Power itself is knowledge
How oil and gas producers manipulate shale gas research in the EULeiden University
Master European Union Studies
Albert den Boogert Supervisor: Aad Correljé
1st of August 2014 Word count: 19.600
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2 Table of Contents
Introduction ... 4
Research setup ... 5
EU policy areas ... 8
Academic debate & existing literature ... 9
Conclusion: analysis of the shale research is Europe is essential ... 10
Chapter 1 Importance of knowledge ... 11
Introduction ... 11
Value Sensitive Design ... 11
Conclusion: knowledge base of society is key in decision making process ... 17
Chapter 2 Research database ... 19
Introduction ... 19
The database ... 19
Categories, tiers and preliminary insights ... 21
Conclusion: database shows large number of reports and great variety of topics ... 25
Chapter 3 Current state of knowledge ... 26
Introduction ... 26 Research subjects ... 27 1. Geology ... 28 2. Technology ... 32 3. Economy ... 34 4. Environment ... 36 5. Society ... 39 6. Politics ... 42
Conclusion: nascent state of knowledge offers room for manipulation ... 44
Chapter 4 Organizational deep-dive ... 45
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Research institutions ... 45
Non-commercial ... 45
Commercial ... 49
Conclusion: no level playing field due to the dominant position of OGPs ... 52
Chapter 5 Content analysis ... 53
Introduction ... 53
Economic reports... 53
Conclusion: not the research, but the topics are manipulated ... 59
Summary & conclusion... 60
Summary ... 60
Conclusion: OGPs manipulate research, which potentially manipulates the debate ... 61
Final remarks & next steps ... 62
Literature ... 64
4 Introduction
The terms ‘shale gas’ and ‘game changer’ have become intrinsically linked in the past years. Within a few years shale gas became a hype of which most people will have heard by now. Shale gas is nothing new though. The exploration of possibilities to economically produce this specific type of gas started a few decades ago in the United States. By 2000 these efforts paid off, which marked the start of a shale-boom in the US. With new techniques, such as horizontal drilling and ‘fracking’ it became possible to extract economically feasible
quantities of shale gas. All over the US oil and gas companies franticly started to produce the gas and within a few years the US changed from one of the world’s biggest importers of energy to a potential net exporter of gas. This development is coined the ‘shale gas
revolution’. It gave a boost to the US economy, among other things by providing US industry a competitive advantage due to low energy prices. More importantly, it relieved the US of its highly feared energy dependency.1
Ever since, other governments and companies are trying to duplicate this success. Shale gas production is not without disadvantages though. The process is complicated and costly. More importantly, it comes with grave environmental and health risks. Additionally, in the long run, it also threatens to undermine the efforts towards a low carbon future in which fossil fuels are phased out and replaced by renewable energy. These two extremes of potentially high costs and benefits have led to a fierce debate within the European Union in which no consensus has been reached so far.2
The political debate on shale gas typically results in a call for further research. Research is therefore placed in a very central position in the decision making process. This raises the question what the interests are of the people behind the research, and if these interests result in biased research. This topic forms the basis of this thesis.
Need for specification of this question asks for a further investigation on which actors are likely to have undue influence. The primary suspects in this respect are the oil and gas
producers (OGPs), as the debate on shale gas has been surrounded by claims of lobby activity and corporate influence.3 Since the subject, at first glance at least, seems to be a trade-off between earning money on the one hand and protecting the people and the environment on the other hand, shale gas seems to be highly vulnerable for these allegations. There are indications that the unbalance in lobby activities is reflected in a unbalance of research
1 David Buchan, Can shale gas transform Europe’s energy landscape?, Centre for European Reform (2013) 1-2.
2 Ibidem, 2-4.
3 Corporate Observatory Europe, Foot on the Gas: Lobbyist push for unregulated shale gas in Europe (2012)
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activity. One of those indications, as I have concluded in a previous paper, is the inequality in research endowments, in the favor of OGPs.4 Research on the impact of new energy sources is complex and costly and therefore my hypothesis was that no one but the oil and gas producers (OGPs) were capable of conducting this research, thereby creating knowledge inequality. This fear of knowledge inequality is underlined by quite a disturbing opening paragraph in the IIPS report on shale gas in Poland and the Chech Republic of 2012.
The shale gas exploration and production are of significant importance to business, policy and security. They are very vulnerable to lobbying activities and international politics. For these reasons, it proved difficult to find credible open sources of information. Most of the public and local institutions and especially companies are rather reluctant for they deem it could potentially harm their interests. Materials and data of promotional character are being an honorable exemption here.5
The shale debate is fierce, as is appears to have huge benefits and risks at the same time. Efforts to quantify these benefits and risks have placed research in a central role in the debate. As OGPs seem most equipped to conduct this research, the suspicion rises that they might use research to manipulate the outcome of the shale gas debate. This thesis will investigate if these claims and fears surrounding the shale gas debate are justified. The goal of this thesis is therefore to answer the following central question:
Do oil and gas producers use research to manipulate the shale gas debate in the EU?
Research setup
In order to be able to assess whether research is used to manipulate the debate it is first crucial to determine if research is capable of doing so. This requires an analysis of the decision making process. As the actual process is still in full progress with no decision taken yet, I have chosen to approach this question from a theoretical angle. Using the theory of Value Sensitive Design, chapter one defines how the decision on shale could be taken, and what the role of knowledge is in this process. This includes an analysis of which stakeholders should be taken into account and how these stakeholders relate to the new technology.
4 Albert den Boogert, Will the EU join the shale gas revolution: essay for the courses EU Lobbying and
Communication and EU Energy Policy at Leiden University (2014)
5International Institute of Political Science of Masaryk University, Shale Gas in Poland and the Czech Republic:
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The analysis in chapter one shows that knowledge, and more specifically that public available knowledge, plays a central role. The subsequent question is whether research can be manipulated. I have assumed that public knowledge can be influenced under two conditions: 1) if there is a lack of consensus on the truth is and 2) if there is no level playing field for research institutes. For the second precondition I have viewed the research landscape as a market. A market only functions properly and produces good products if there are multiple competing producers. The same would apply for research. As long as there are enough competing institutes that conduct research, the produced knowledge will be of the highest quality. This view stems from the conviction that people are independent actors that are able to choose what information they use to form their opinion. Off course it should be realized that there are far more factors influencing if a knowledge source actually reaches the public than sheer availability. These other factors will not be part of the analysis of this thesis. This last choice is grounded in the rationale that, even though we cannot assume that available research equals public knowledge, we can assume that people cannot base their knowledge on facts if there is no research available.
The two conditions result in the need for 1) an overview of the current status of
knowledge on shale gas and 2) an overview of the active research institutes. Both overviews appeared to be absent or incomplete so far, as will be discussed later on in this introduction. Therefore it became necessary to create a database that includes all reports on shale gas. The methodology and limitations of this database are outlined in chapter two.
Based on the research from the database, chapter three outlines the current status of the knowledge on shale gas in Europe. 15 research topics have been identified that have been grouped in six categories. For each category a list of actors that are participating in research is included. The research is subdivided in three tiers, covering primary quantitative, primary qualitative and secondary research. Chapter three offers some valuable insight in the
complexity and variety of issues and concludes that knowledge on shale gas in the EU is still in nascent state. For not one of the topics consensus has been reached on the conclusive answer to the question. Moreover it appears that for most topics there is a considerably wide spectrum of answers given. This creates what I call ‘outcome flexibility’. This flexibility, also known as uncertainty, offers room for manipulation.
Chapter four and five consequently show whether this manipulation actually occurs. Chapter four deep-dives in the organizational features of research, focusing on the question whether there is an organizational level playing field. If there is a level playing field this should result in a balanced research landscape in which each view is expressed and from
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which the public can choose to their liking. If this is not the case, some views can be expressed while others are oppressed, resulting in the possibility of manipulation. This analysis includes insights in the funding of research.
After chapter four has established whether the organizational setup offers the possibility of manipulation, the next chapter assesses whether this potential is materialized in substantial terms. In chapter five three reports are selected for a content analysis. These reports are assessed on general quality, assumptions taken and the input data chosen. This assessment is linked to the conclusions of the reports and the goal of the research in order to establish whether the research is biased. Chapter four and five will focus on economic knowledge. The research setup is illustrated in the following argumentative chart:
Figure 1 argumentative chart of research structure, by author.
Several choices have been made in this research setup, the rational of which is elaborated upon in the relevant chapters. First of all the analysis only looks at publicly available
research. Undisclosed and not free available reports have not be taken into account. Secondly this thesis will only take reports into account that are conducted by agents that are at least partially based in the EU. Due to the differences in circumstances, research on shale gas in other parts of the world will be considered less relevant for the knowledge in Europe. Finally
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it must be stressed once more that this thesis will not look at the actual political or societal debate, or the actual impact of research on this debate. The debate is still ongoing and therefore any conclusion would be premature. Instead it will only assess the theoretical and potential impact. The term ‘EU’ is in this thesis used as a description of the region it covers, and not only the organization that governs the EU.
The primary contribution of this thesis consists of the database that is created to map the research landscape. In doing so, a framework is established to rank and structure research, based on three tiers and six categories. Consequently, based on the research in the database, it provides an update of the current status of knowledge on shale gas in Europe.
The second contribution lies in linking the theory of Value Sensitive Design (VSD) to
research by showing the key role of publicly available knowledge. VSD offers great potential in its application to shale gas, but, as will be argued in chapter one, a precondition to its success is the knowledge available. Finally this thesis offers an objective theoretical assessment of corporate influence in the shale gas decision making process. Although this analysis has its limitations, it has been executed as thoroughly as deemed possible within the scope of a master thesis.
EU policy areas
The final decision to allow shale gas or not rests with the member states. According to Article 4 of the Treaty on the Functioning of the European Union (TFEU), Energy is a “shared competence”6
. The powers of the EU in respect to the choice of energy mix is limited by Article 194 (2) TFEU: “measures shall not affect a member state’s right to determine the conditions for exploiting its energy resources, its choice between different energy sources and the general structure of its energy supply”7. This implies that the EU has no direct say in the question of implementing shale gas in member states.
The EU can influence the process though via multiple indirectly linked policy areas. Amongst others, the shale gas issue is linked to the policy areas of environment, consumer protection and internal market. The EU could de facto block the shale gas process through increased environmental measures, and at the same time could provide the necessary impetus by incorporating shale gas in the EU energy planning. The most influential EU policy
instrument at the moment is the Energy 2030 plan. In March 2013 a Green Paper was
6 European Union Consolidated Treaties, TFEU: Article 4, 51; (2010 publication). 7 Ibidem, TFEU: Article 194 (2) 135.
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released and the final document is to be published in 2014.8 The goal of the Energy 2030 initiative is to provide in a comprehensive energy and environmental planning for the next one and a half decade. The inclusion or exclusion of shale gas in these plans can send a clear signal towards the member states and potential investors.
Academic debate & existing literature
Currently there is no comprehensive overview of all the past, current and future research on shale gas within the EU. Consequently there is no real academic debate on this topic. A lot of scholars participate in the debate, but there is barely an objective study on the debate itself. There are a few notable exemptions but all, as will be discussed, are insufficient.
First of all there are several private initiatives that try to bundle the existing knowledge on shale gas. The problem with these initiatives is that their private funding breaches their
objectivity. One of these initiatives is Shale Gas Europe. An industry initiative which presents itself as: “a dedicated resource centre that is open to anyone who wants to understand more about shale gas, tight gas and coalbed methane”9. Shale Gas Europe is founded and funded by the major oil and gas companies, like Shell and Exxon. This direct involvement raises doubt on the objectivity of the initiative, and therefore automatically makes it unfit as a comprehensive and objective source. Another private actor is Corporate Europe Observatory (CEO). This is a NGO that monitors the corporate lobbying activities within the EU. In 2012 they presented the report Foot on the Gas10. CEO has a clear anti-industry attitude, claiming to work to: “expose and challenge the privileged access and influence enjoyed by corporations”11
, and is therefore most probably not fully objective. Another source of information are the reports and articles that comment on primary shale gas research. Among these critiques there are several reports with a clear policy agenda. One of these is the report of Friends of the Earth, Unconventional and Unwanted12, which, among other things, criticizes the report of Philippe and Partners, Final Report on Unconventional Gas in Europe.13 The problem with these kind of reports is their evidently-and openly- biased
8
European Commission, Green Paper: A 2030 framework for climate and energy policies (2013); European Commission, Annex to the communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Commission Work Program 2013 (2012)
9http://www.shalegas-europe.eu/en/index.php/about-us/about-shale-gas-europe - 14.10.2013
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CEO, Foot on the Gas (2012)
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http://corporateeurope.org/about-ceo, 29-07-2014
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Friends of the Earth, Shale Gas, Unconventional and Unwanted: the case against shale gas (2012)
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nature. They are therefore to be considered as a part of the debate instead of a source on the debate. Additionally there are independent -or at least seemingly independent- critiques on other shale gas research. One example is the report of the Dutch Rathenau Instituut¸ Samen Winnen14, which has been written in reaction to the government ordered report of Wittebos &Veen15 on the risks of shale gas in the Netherlands. The last type of reports is helpful in judging the objectivity and value of the original reports. They are not comprehensive though, since they generally only assess one of a few reports at a time.
Finally there is one single academic article which compares the shale research agendas of the US and EU.16 However, this article fails to present a balanced comparison of both and only provides limited information on the research in the EU.
Conclusion: analysis of the shale research is Europe is essential
The big benefits and risks of shale gas production resulted in a fierce debate in the EU. Research seems to play a central role in this debate, and there are indication that OGPs play a central role in research. As the EU can indirectly determine the faith of shale gas, it is
essential to analyze how this research evolves and which interests play a role in its creation. Unfortunately, such analyses have not been conducted so far and there is not even an overview of current research.
This thesis aims at filling this void by gathering and analyzing the research on shale gas in the EU. First and foremost this aim will be achieved by creating an overview of all reports that currently exist. Secondly this knowledge will be analyzed in order to establish whether or not research is used to manipulate the shale gas debate.
14
A. de Vries, R. van Es and A. van Waes, Samen winnen. Verbreding van schaliegasdiscussie en handvatten voor besluitvorming, Rathenau Instituut (2013)
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Witteveen & Bos, Arcadis and Fugro, Aanvullend onderzoek naar mogelijke risico’s en gevolgen van de opsporing en winning van schalie- en steenkoolgas in Nederland, Ministerie van Economische Zaken Directie Energiemarkt (2013)
16
Corey Johnson and Tim Boersma, The Shale Gas Revolution: U.S. and EU Policy and Research Agendas, Review of Policy Research 29:4 (2012)
11 Chapter 1 Importance of knowledge
Introduction
This chapter is a theoretical investigation on the importance of knowledge in the debate on shale gas. The theory of Value Sensitive Design (VSD) has a central position in this
theoretical quest. First of all VSD will be used to explain what impact a new technology, such as fracking, has on society. Secondly it will identify the stakeholders that should be
incorporated in the decision making process. Finally it will provide insights in the role of knowledge in this relation between stakeholders and the decision making process.
The analysis is needed in order to determine whether it is possible to manipulate the debate through knowledge. If knowledge is unimportant, so is research. On the other hand, if knowledge is important, and we consider that knowledge is based on facts that are revealed and interpreted by research, research is important.
It is approached from a theoretical angle instead of an empirical one. This is due to the fact that the current debate is still raging on and therefore any practical assessment of the process would be premature.
Value Sensitive Design
The debate on shale gas is polarized. Opponents and proponents advocate radically different views that both seem to be reasonable and unlikely to change.17 Recently a group of Dutch scholars have proposed a solution to this problem through the theory of Value Sensitive Design (VSD).18 This theory tries to mediate between public values and technological
innovation by, as stated by Correljé e.a.: “systematically incorporate diverse human values in the design of new technologies”.19 The basic idea is rather simple. What society finds most important is embedded in public values. If these values are taken into account in a new technological design, the technology will serve what society finds most important. Therefore the technology will serve all and all will agree to it.
VSD was developed in the late eighties, as it became clear that the development of computer and cyber technologies would become a large part of human life. Consequently,
17
International Energy Agency, World Energy Outlook 2012 Special Report On Unconventional Gas: Golden Rules for A Golden Age of Gas (2012) 9.
18 Aad Correljé, e.a., Responsible Innovation in Energy Projects, Responsible Innovation, Volume II
(Forthcoming); Aad Correljé, Responsible innovation as an endorsement of public values: the need for
interdisciplinary research; Submitted to: Journal of Responsible Innovation (submitted); Research proposal: Aad Correljé, e.a., The acceptability of shale gas: towards value-sensitive design of technologies and institutions (….)
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questions arose how this innovation could adhere to, or clash with, existing human values. In order to facilitate potential clashes between human values and digital innovation VSD was developed. First VSD was exclusively designed to investigate the interaction between human public values and computer technology, but later this was extended to other fields of
technological design.20
The team of scholars of Delft University of Technology (TUD) have started a new chapter of VSD with the project: “The acceptability of shale gas: towards value-sensitive design of technologies and institutions”. The project aims at expanding the field of VSD, first to the energy sector and the development of shale gas, and second to incorporating
institutional design.21
How does shale gas relate to the society?
VSD starts with the notion that technology is value-laden, and not -as one might intuitively think- value free.22 Technology is value laden through, what I will call, its value input and value output. First of all, the input of technology is value-laden, i.e. it is designed with certain values in mind. For example, a car designer who strongly adheres to the value of safety will design a different car than a car designer who finds economic welfare most important. This value-input is not necessarily explicit or even consciously applied but often the result of an “implicit world view”, as Correljé e.a. state, “that drives their technological design”23
.
Subsequently, once designed, technology has value-laden output. “Technology […] invites or discourages a certain kind or normative behavior”24. This behavior could be in
correspondence with certain values while conflicting with others, and “hence promote or undermine certain values”25 . The relation between values and technology can, in its most basic form, be visualized as an ongoing circular process, as shown in figure 1. Values will affect the way technology is designed, technology will affect the way people behave and this behavior affects the values.
As next step, VSD argues that designers should be aware of the value implication of their design and not only integrate
20 Batya Friedman, Value Sensitive Design, Interactions 3:6 (1996) 17. 21 Correljé Research proposal, 1.
Correlje, Responsible Innovation in Energy Projects, 7, in reference to Winner 1980.
23 Ibidem, 8. 24 Ibidem, 8. 25 Ibidem, 24. Value Technology Behavior
Figure 2, Technology-value triangle, based on: Correljé e.a.
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their own values, but all relevant public values in the technology. Designers should
beforehand make an estimate of the value implications, the value output of technology, and then take these into account while designing.
The need for ex-ante incorporation of values is argued in two ways. The first line of reasoning is that of the idealist. In essence the idealist would argue that: “since innovations should primarily serve societal needs, the various societal complexities and ethical problems of innovations should be anticipated”26. Technology serves the society and therefore needs to adhere to its values of this society. In a variation to this argument it could be argued that even if technology does not primarily serve society it still has consequences in the value domain, given the value-technology interaction. The power to influence creates the moral obligation to exercise this influence in a responsible manner.
The second line of reasoning is that of the pragmatist. The pragmatist would argue that the world is not exclusively governed by technological and economic considerations. Other consideration are important as well, and these could affect the success of a new technology. One currently powerful consideration for example is the need to preserve the environment. If these considerations are not included in the design of technology, the technology will
encounter opposition with implementation or usage of the new technology. At best this opposition will cost time and money, at worst it could prove to be a showstopper. Therefore, for a technology to become successful it should internalize public values at the design stage.
One of the theories that is presented by Correljé as a tool to create insight in the public values is through the value-hierarchy of Van Der Poel. Van Der Poel identifies three levels in his value hierarchy. The highest level is that of the fundamental values. The fundamental values are abstract and supposedly uncontested. An example is the value of safety. At the next level, values are translated into specific norms, this is the point where possible friction occurs. Norms form a: “‘prescription for or restriction on’ actions”. The need for maximum safety could be a norm derived from the value of safety. Finally these norms are specified into design requirements on the lowest level. By separating abstract values from specific norms and requirements, the hierarchy of Van Der Poel, enables us to trace back all normative behavior to some abstract values.27
Before the value identification process is started though, first should be established who the relevant stakeholders are. Logically only the values of the relevant stakeholders should be
26 Correljé, Responsible Innovation and Public Values, 1. 27 Correljé, Responsible Innovation in Energy Projects, 25-26.
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identified and incorporated in the design.28 Therefore a stakeholder analysis is needed. The stakeholders are those who “use the technology and those who could be affected by the use of technology”29
. Determining who are the stakeholders, and specially how they interact, can be a highly complex matter and a clear methodology to do so lacks in VSD theory.30
If the stakeholder and value analysis and value identification are executed correctly, values can be incorporated in a design. This endeavor could help us to design technology that fits the public values of society, contributes to that society and can be successfully
implemented.
How does VSD apply to shale gas?
If VSD is applied to shale gas it is important to realize that the technological design of shale gas is special, so Correljé e.a. argue, because is it part of the bigger energy system.31 The energy system has two characteristics that are relevant in this respect.
The first characteristic is the enormous complexity of the system. This complexity is shown in the size of the sector, the level of integration in society, the technological intricacy and the diversity of users and suppliers. As a consequence, new technology will be part of a wider system and therefore the value implications will be less clean-cut and isolated. This results in a technology-value cycle that is far more complex than the simple cycle of figure 1. Correljé e.a. describe this evolution of values as a “dynamic interplay” in which technology and values “co-evolve”. There is a continuous interaction of stakeholders and technology, which results in an dynamic inter-subjective set of values.32
The second and related characteristic is the salience of the system. The energy system is of huge importance to modern life. Virtually every part of life has grown dependent on availability of affordable and reliable energy supply. The effect of power outings or changes of oil prices support this claim. This level of integration in society and the consequent level of dependency strongly increases the value implications. Salience of a topic seems to
manifest a gravitational force on values, with growing salience the impact grows, in number of values affected and in severity of impact. Consequently the number of stakeholders grows and the intensity of value conflicts increases.33
28 Correljé, Responsible Innovation in Energy Projects, 5. 29 Ibidem, 25.
30 Ibidem, 25. 31 Ibidem, 9. 32 Ibidem, 9. 33 Ibidem, 9-10.
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As a consequence of the fact that shale gas would be embedded in an energy system, everyone will be affected by this innovation. Furthermore, as the TUD working group argues, the imbedding in the energy system asks for an inclusion of institutional values is needed for a value sensitive shale gas design. Technology manifests itself in institutional context. This context strongly influences the way in which technology interacts with the stakeholders and how the co-evolution of values develops.34 Institutional values include values of
accountability and procedural justice. These values are related to questions like: how will the risks be managed; who will be responsible; how will the welfare gains be distributed?35
Being part of the energy system has a profound effect on the value implication of technological innovation within the system. This increases the need for a value sensitive design, but simultaneously makes it far more difficult to create one. This explains to a big extent the problematic situation described previously. The plurality and magnitude of the different forms of impact shale gas can have on society make it possible that opposition is created between people who share the same public values. VSD also explains the ferocity of the debates. Values are considered to be the highest goods of public live. If these values become threatened, people will feel to be targeted at their core.
Potential and problems
The potential of VSD is big. First off all because it shows that the decision on shale gas is not merely a technical matter, but has implications for those matters that people find most
important: their values. Using VSD could not only solve the current impasse, it could also result in long term improvement. As can be seen with all other forms of energy production, discussion will not end when the production gets started. In the USA for example shale gas production has been going on for a decennium. Still though, the debate continues, certainly now the implications of shale gas are starting to become clear. This indicates that it is not only sufficient to solve the current debate in the EU, future friction should be anticipated as well. By analyzing the stakeholder interaction and identifying the value implications, VSD enables designers to do so.
VSD is interesting for the shale gas debate because it could breach the polarization. Instead of an static obstacle at the center of the public debate, it is changed in an dynamic objective outside of the debate. By offering the third way, the alternative to the “yes” or “no”, it may change the debate from a polarized pro vs contra to constructive incorporation of
34 Correljé, Responsible Innovation and Public Values, 3. 35 Ibidem, 1.
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multiple views. From this perspective everyone in the debate stands at the same side and together is able to shape the new technology. Furthermore, ideally, VSD drags the decision outside of the political arena. In the traditional view, technology is created and then it is up to the politicians, and the influence groups surrounding them, to decide whether or not it will be legalized. With VSD however, the whole society is incorporated in this decision because the technology is not seen as a static given but as a design that is supposed to be created and changed in dialogue with the values of society. Therefore, ideally, the decision making process opens up for everyone who interacts with the technology.
Figure 3, VSD offers opportunities to breach polarization in the shale gas debate, interpretation of Correljé e.a. 36
According to the Delft scholars there are some practical problems though. The first problem comes with the identification of the values. As is described by Correljé e.a., values are not objective or static but dynamic “intersubjective sets”37. This makes them hard to identify and even impossible to: “fully specify ex ante which values need to be taken into account”38. The nature of values makes them not only hard to identify, it also raises the question if they are fit at all to be incorporated in the far more static nature of technological design. Should technicians go to great length to identify and incorporate values in their design if they are not sure if the values will still be relevant at time of implementation? A second problem occurs when public values are conflicting. When values conflict, three questions become relevant. Whose opinion should count? Which opinion should count? And, if the conflict persist, how to facilitate a trade-off?39
Additionally, there is another, potentially more fundamental problem. If we are to base all on public values, should we not ask ourselves how these values came into being? How were they created? And far more important, on what grounds? Can values be based on
36 Image is a visual interpretation made by author, based on the theory of VSD as outlined by Correljé e.a. 37 Correljé, Responsible Innovation and Public Values, 3.
38 Correljé, Responsible Innovation in Energy Projects, 20. 39 Ibidem, 25.
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misperceptions formed by lacking or erroneous knowledge? It will not be possible to answer these questions in this thesis, but we can make a start by analysis the knowledge base of society.
Conclusion: knowledge base of society is key in decision making process
Given the broad and deep impact of shale gas on society, directly or indirectly through the energy system, all in society are relevant stakeholders. Technology and society interact, this interaction creates value implications, and therefore fracking technology has value
implications. The value implication explain the ferocity of the debate. The impact of shale gas will be even bigger due to the fact that it could become part of the bigger energy system. This connection acts as a multiplier which increases the number of people and values that are affected, and engraves the effect on those people. Therefore it is of utmost concern that shale gas is designed in accordance with public values. This is crucial for shale gas production to come into existence and serve society and it will prevent, or at least soften, friction in the future. This implies that the decision on shale gas should be made dependent on the question whether public values can be adequately incorporated in the design of shale gas.
The implication of this line of reasoning is that the public values become a central
element in the decision making process. This raises the question how public values come into existence, and on what knowledge they are based. Without going into detail in the formation process of values, we can assume that knowledge should play a central role in this process. At least we can say that a lack of knowledge would negatively influence the quality of values, as people cannot judge what they do not know.
This places public available knowledge in a central position in the decision-making process, which raises several questions. How much knowledge is available, and what is the knowledge equally spread over the different topics of shale? What is the quality of this knowledge? Is it possible that some stakeholders steer the knowledge of others, or is
knowledge formed in a independent environment? If the design will incorporate the values of stakeholders it can have a big impact if these values are not constituted in a balanced,
independent and reliable research environment.
VSD can only facilitate a more honest and democratic decision making process if the knowledgebase of the society is not unequally influenced by one of the stakeholders. As the debate is moved outside political spheres, so it the potential to manipulate the process. Therefore it is crucial to analyze the creation of the knowledge base of society in order to assess whether the oil and gas industry uses research, i.e. knowledge creation, to manipulate
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the decision making process. How this thesis is going to analyze the knowledge base will be outlined in chapter two.
Apart from reviewing the corporate influence on the knowledge of shale gas, this analysis could contribute to the theory of VSD by shedding some light on the role of research in the stakeholder interaction. There are several options in this respect. If research is conducted in a balanced, independent and thorough manner, it should be placed outside of the regular stakeholder interaction. In this case it would not interact with other stakeholders but merely provide the factual input in the debate. In this role research could be well equipped to solve the value trade-off problem by judging which value has the strongest scientific foundation. On the other hand, if it would appear that research does interact with the other stakeholders, if it is used as a steering instrument or actively pursues ones policy outcome, it would be part of the debate. If this is the case it would be interesting for future research to analyze how exactly research plays its part.
19 Chapter 2 Research database
Introduction
Chapter one concluded that knowledge could indeed be used to manipulate the debate. Public knowledge is key in the decision-making process and therefore those who create that
knowledge are key. Following this logic we can conclude that, if research is capable of manipulating knowledge, research would be capable of manipulating the decision-making process.
As a second step towards answering the research question it should be asked whether research is indeed capable of manipulating knowledge in the case of shale gas. In order to manipulate knowledge two precondition need to be in place: 1) lack of consensus on the truth; 2) a level playing field for research. If there is complete consensus on the truth, research will barely have impact since it can only confirm the truth or will not be trusted. Secondly if there is a level playing field for research institutes, scholastic competition will make it impossible to steer the knowledge to your liking. Assessing whether these
preconditions are in place asks for an analysis of the status of current knowledge, and the mapping of the research landscape. In order to be able to analyze current knowledge objectively, at least an overview of all knowledge is needed.
An overview of current knowledge and the research landscape has been missing so far. Therefore there was the need to create a database. However, collection of reports was not enough, they also needed the be structured. One problem is that there are no formulized borders and boundaries in the research landscape. There can for example, at the outer limits of research, be a thin line between research and a mere transcription of opinion or
paraphrasing of others. This chapter will outline how the research database is created, where the borders are drawn and how its content is structured. Finally the chapter provides in some preliminary conclusions derived from the database.
The database Selection method
The primary selection method for the database is a structured snowball method. Starting with a few leading reports I have followed the annotation trail. This process started with the IEA special report on shale gas of 2012, the study of Florence Gény from 2010 and a JRC report
20
that dates from 2012.40 These trails led me to 90% of the reports gathered. At this point the trail is virtually depleted to a point where the last five new reports did not refer to new and unknown research.
The snowball method is supplemented by semi structured associative methods. This included the monitoring of relevant news agencies and platforms devoted to shale gas or the energy business. Next to the news agencies I have scanned non-research papers like official documents from governmental and EU debates and position papers from interest groups for references to research. Additionally I have specifically searched for reports and articles from known experts and research groups. Finally I have just ‘googled’ my way around in order to fetch the crumbs of research. These supplementary efforts were predominantly meant as a check for the snowball method. In theory it could be that the research is performed in relatively closed annotation circles and that I would miss out on an entire field, if I would follow only one trail. This proved not to be the case though. As an additional advantage, the associative method has been useful in order to get a grasp of the popularity of the different reports.
The advantage of the snowball method is that my searching capacity is multiplied through the capacity off all researchers who wrote on shale. Additionally this method implies a pre-selection of reports. Since this thesis focusses on the knowledge base of society, it is not the primary goal to find all research, but to find the research that reaches the public. If research is not being referred to in any other research it is unlikely that it finds a way to the public, and therefore not interesting for this analysis. An exception to this rule is research which
colleagues consider to be useless but that does finds its way to the public through the media. This category is covered though by the associative method. Research has been collected from June 2013 to March 2014.
Limitations
The database is limited to research that is produced on European soil. A few exceptions have been made for institutes that have a global presence and a big impact on EU research. A precondition in these cases is that the institutes are partly based in the EU. Notable examples are the IEA, with its headquarters in Paris and the US consulting firm IHS CERA, which has
40
IEA, Golden Rules (2012); Florence Gény, Can Unconventional Gas be a Game Changer in European Gas Markets?, The Oxford Institute for Energy Studies (2010); European Commission Joint Research Centre, Unconventional Gas: Potential Energy market Impacts in the European Union (2012)
21
offices in ten EU member states.41 A second limitation is formed by language barriers. Although the great majority of reports is written in English or translated into it, some reports are not. This has been a problem is the case of a few Polish reports. If enough information was available on the report, for example through translated executive summaries, news reports or references in other reports, the research is included in the database. Unfortunately in these cases it has not been possible to follow the references on which the reports were based and the trail therefore ended there.
Due to the plurality of reports and research initiatives, the scope of the topic and the limited time available for this thesis, the database is exhaustive. Without a doubt reports will be missing. However, I am confident that the chance that an influential report has been missed is small. Therefore the database is a good representation of the research landscape on shale gas in the European Union.
Categories, tiers and preliminary insights
Three tiers
Reports under review have been categorized in the three tiers listed below in figure 4. The distinction is based on the type of data that has been gathered and the kind of analysis that has been applied. The first split is made between primary and secondary research. The defining difference in this case being if the research is based on first hand data or on other research. Reports that mix primary and secondary research are also considered primary. The difference between tier 1 and tier 2 is the analysis applied. Tier 1 being quantitative, making use of mathematical models, whereas tier 2 research uses qualitative analysis, e.g. interviews.
From chapter four onwards this thesis focusses on tier 1 and 2, i.e. primary research. The first reason is that primary research forms the input for secondary research. Primary research forms the foundation of the research landscape, and therefore forms the foundation of public knowledge. The second reason is that this is a defined category which unmistakably classifies as research, whereas secondary research has no clear border distinguishing it from
journalism, position papers or student papers.
22 Figure 4 schematic overview of tier subdivision, by author.
Commercial and non-commercial
Next to the tier categorization, research can be divided based on organizational features. The primary division in this respect is between commercial and non-commercial research. This division is based on the distinction whether or not research has economic gains as primary goal. From the database several types of commercial and non-commercial organizations emerged, and the different types of organizations seem to push for different goals. It is useful to highlight here in what forms research can render economic gains as it shows the inherent problems of commercial research in providing unbiased publicly available knowledge.
First hand data collection
Quantitative analysis, using numerical data Mathematical modelling
First hand data collection
Qualitative analysis, using writen data Experts panels, interviews etc
No first hand data collection
Based on other research, literature review Position papers, updates
Prim ar y Se con d ar y Tier 3 Tier 2 Tier 1
Incentive for high quality objective reports But, not disclosed: no public knowledge E.g. oil and gas companies
Incentive for high quality objective reports But, not free available: no public knowledge E.g. consultants, think tanks
Incentive for biased reports
E.g. interest groups, oil and gas companies, commissioned reports
Incentive to write reports that are positive for potential clients, details often undisclosed E.g. consultants, think tanks
Sales Business improvement Lobbying Promotion 1 2 3 4 Di re ct In d ire ct
23
Commercial research is problematic as it is likely to be either unavailable for the public or biased. The unavailability and potential bias of commercial research is a logical
consequence of its goal: to render profit. Making profit through research can be done in four different ways.
First by selling the report. Energy consultants such as Wood Makenzy are a good example of category one research. They produce research in order to sell it. These firms are incentivized to produce unbiased research of the highest quality as this will increase the value. Unfortunately the reports will off course not be publicly available, and can therefore not be taken into account.
Category two research, conducted for business improvements, are for example geological research by OGPs. Several test drillings performed in Europe in the past years show that OGPs are active in geological research, and the drillings will most likely be preceded by economic research to predict profitability. This research has a clear incentive to be objective and of high quality. However, again, the value of these reports is based on their exclusivity and therefore they are not publicly available.
Category three, the indirectly profitable reports, are in general publicly available, but highly incentivized to be biased. The reports aim at producing indirect revenue through lobbying. Lobbying activities can be directed at the government, in order to influence legislation, or at the public to indirectly pressurize politicians. Influence groups will off course only provide information that is supportive to their cause, and will therefore be biased.
Supplying information to the EU institutions is an effective way of lobbying. Heike Klüver, a scholar specialized in lobbying in the EU, concluded in a statistical study that the amount of information supplied to the institutions increases the influence of the supplier. The level of influence in this respect depends amongst others on the complexity and salience of the topics and the research endowments of the influence groups. In this case, with the complex and salient issue of shale, this means that the well-endowed OGPs have a big advantage.42 In another article Klüver also concluded that citizen support positively influences the level of influence that an influence group can exercise.43 Therefore it is also important to lobby the public. It can be questioned though if research, and especially primary research, is the best instrument to influence public opinion. Perhaps more graspable
42 Heike Klüver, Informational Lobbying in the European Union: The Effect of Organizational Characteristics,
West European Politics 35:3 (2012) 505-506.
43 Heike Klüver, Lobbying as a collective enterprise: winners and losers of policy formulation in the European
24
secondary research, interpretations and journalism are more fit for this task. This could explain why opponents of shale gas, who are generally less well-endowed, focus more efforts on tier 3 research. As will be shown in chapter three and four, opponents of shale gas are less active in research, and especially primary research, than the proponents. What stood out though when creating the database is that the opponents are highly active in communication to the public with other means, such as websites, position papers, news articles and
demonstrations.44
Fourth category research finally, that is used for promotion, is incentivized to write what would be of interest for potential clients. This could result in biased research if there is substantially more money available at clients that are interested in one point of view. Furthermore, category four is likely not to disclose detailed research. Often the published reports are meant as teasers in order to acquire clients that will pay for more detailed research.
Chapter four will elaborate further on the organizational aspects of research in a deep-dive on primary economic research.
Preliminary insights
The database reveals the enormous size of the shale gas research in the EU. Certainly if we take into account that the earliest report dates from 2010, it is impressive what has been produced over the past four years. Over 50 institutes are listed, and most of which have produced far more than one report or article on the issue. The research is not only extensive rated in the amount of institutes, the reports themselves are substantial as well. Only a few consist of less than 15 pages and more than half is over 80 pages thick. The steep growth in institutes involved indicates growing budgets and increased competition. Off course, size does not reflect quality but it certainly is an indication of the effort put into research. Overall this can be considered a positive thing. A potential downside of the size is the risks of duplication and, more importantly, diffusion of information. With 50 parties offering information it is far harder to make a distinction based on quality. In order to structure the analysis, the reports therefore needed to be ranked in three tiers.
Three observation stand out on the actors side. First off all, at first glance, the research does not seem to be dominated by OGPs. Less than five OGPs have produced reports. A
44 FoE, Unconventional and Unwanted (2012); http://stopclimatechange.net/main-topics/shale-gas/ -
20.06.2014; Milieudefensie, Factsheet: De risico’s van onconventioneel aardgas (2011); Environmental NGOs, Position statement on shale gas, shale oil, coal bad methane and ‘fracking’ (2012);
25
second observation is that a large number of reports are tier 3 research. This implies that this research did not use first hand data but based their work on other research. This in itself is not problematic, and might even be positive, but it becomes an issue if primary research is
lacking, incomplete or incorrect. Finally, the opponents of shale gas seem not to have published a lot of research.
Conclusion: database shows large number of reports and great variety of topics
As knowledge potentially has a central role in the decision-making process and there was no overview of the current state of knowledge the need emerged to create a research database. In order to structure the reports they are categorized in three tiers, dividing primary qualitative and quantitative and secondary research. Furthermore the reports are divided in commercial and non-commercial research. This division in commercial and non-commercial is especially useful as it gives insights in what can be expected from the reports. The theoretical
examination of how research can serve commercial goals showed that commercial research is likely to be either biased or not publicly available.
A few preliminary insights can be drawn from the database. First of all, the research landscape is big. The database revealed a large number of reports written by over 50 actors in the past four years. Secondly, the research is divers. The reports cover a wide range of topics, and are not only highlighting some elements of shale gas. Thirdly the research landscape does not seem to be dominated by OGPs. Fourthly, the database showed that most of the research is secondary research, that is based on other research instead of first hand data. Finally, the database seems to reveal that opponents of shale gas are rather inactive in research.
26 Chapter 3 Current state of knowledge
Introduction
The previous chapter outlined how the database is created and showed some preliminary insights. Inter alia, the database revealed the large amount of the research that has been conducted and the variety of topics that is dealt with. The following chapters check these insights and derive conclusions from the database.
The amplitude of the research landscape has consequences for this thesis. Time restraints make an in-depth analysis on all reports gathered unfeasible. Therefore I have chosen for a two-fold approach. In this chapter the first approach is executed. This consists of a inclusive analysis on all topics that are covered by the entire research field. In order to be able to look into all reports a generic focus is applied. The chapter concludes which topic is most
vulnerable for manipulation. This conclusion is used as starting point for the second approach, in chapter four and five, which is exclusive. Chapter four deep-dives in the organizational features of the most vulnerable topic. Consequently chapter five concludes with a content analysis of the three most pivotal reports of this topic.
The primary goal of this chapter is to indicate the current status of knowledge. As discussed previously, current consensus partially determines how vulnerable topics are for manipulation. The vulnerability for manipulation is indicated by the level of outcome
flexibility. Outcome flexibility indicates the distance between the two most extreme plausible answers to a question. If actor A can justify ‘5’, while actor B justifies ‘95’ the flexibility is larger than would be the case if the two extremes are “98,1” and “98,7”. Larger uncertainty creates larger power for those who can provide the truth. The knowledge analysis will be accompanied by an overview of the actors who are active in research.
The issues related to shale are divided over six categories. Each category has been split in research topics and subdivisions and is accompanied by a list of relevant research for that category. For each subject category an analysis is included on the research coverage. The chapter will start with an overview of topics and end with an overview of actors. The combination of the knowledge and actors will eventually result in the conclusion whether manipulation is possible and which category is most vulnerable.
27 Research subjects45
Category Research topics Subdivision
Geo
lo
g
y A Resources I Availability
B Drilling conditions I Resource depth
II Rock composition
III Water availability
T ec h n o lo g
y A Production capacity I Equipment
II Infrastructure
B Innovation I Expected progress
II R&D funding E co n o m y
A Breakeven price I Costs
II Prices
B Energy market I Demand
II Supply
III Market structure
C Economic impact I Employment
II Revenue
III Lower energy price
E n v ir o n m en t
A Pollution I Water usage
II Contamination B Climate I GHG Emissions II Transition fuel So ciety A Nuisance I Noise II Traffic III Stench
B Health risks I Seismic activity
II Groundwater contamination
III Air pollution
C Benefits I Rural employment
D Risk management I Regulatory regime
Po
liti
cs
A Geopolitics I Energy Security
II EU-Russia
B EU politics I Centralization
II Corporate influence
Figure 6, overview of all topics discussed in research on shale gas, based on database.
45 Topics categorization is based on a own assessment, content of topics will be explained in subsequent
28 1. Geology Ge ology A Resources I Availability II Location
B Subsurface conditions I Resource depth
II Rock composition
III Water availability
Figure 7, geological research topics, based on database.
Geological research revolves around two questions: how big are the recoverable levels of shale gas and how hard will it be to extract them.
The amount of recoverable shale gas resources is subject to continuous debate. The first estimate, still often quoted, dates back to the groundbreaking work by Hans-Holger Rogner, then employed at Victoria University in Canada.46 Ever since a host of publications on the subject has been produced, with only few focusing on Europe. In 2012 the ECs JRC included an review of all unconventional gas resource estimates in an extensive report on
unconventional gas in Europe. The contribution, funded by EC and written by scholars from UKERC, concluded that “very few estimates are available”47
on recoverable resources in Europe. The reports that did produce European estimates all originated from non-European institutes.
Next to this observation, JRC assessed research on North American resources, which provides us with two valuable insights. The first insight being that large scale American shale production led to a steep growth of research efforts. The second insight being that the average estimates of recoverable resources has multiplied tenfold since 2006.48 Deriving from these insights we can assume that estimate depend on production, and that estimates are likely to change heavily over time. Graph 1 from JRC shows the big differences in global estimates and graph 2 from IEA focusses on the differences in Polish estimates.49 The original 2011 estimates of Polish resources by the US Energy Information Administration were very high and resulted in high hopes in Poland. Two years later though, the Polish Geological Institute estimated their shale potential and concluded 93% - 86% lower levels, downplaying it from 5,3 TCM to 346-768BCM.50
46 H.H. Rogner, An Assessment of World Hydrocarbon Resources, Annual Review of Energy and the
Environment 22:217-62 (1997); JRC, Market Impacts, 24.
47
Ibidem, 28.
48 Ibidem, 22-23. 49 Ibidem, 51-52.
50 IEA, Golden Rules, 123-124. EIA estimates: U.S. Energy Information Administration, World Shale Gas
Resources: An Initial Assessment of 14 Regions Outside the United States (2011); PGI estimates: Polish Geological Institute National Research Institute, Assessment of Shale Gas and Shale Oil Resources of the Lower Paleozoic Baltic-Podlasi-Lublin Basin in Poland (2012)
29 Figure 8, differences in global recoverable resource estimates, JRC. 51
Figure 9, impact of different resource assessments on projected shale gas production in Poland, IEA. 52
Once the resources are estimated there is still the uncertainty of the exact location, and whether the subsurface conditions allow production. The area cannot be too densely
populated, needs easy access to vast quantities of water and should not be allocated for other usage such as agriculture. Shale gas production is rather land consuming. Especially when it is taken into account that exactly locating recourses is only possible with extensive test drillings. Therefore large areas should be available where OGPs have considerable leeway to test several spots. The issue of land availability is indicated by Gény as one of the biggest European problems compared to US conditions. Europe is too densely populated, and therefore potential production areas are “generally too small”53.
A second branch of geological research focusses on the subsurface conditions. This research is strongly related to the resource estimates, since the recoverable resources depend on the subsurface condition. Specific questions in this respect are how deep the layers are
51 JRC, Market Impacts, 27 52 IEA, Golden Rules, 124 53 Gény, Game Changer, 72-73
30
located and how hot they are, the level of permeability of the stone layer and the location of water aquifers. These issues considerably affect drilling costs, as discussed under economic topics.54
The geological research lacks substantial EU-wide primary research. Two institutes have assessed national resources in Britain and Poland. Furthermore there are two German
initiatives, the GFZ GASH, exclusively funded by OGPs, and government backed GeoEn. The GASH initiative planned to do primary research over the course of 2009-2012 on shale layers of Europe, but hasn’t published any scientific articles after 2010. GeoEn started in 2010 with a timeline of six years. Up to this point it is uncertain how productive GASH and GeoEn have been. Finally it can be assumed that OGPs that are investing in shale gas in Europe, are also involved in geological research, but this information is not publicly available.55
Resulting from the nascent state of test drillings and limited primary research, there is no to be trusted baseline of European shale estimates. Many share the idea that this void will remain as long as shale gas is not being produced in large quantities.56 As JRC puts it: “Given the absence of production experience in most regions in the world and the number and
magnitude of uncertainties […] current resource estimates should be treated with
considerable caution.”57 A lack of a geological base-line knowledge obviously is of great concern since it affects all other research. What would happen if the available resources in the EU would also increase tenfold, as happened in North America, or, equally far-reaching, decline tenfold? This would off course heavily change the debate. Contradictory, the second problem is formed by the estimates that do exist. Even though the scholars themselves underline the uncertainties in their work, these estimates are often presented as facts by others.58 As original estimates are quoted, a lack of transparency about the assumptions used comes into existence. These second hand consequences are inevitable. When research is quoted it always loses a part of the original granularity and context. This effect is likely to be
54 Maximilian Kuhn and Frank Umbach, Strategic Perspectives of Unconventional Gas: A Game Changer With
Implications for the EU’s Energy Security (2011) 33.
55
In the UK: British Geological Survey, The Carboniferous Bowland Shale Gas Study: geology and resource estimate (2013); In Germany the GFZ German Research Centre for Geosciences has been active in multiple shale gas initiatives: A. Hubner, B. Horsfield, I. Kapp, Shale Gas in Europe: pragmatic perspectives and actions, EPJ Web of Conferences 33 (2012) and GeoEn, http://www.geoen.de/ - 25.06.2014; In Poland: PGI, Lower Paleozoic Baltic-Podlasi-Lublin Basin (2012); In the Netherlands limited research by: Energy Beheer Nederland, Focus on Dutch Gas (2011); W&B, Aanvullend onderzoek (2013)
56 Kuhn, Strategic Perspectives, 33; IEA, Golden Rules, 22; UK Government: House of Commons Energy and
Climate Change Committee, The Impact of Shale Gas on Energy Markets: Government Response to the Committee’s Seventh Report of Session 2012-2013 (2013) 6.
57 JRC, Market Impacts, V. 58 Kuhn, Strategic Perspectives, 33.
31
bigger in an area that is both highly technical and important, as is the case with geological research. Additionally, since the estimates differ this much, it gives researchers, journalist, politicians etc., a lot of leeway to manipulate the debate.
Figure 10, overview of actors in geological research, based on database.59
59 UKERC conducted the study that is included in the JRC Market Impacts paper. This research was funded by
the EC via JRC. Both institutes are listed here because EKERC also published a more extensive version of this study on its own account.
32 2. Technology
Te
chnology
A Production capacity I Equipment
II Infrastructure
B Innovation I R&D
II Expected progress
Figure 11, technological research topics, based on database.
Technological research analyses the current industrial drilling capacity, and future
technological innovation. First question is how well Europe is equipped for large scale gas production. Is, for example, the drilling rig capacity sufficient? Is the infrastructure in the shale rich areas suited to take the drilling equipment in, and distribute the gas out? These issues cannot be taken for granted. It is often questioned for example if the rather remote shale areas of Poland are fit for shale production.60 The second technology topic revolves around innovation. Innovation is needed in order to adapt fracking techniques to European circumstances and could play a major role in decreasing costs and risks.61 Innovation research topic leads to the questions who should perform and pay R&D, and what progress can be expected. Since a current decision will result in future production it is necessary to estimate what technological conditions in those years will look like. Underestimation of innovation will lead to overestimate of the risks and vice-versa. Therefore proper decision making is dependent on well-managed R&D expectation.
Experts have indicated that technological issues might cause problems, or, on the contrary, solve problems. On the skeptical side, it is notable that Europe’s shore drilling capacity is highly underdeveloped compared to the US. In this context, consultancy firm Ernst and Young pointed out in 2012 that there are only 50 onshore drilling rigs in the EU, against 2000 in the US.62 Up-scaling rig numbers alone would bring serious cost,
endangering the profitability of shale gas production. Drilling rigs are only one of the potential issues. If for example the Polish gas-pipelines are not fit for large scale production this could prove a financial show-stopper.63 On the positive side, there is a good chance that technology will improve and take away a lot of the issues currently labelled as problems. According to a JRC report from 2012 innovation might be capable of decreasing drilling costs with 30-60% and lowering water usage to zero.64 Since drilling costs and water usage are one of the biggest disadvantages to European shale production, as will be seen in the
60 Ernst and Young, Shale gas in Europe, Revolution or Evolution? (2012) 17-18. 61 Gény, Game Changer, 72.
62 EY, Revolution or Evolution, 27. 63 Ibidem, 17-18.
33
economic and environmental paragraphs, the potential impact of these statements is big. In another JRC report, the Montan Universität nuances this statement already though when estimating that, in the most positive scenario, these product and technology developments will take 10 to 15 years.65
The JRC report and the Montan Universität contribution mentioned above form the only substantial reviews of R&D issues. The European Parliament is the only one that reported extensively on the drilling capacity. Apart from these reports the issues are often mentioned, e.g. in the EY report, but only as a side note in reports that primarily deal with other issues. Additionally, more problematic, hardly any research center focusses on innovation
themselves. The lack of innovation is underlined by the Dutch UGRI research proposal from Delft University, which aims at becoming a leader in unconventional gas R&D.66 Ruud Weijermars, one of the researchers of UGRI, has already published some work on
technological issues in name of Alboran Consultants, analyzing the potential of R&D.67 Up to date though, no articles have been published by UGRI itself and it is unclear whether UGRI actually started its tier 1 research.
Figure 12, overview of actors in technological research, based on database.
65 JRC, Market Impacts, 91.
66 Research proposal UGRI: Ruud Wijermars e.a., Unconventional Gas Research Initiative (UGRI) – A TU Delft
Research Proposal (2011, final draft), 1; 3.
67 Amongst others: Ruud Weijermars, Can technology R&D close the unconventional gas performance gap?,
