Can the US shale revolution be duplicated in europe ?

Over the past decade, the rapid increase in shale gas and shale oil production in theUnited States has profoundly changed energy markets in North America, and has led to asignificant decrease in American natural gas prices. The possible existence of large shaledeposits in Europe, mainly in France, Poland and the United Kingdom, has fosteredspeculation on whether the "shale revolution", and its accompanying macroeconomicimpacts, could be duplicated in Europe. However, a number of uncertainties, notablygeological, technological and regulatory, make this possibility unclear. We present atechno‐economic model, SHERPA (SHale Exploitation and Recovery Projection andAnalysis), to analyze the main determinants of the profitability of shale wells and plays.We calibrate our model using production data from the leading American shale plays.We use SHERPA to estimate three shale gas production scenarios exploring differentsets of geological and technical hypotheses for the largest potential holder of shale gasdeposits in Europe, France. Even considering that the geology of the potential Frenchshale deposits is favorable to commercial extraction, we find that under assumptionscalibrated on U.S. production data, natural gas could be produced at a high breakevenprice of $8.6 per MMBtu, and over a 45 year timeframe have a net present value of $19.6billion – less than 1% of 2012 French GDP. However, the specificities of the Europeancontext, notably high deposit depth and stricter environmental regulations, couldincrease drilling costs and further decrease this low profitability. We find that a 40%premium over American drilling costs would make shale gas extraction uneconomical.Absent extreme well productivity, it appears very difficult for shale gas extraction tohave an impact on European energy markets comparable to the American shalerevolution