A shale gas check-up

A look at what’s going on in the world of shale gas – how are key countries responding to the controversial extraction process?

The development of shale gas extraction could change world energy markets, offering potentially ample supplies that would otherwise tighten in coming years.

In the United States, where hydraulic fracturing or fracking drilling technology is most widely used, it could flip the country from a net importer of natural gas to a net exporter.

But shale gas extraction requires large amounts of water and chemicals, and environmental concerns have led some governments to ban its use or put moratoriums in place.

Here is an alphabetical list of key countries with shale gas reserves and their governments' legal positions on the fracking technology.

Argentina

At around 774 trillion cubic feet of estimated recoverable reserves, the South American country is likely to have the world's third-biggest reserves in unconventional gas behind China and the United States, according to the US Energy Information Administration (EIA).

The government has launched its Gas Plus program, which promises to give a price guarantee for newly discovered gas.

There are about 50 projects approved under the scheme, many of which correspond to non-conventional gas fields.

Australia

Australia has 396 tcf of technically recoverable shale gas resources, according to the EIA, equivalent to about 46 per cent of US reserves.

Widespread fears about the impact of hydraulic fracturing on water supplies in Australia have led to calls for a moratorium on the practice in several states. A temporary moratorium is currently in place in eastern New South Wales.

Australia's shale gas industry has grown in the past few years but is still far from becoming a major gas producer as high costs and a lack of infrastructure to access the far-flung assets remain hurdles to the industry.

Although there has been speculation that shale gas may rival Australia's booming coal seam gas industry, experts say significant production is probably a decade away.

Britain

The UK government backed the exploration of shale gas in April, nearly a year after it suspended domestic shale drilling activity when exploration work triggered small earthquakes near Blackpool in northwest England in May.

After reviewing a report into the incident commissioned by Cuadrilla Resources, the company responsible for the work, the government published its own report which gave a provisional green light to shale gas fracking provided tighter rules on seismic monitoring and drilling surveys were implemented.

The energy ministry is inviting public comment on the report's findings until the end of May 2012, after which it will issue its final ruling on the future of UK shale gas exploration.

Bulgaria & Romania

The Bulgarian government in January banned shale oil and gas exploration through hydraulic fracturing due to environmental concerns following widespread protests.

The government cancelled a shale gas exploration permit to Chevron at Novi Pazar field for which estimates showed reserves of 1 to 3.5 tcf.

Romania's shale gas industry is still at an early stage, and the country currently has no specific legislation in place and instead uses the same laws that apply to its conventional gas sector.

China

China in January approved shale gas as an independent mining resource, a legal status that may allow more Chinese firms to develop the unconventional energy source.

Foreign companies would not be able to participate in the tenders but could partner with the winning Chinese firms.

The world's top energy user could hold shale gas reserves around 1,275 tcf, according to the EIA, exceeding those of the United States (862 tcf).

France

The French government banned the use of hydraulic fracturing last year in the face of concerns about potential environmental damage.

As a result, it has cancelled several shale exploration licences with major energy companies, such as Total SA.

The EIA says France has shale gas reserves of 180 tcf.

Poland

Poland does not have any law relating specifically to shale gas, but it has launched work on a new tax on shale gas and other hydrocarbons, expected to be ready in the first half of 2012.

The country is pursuing unconventional gas to boost its energy security.

Its estimated shale reserves of 187 tcf are Europe's biggest of known unconventional gas and could feed domestic consumption for some 300 years. The government has awarded over 100 concessions to mainly foreign companies.

US

Shale gas drilling in the United States is mostly regulated on a state-by-state basis.

The Environmental Protection Agency is currently studying fracking and its impact on drinking water, with a preliminary report expected this year. The final analysis will be released in 2014.

The Interior Department also is updating rules for fracking on public lands.

A few states do not allow fracking. New Jersey lawmakers recently agreed to a one-year ban on the practice, and New York has a moratorium in place.

Other states have implemented regulations to keep a closer eye on drilling until federal regulators weigh in. Many states, including Texas and Colorado, require at least some disclosure of the chemicals used in fracking.

This article was originally published by Reuters. Republished with permission.