Also, A Russian POV On China: “China will continue to pay high multiples for these shale-gas assets…So, the shale story may continue to play itself out despite the destructive value to present shareholders.”

The shale-gas revolution has been a game changer in the U.S., but producing this unconventional resource in Europe is less likely to provide significant new gas supply there, says Mark Gyetvay, chief financial officer for OAO Novatek, Russia’s second-largest gas producer, making 5.3 Bcf/day.

“In Russia, we obviously look at the events in the U.S. with great interest, as the changes observed there will have some impact on us—albeit smaller than most people predict—but, nonetheless it is a situation that must be considered in capital expenditures and supply/demand dynamics,” Gyetvay says in a guest article exclusive to OilandGasInvestor.com. (For the article, click Russian Gas CFO Discusses The Shale-Gas Boom, European Supply/Demand, Poland’s Unconventional, China.)

Gyetvay says that, if all 70 rigs operating in Europe began drilling for unconventional gas in Poland, “it would take approximately 10 to 12 years to reach productions levels of roughly 2 Bcf per day, or the equivalent of 4% of current European gas consumption.”

Keith Rattie, chairman of U.S. integrated-gas company Questar Corp. and chairman of U.S. gas E&P company QEP Resources Inc., notes that Europe’s interest in developing indigenous gas resources is motivated in part by the fact that Russia’s OAO Gazprom, the world’s No. 1 gas producer, has cut off gas supply to western Europe twice in the past decade during disputes with Ukraine through which Russian gas supply westward travels.

Tantalizing is that drilling in the Marcellus alone, in the eastern U.S., has grown the shale-gas play into the world’s second-largest gas field in terms of recoverable reserves—catapulted ahead of five Russian fields, all conventional. (For a table, click The World’s 10 Largest Gas Fields.)

Rattie says, “I tend to agree with Gyetvay that shale gas is unlikely to be a game changer in Europe to the extent that it is in the U.S. But it's early: The resource base could be very large, and never underestimate the potential for new technology to disrupt.”

Gyetvay says Russia’s conventional gas resources are produced at a much lower cost than U.S. shale gas. Rattie notes, however, that production costs tell only part of the U.S. story.

“There is a high cost of transporting gas from the Yamal Peninsula via pipeline to European markets,” Rattie says. The distance from Yamal to central Europe is some 2,600 miles; meanwhile, to put this into context, the distance from the North Slope of Alaska to Calgary is some 1,700 miles.

“Producers on the North Slope of Alaska can also produce gas at a very low cost. In fact, they're producing, separating and re-injecting 8 Bcf a day. But that doesn't make Alaskan gas an economic option of the U.S. market: Alaskan gas can't compete because it will cost $30 billion to build a pipeline to move that gas to the Lower 48.

“In the Barnett shale—or Haynesville or Marcellus—production costs are a lot higher than in the giant gas fields in Russia. But the U.S. shale plays are located close to the market, so transportation costs are low.”

For Gyetvay’s guest article, click Russian Gas CFO Discusses The Shale-Gas Boom, European Supply/Demand, Poland’s Unconventional, China.

For the table, click The World’s 10 Largest Gas Fields.

For more information on U.S. shale-gas resources, click the DOE’s Annual Energy Outlook 2011: Early Release.

For more on Europe’s lack of love for Gazprom, and on Gazprom’s lack of love for unconventional gas, see “Gazprom Humor,” May 27, 2010.

–Nissa Darbonne, Editor-at-Large, Oil and Gas Investor, OilandGasInvestor.com, OilandGasInvestor.com Today, Oil and Gas Investor This Week, A&D Watch, A-Dcenter.com, UGcenter.com. Contact Nissa at ndarbonne@hartenergy.com.

Editor's note: Gyetvay can be reached at mgyetvay@novatek.ru.