The recent crisis in the Ukraine has highlighted a big, glaring fact when it comes to Europe: It needs to diversify its energy stocks from Russia.
While that means importing a hefty dose of U.S.-produced natural gas via new export terminals, it also means allowing energy stocks to tap its own abundant shale resources. Fracking has been a point of a fierce contention on the continent — one that makes our own Keystone XL pipeline battle seem tame.
In short, Europe will need to frack, and frack hard, to meet its growing energy requirements — especially if it’s trying to remove the yoke of Russia-produced natural gas from its energy mix.
However, it appears that right now, only the United Kingdom seems serious about creating a fracking revolution.
Still, that means opportunity across a few energy stocks that are able to get in early and tap the nation’s vast reserves. Two in particular stand out to me.
As is the case in much of Europe, fracking in the U.K. has been met with public outcry and protest. However, with the continent receiving around 40% of all its energy needs via Russian natural gas imported via the Ukraine, the region faces a major energy issue.
But it’s an issue that fracking can solve — and the U.K. is set to become the leader on that front.
First, the nation has “mind-boggling” shale gas reserves. Recent seismic studies by the British Geological Survey peg the large Bowland Basin formation’s total reserves at a massive 1,300 trillion cubic feet (Tcf). That would make the Bowland the largest shale gas basin in the world — bigger than the Bakken, bigger than the Niobrara, and even bigger than the mammoth Marcellus.
In theory, the basin could ensure that the U.K.’s energy needs could be met for roughly 40 years.
Now, only about 200 to 330 Tcf are currently recoverable using today’s technology. But that amount still puts the U.K. into the top nations in terms of shale gas potential.
And that doesn’t even consider the other shale basins — both onshore and off — that the U.K. could possible tap. The Kimmeridge Clay, Weald Basin and Oxford Clay have all been found to hold massive natural gas and oil resource potential. Meanwhile, preliminary data from the BGS suggest that the U.K.’s offshore shale gas reserves could be between five to 10 times as large as its onshore ones. Various energy companies have been tapping the prolific North Sea for conventional oil and natural gas for decades now … with much success.
Amid the massive reserve potential, the U.K.’s government seems to be on board with the idea of fracking.