The development of European shale and unconventional resource plays has made little progress in 2012 as some operators have seen poor results on initial exploration wells. The industry has also been impacted by legislative bans on hydraulic fracturing in various countries, as fears mount on the possible environmental impact of this technique.

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Exxon Mobil (NYSE:XOM) is working on various shale plays outside the United States, and recently announced that the company would end its exploration program in Poland, where the company has interests in six licenses. The company cited the low productivity of initial wells as the reason for the pull out.

Exxon Mobil is not abandoning all of its international shale exploration and development as the company has signed an agreement to develop tight oil reserves in Siberia. The company will jointly develop these properties with Rosneft, a Russian oil and gas company that is majorly owned by the government.

Other companies are still optimistic that Polish exploration efforts may be successful. San Leon Energy PLC has drilled several exploration wells in the SW Carboniferous Basin and reported natural gas pay in five different zones.

Environmental Concerns
The exploration of shale reserves have been slowed by concerns over the impact that hydraulic fracturing has on the environment. France banned the use of this process in 2011 and derailed a planned exploration program by Hess Corporation (NYSE:HES), which holds interests in the Paris Basin.

Bulgaria also banned this controversial process in early 2012, and canceled an exploration permit held by Chevron Corporation (NYSE:CVX). The government recently relaxed this prohibition, as the ban was so comprehensive that it also affected conventional drilling in Bulgaria.

SEE: A Primer On Offshore Drilling

There is no doubt that shale gas resources are present in abundance in many countries in Europe. In Germany, the Federal Institute for Geosciences and Natural Resources issued a report that estimates that country's shale gas resources in a range from 6.8 trillion to 22.6 trillion cubic meters. The report indicates that approximately 10% of these natural gas resources may be recoverable.

Lithuania is set to start exploration for shale gas and recently announced the country's first tender for licenses in two fields. The Lithuanian State Geological Service estimates that the country may have as much as 500 billion cubic meters of shale gas, according to Reuters.

SEE: Natural Gas Industry: An Investment Guide

The Bottom Line
Many market pundits have called the massive development of shale and unconventional resource plays in the U.S. a "game changer" that will lessen dependence on foreign imports of energy over the next few decades. While some may dispute this claim, it's an indisputable fact that shale development in Europe is the opposite of a game changer as it moves incrementally along.

At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

Tickers in this Article: XOM, HES, CVX, SLE

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