Impetus to unconventional gas exploration in Europe
Substantial deposits of unconventional natural gas are believed to exist in many European countries such as Germany, France, the UK, Austria, Poland, Sweden, Romania, Hungary and Ukraine.12 In some places exploration is already underway. The big US corporations (foremost among them the supermajor Exxon) were slow to recognise the potential of shale gas business, with the result that they had to pay top prices to take over bold pioneering firms. Today the energy giants and oil field equipment suppliers (e.g. Exxon, Schlumberger and Shell), and many smaller companies too, are staking claims throughout Europe. As in the 1960s, Europe is dreaming of a new "gas wonderland". In fact production could actually begin in two years in northern Germany (e.g. Lower Saxony), southern Sweden or Poland. However, the muted trend in prices as a result of the gas glut is currently putting a damper on development, so that significant output is not to be expected for another decade. Europe does have an advantage on America in that it already possesses quite a close-knit natural gas grid facilitating feed-in of the widely dispersed deposits. But owing to Europe's higher population density, environmental concerns such as potential hazards to groundwater and drinking water argue at first sight against excessive usage. Indeed, the rock strata containing gas in Europe are generally located several hundred metres beneath the groundwater. What is more, in important countries such as Poland and Ukraine the gas deposits are believed to exist chiefly in rural areas. Additionally, in the US deposits have also been exploited in densely populated conurbations - allegedly with no difficulty at all.

Eoin Treacy's view Unconventional gas is a game changer for the energy complex because it brings significant new supply to a market thirsty for resources capable of producing ample, secure, clean, reliable power at an acceptable cost. This new supply could keep a lid on prices over the medium term or for as long as it takes for new demand to soak it up. However, the question is around what price will an equilibrium be found, where new supply is economic and demand is prepared to return.

Natural gas prices have been ranging mostly above $4 since last year and rallied from that area once more from May. It encountered resistance in the region of $5 today, forming a large key day reversal and a countermanding upward dynamic would be required to offset scope for some additional downside. The fact that natural gas is so weak on a day when oil rallied by more than $2.50 may speak of the supply dominance where unconventional gas is changing the internal machinations of the market.