Shale gas production shows great promise in power generation capacity and is likely to shift natural gas trading patterns. As the production increases, it is expected that shale will become the preferred feedstock for chemical manufacturing in the future, with high economic potential in Europe and Africa.

Frost & Sullivan analyst, Dominic Goncalves, says, “The shale gas dilemma has become a contentious debate in South Africa, fraught with emotions and tension between industry and environmentalists, with public perception caught in the middle. Unfortunately, vested interest by both extremes of the argument has caused many facts to be taken out of context. Potential economic benefits are large, if the gas can be extracted at an affordable price.”

However, the extraction process is associated with environmental issues, such as potential water contamination and has attracted a fierce backlash with calls for strict regulations governing production.

If Europe deals with these issues, the development of shale resources would decrease the region’s dependence on supplies from Russia and the Middle East. The production value chain is dominated by major oil and gas players, energy service companies as well as chemical and water treatment companies.

“While natural gas currently holds a significant share of the energy market, newly discovered shale gas reserves around the globe are likely to promote consumption of gas as both an energy source and an affordable feedstock for a wide variety of chemicals and materials,” consulting analyst, Michael Mbogoro, says. “The role of renewable energy sources globally could be challenged by the increasing importance and position of shale gas in the energy mix, especially in China and Europe.”

While Europe has significant shale gas reserves, the development of these resources is nascent, due to strict regulatory framework. Yet energy independence and the political clout that comes with it, in addition to a burgeoning domestic industry fuelled by cheap energy, is a compelling case for the development of shale resources.