Water supply & use of too much water
• Creates jobs (economic prosperity) and tax revenues
(Taxes Germany ~30%, Poland 19%, Spain 35-40%)  use water from brackish aquifers and water recycling
• Is a local fuel – which can be regulated according to local
standards
• With room for cost reduction it is considerable cheap
• Reasonable water consumption
• Relative low emissions compared to other forms of power
generation
• Can helps to reach it’s emissions targets But public acceptance is key!!!
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent

11. Agenda
1 Myth and Truth about Unconventional Gas
2 Europe´s Energy Challenge and Global Development
3 Discussion
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent

12. I’d Rather Not Walk the Plank missing global developments EU Energy Policy
• The revision of nuclear energy policy has big implications for
gas worldwide as well as in Europe
• Current EU political declarations underestimate the role of gas
till 2050
• Gas presents, in short term, a quick and competitive solution for
a low-carbon energy mix and in the long run. Gas offers the
most cost-effective and efficient back-up to renewables based
intermittent production will also continue to be needed (in
combination with carbon capture and storage CCS)
• The EU believes Energy policy can solely guaranteed through a
highly theoretical vision of the market.
(liberalization is becoming over-regulation?)
• The EU and governments should facilitate dialog with
producing and transit countries and encourage the right legal
framework.
• EU has to set the incentives for the Energy mix
• Current high risk & uncertainty in security and predictability for
policies, regulations and about the energy mix leads to lack of
investments.
• There is a need to maximize production of indigenous gas to
offset declining production
• Europe is not the US!
A framework to protect the interests and welfare of local
communities as well as important environmental legislation are
in place, in particular for water quality
• Issues to watch:
Pricing [Oil-linked long-term contracts vs. Spot market]
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent

13. What happened with US Unconventional Gas (R-)evolution
US Shale Basins and US Pipeline Grid Shale gas production set to grow steeply now…
US Henry Hub natural as % of WTI Unique challenges of Shale plays
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent Source: EIA, American Clean Skies Foundation, Halliburton, Deutsche Bank, Wood Mackenzie,

14. Development of Unconventional / Shale Gas in the U.S.
US key drivers for success Shale Gas Plays, Lower 48 States
• Unconventional gas production has helped the US to turn from a net
importer to self-sufficiency - US became No1 Gas producer –
overtaking Russia
• Unconventional natural gas has been transformational, changing the
US into a surplus natural gas producing country, essentially forever
• US unconventional production boosted the availability of gas
worldwide
• US LNG exports would put further price pressure on the Atlantic
market.
• With past LNG liquefaction growth aimed at US market, diversion
elsewhere exacerbates global gas glut
U.S. domestic gas production US LNG demand growth has been revised
down sharply as unconventional gas impacts
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent Source for all charts: own analysis, EIA, Company data, Deutsche Bank Research,

15. LNG
LNG No global Gas Price – but NA sets the Benchmark
• US unconventional production boosted the availability of gas
worldwide $ per MMBtu $ per ‘000 CM
• US LNG exports would put further price pressure on the Atlantic
market. pence per therm
• With past LNG liquefaction growth aimed at US market, diversion C$ per GJ
€ per MWh HH
elsewhere exacerbates global gas glut
• Gas oversupply lead to price renegotiations $ per ton
• LNG increases the global gas flows and global gas dynamics and
¥ per ton $ per toe
diversification
• LNG helps to establish a global natural gas price reference (HH) $ per scf
• But gas prices remain political, not economic set.
LNG LNG Supply: Existing oror Under Construction (mtpa)
LNG Supply: Existing Under Construction (mtpa)
World Liquefaction Capacity vs. LNG Demand
800
Market Tightness in supply as Market LNG market in balance?
conditions fewer projects come swinging back
700 favorable online: upward pressure in favor of
for buyers on prices buyers?
600
500
400
mtpa
300
200
100
0
2000
2005
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
Asia Pacif ic In Operation Atlan. Basin In Operation Med. Basin In Operation
Middle East In Operation Asia Pacif ic Under Construction Atlan. Basin Under Construction
Med. Basin Under Construction Middle East Under Construction Asia Pacif ic Planned
Atlan. Basin Planned Med. Basin Planned Middle East Planned
Total Speculative LNG Demand Base Case
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent Sources: own analysis, EIA, FACTS Global Energy, Company data, Bernstein Research,

16. A New Economic Order
North America shale economics Unconventional gas resources become cost competitive
Prior Perception New Understanding
Unconventional Gas Conventional Gas
Gas Price
Gas Price
Unconventional Gas
Conventional Gas
Gas Resources Gas Resources
Cost reduction Of Course there is an Elephant in the room…
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent Source for all charts: own analysis, ADVANCED RESOURCES INTERNATIONAL, IEA, USGS, Nomura Equity Research

17. Water Lifecycle in Hydraulic Fracturing
Well Construction Possible leak paths
Leaks from surface storage and during disposal
Poor cementation
Poor cementation
Fracture propagation
Source: own analysis, Pictures from US EPA Draft Plan to Study the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent

18. Environmental Concerns and Challenges
Hydraulic Fracturing of a Marcellus Shale Well, West Virginia Drilling Fluids and Retention Pits
Power Generation Water Use Efficiency Fracturing Mixture Makeup (Goldenstedt Z23 Germany)
ExxonMobile
Water Possible Additive Composition
Acid 0.123%
Friction Reducer 0.088%
22% CO2
Surfactant
Potassium Chloride
0.085%
0.06%
Gelling Agent 0.056%
1% Scale Inhibitor 0.043%
pH Adjusting Agent 0.011%
Additive Breaker 0.01%
75% 2% Crosslinker
Iron Control
0.007%
0.004%
Corrosion Inhibitor 0.002%
Quartz Antibacterial Agent 0.001%
Source: Hightower 2008
AXPC (other than CHK data
3% sand
Sources: ALL Consulting 2008, Chesapeake Energy Corporation, ExxonMobile, ADVANCED RESOURCES INTERNATIONAL, IEA, Company data,
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent

19. European Gas: Disconnect between oil and gas
European Gas in 2010: All Change European Gas Surplus To Widen, (BCM)
• European gas demand uncertainty 700
• 2010 Europe gas demand: flat or, at best, up 0.5%. 650
600
• Excess gas supply in Europe expected in 2010. 550
• Spot gas in Europe sales expected to reach a 20% market share . 500
450
Expecting a persistent disconnect between gas and oil prices, 400
focus on renegotiating take-or-pay contracts. 350
300
• Flexibility is winner: arbitrage spot-linked upstream (e.g., LNG) and 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
selling into oil-linked downstream markets. Supply Demand
European demand forecasts – Lower than IEA’s Gas prices have decoupled from the oil price
700
14 160
600 140
12
500 120
10
100
400 8
80
300 6
60
200 4
40
2 20
100
0 0
0
01/08/2007 01/12/2007 01/04/2008 01/08/2008 01/12/2008 01/04/2009 01/08/2009 01/12/2009
2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025
Residential Industrial Power generation Henry Hub gas, US$/MBtu Oil, US$/bbl (rhs)
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent Source for all charts: BP Statistical Review of World Energy, BLOOMBERG PROFESSIONAL™ service, Credit Suisse estimates

20. European Gas: Gazprom’s price formula – self inflicting wound
Winners and losers Majority of gas piped into Europe flows east to west
• Suppliers with poor pricing flexibility are at risk (Gazprom).
• Swing producers in the North Sea suffer from
availability of LNG as a flexible supply source (Shell, Statoil, Exxon).
• Incumbent midstream gas suppliers’ margins and market shares will
likely be at risk, caught between oil –indexed gas procurement and a
liberalizing end customer (E.ON, ENI).
• Winners are producers able to benefit from contango in gas market and
disconnect between spot and contract (BG).
• Gazprom playing for time, but is time enough?
Gazprom Contract Price (e) vs. UK Spot ($/mcf) Recent price developments
$/bbl $/mcm
16.00 UK spot/future US spot/future Gazprom Oil price (lhs)
160 500
14.00 450
140
12.00 Future 400
120
10.00 350
US$/mcf
100 300
8.00
6.00 80 250
4.00 60 200
2.00 150
40
100
-
1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 20 50
Gazprom oil-linked price UK spot gas 0 0
27/12/07 3/3/08 7/5/08 10/7/08 12/9/08 17/11/08 27/1/09 1/4/09 10/6/09 13/8/09 4Q09 2010
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent Source for all charts: own analysis, Eurostat, BP Statistical Review, Credit Suisse estimates, IEA, Company data

21. CASE: Germany
Germany German Oil and Gas fields
• Do more with less environmental footprint (find sweet spots)
• In Damme in Lower Saxony fracking takes places in 1,100 meters
and cracke´s the rock horizontally for about 160 meters. The
groundwater table sits at a depth of 30-40 meters.
• Gas prices in Oil-linked take-or-pay contract are, and will continue
to be, significantly higher than market based prices
• This creates an economic environment and makes drilling feasible
• Unconventional gas is one source for diversification of supply and
diversification of routes. (NRW UCG estimates are 2.1 tcf)
• Affordable conventional gas supplies put a price cap to the market
German Power Generation Capacity Lower Sayony shale drilling sites
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent Sources: own analysis, ExxonMobile,

22. CASE: Germany II
Fracking in Germany Legal framework
Since 1955 (Schleswig-Holstein), 1977 (Lower Saxony) Mining Act (Claim: Change of the Mining Act)
–EIA - Involvement of the public
•Unconventional Gas: –Assessment of the geological data
–Tight Gas: •Rotliegendes e g. Gas Field Söhlingen –Security deposit -insurance of the producing operator (public losses)
Tight Gas Development in 1990s •Federal Water Act
•Carboniferous e. g. Gas Fields –Protection of ground water, surface water
Leer, Goldenstedt •Federal Emissions Act
No environmental impacts are known, up to now. –Regulation and supervision of emissions
No pubic interest until 2010 •Federal Chemical Act, REACH Regulation
2007: Skeleton Operation Schedule on well on a tight gas layer including EIA –use of chemical substances and their potential
and involvement of the public impacts on both human health and the environment
-No comments on fracking from stakeholders •Private Law
–insurance of the producing operator (private losses)
–independent arbitration body for adjustment of losses (Court of justice)
Shale Gas Regulatory Risk Index EU-legislation (TFEU, Art.193) and Directive 94/22/EC of the European
Parliament and of the Council of 30 May 1994 on the conditions for granting
and using authorizations for the prospection, exploration and production of
hydrocarbons.
UG developments must…
 be highly sensitive to environmental concerns
 ensure that no new environmental and public health
problems are created
 be in line with EU environmental legislation
EIA – Environmental Impact Assessment (Eu-EIA Directive 85/337/EC)
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent Sources: own analysis, The Rapidan Group, LBEG (K. Söntgerath), EC

23. Europe - a though nut to frac!
Obstacles:
•Environmental concerns • Water availability / scarcity
• Water pollution
• Environmental Footprint / population density
•Rights and Access
• landowners versus state
• public opinion / NIMBY Factor (Not-In-My-Back-Yard)
•Economics
• Competition with “cheap” imports
• Drilling rigs and service sector
• Embryonic stage
•Regulatory issues • Geology / still unknowns
• Market structure
• Pipelines
• Liberalization
• Long-term ToP Contracts
• Oil indexed price
Location North America West Europe East Europe, Caspian and Asia Pacific
FSU
Drivers Maintain leases Diversification of supply Balance exports with domestic needs Supply / Demand
Cash flow generation Projected supply gap Rising frontier field production costs imbalance
Partially linked oil pricing Import reliance
Pricing protection
Uncertainty
Drivers Below ground: Different players | Different market
Above ground: Different regulation | Different infrastructure | Different supply base | Different public perception
Commercial: Different geologies
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent Source: own analysis; EUCERS Strategy Paper

24. But Rome wasn´t built in one day …
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent Sources: Bernstein Research, SBC, Schlumberger

25. Geopolitical Implications of Unconventional Gas
“crack the minds of people” * Geopolitics
The development of unconventional gas has major • Unconventional gas is here to stay for a number of
implications for company strategies and the shape reasons (Political, environmental and economic)
of the future gas industry. • Not a direct copy of the North American experience
Over the past ten years the largest oil and gas –
companies have largely focused their gas All companies will have to learn and adapt
strategies on connecting distant and stranded  Super major: New types of plays and
supplies with markets. operating model
Indeed, the uptick in unconventional production  Independents: New business environment
internationally might occur just as the growth of
LNG looks set to slow after 2015.  Service companies: New technical
challenges
Unconventional gas could emerge as a critical
source for reserve replacement and production
growth globally. • Technology is likely to continue to be a key driver
for the commercial success
• Different farcing techniques emerging and
improvements reduce environmental footprint
• China emerging as the third largest natural gas
market
• Unconventional gas , as a domestic fuel, changes
the leverage in Producer – Consumer equation
• “THE Stone Age did not end for lack of stone, …. ”
new (energy) technologies will arise.
* Quote: Marek Karabuła, vice-president of the Polish Oil and Gas Company (PGniG) Source: own analysis, H. Wilczynski (SBC)
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent

26. Unconventional Gas in EUROPE: A Revolution in the Making?
Game Changer, or Not?
Shale gas development has changed the energy situation around the world; and, although it has
changed the European market, other than one would have expected. Shale gas has not yet changed the
overall energy balance in Europe, nor is it clear if it will materialize before 2020, although it has become
a game changer for the European gas market.
The U.S. shale gas boom enabled a revolutionary domino-effect on the European market, with the
contractual structure, based upon 20-years long term take-or-pay oil linked natural gas contracts that
had hitherto dominated being re-negotiated. Consequently, shale gas is having an increasing influence
on European gas prices and is anticipated to continue doing so through 2015.
Regardless of how the outlook on European unconventional gas development looks – whether or not it
will enhance the EU’s energy supply security by reducing dependence and/or increasing affordably and
sustainably in the mid-to-long term in Europe – shale gas has already changed the European market;
even before a single well has been drilled, or a single molecule of unconventional gas has been
extracted from the European basins.
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent Source: own analysis; EUCERS Strategy Paper

27. THANK YOU!
MAXIMILIAN KUHN
(Maximilian.kuhn@kcl.ac.uk)
Affiliation:
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent

28. International Players in Poland
European resource play is attracting increasing number of IOCs to Poland
Cross section from SW to NE Poland - middle area is the TTZ fault deformation zone
(therefore the right side of the cross-section is north of the fault)
32
© Maximilian Kuhn. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent Source: Polish Ministry of Environment, 3 Legs Resources