(EnergyAsia, January 9 2013, Wednesday) — Russia’s leadership in the natural gas business could come under threat from rising exploitation and production of shale reserves in the US, and potentially from Europe and other parts of the world.

According to US-based GBI Research, shale prospects in Europe may well reshape the continent’s energy market dynamics by easing the continent’s traditional reliance on Russian natural gas.

Last year, Russia accounted for around a third of Europe’s 16.5 trillion cubic feet (tcf) of natural gas imports, said GBI Research.

Europe holds around 3,500 trillion cubic feet of unconventional gas reserves including tight gas, shale gas and coalbed methane (CBM), sufficient to meet 60 years of consumption, according to the International Energy Agency (IEA).

The US could also dent Russia’s interest by competing to supply gas to Asia’s fast growing markets at much lower prices.

But, Russia is not completely disadvantaged, said GBI Research as Europe faces a number of geological, legal, environmental and political challenges to exploit its shale gas potential.

For all its potential, the US too must iron out market issues before it can realise the potential of its possession of abundant shale reserves and efficient gas-fired power plants, said another consultant, GlobalData.

In a recent report, GlobalData states that natural gas producers must continue to proceed with caution in developing the fuel to meet long-term demand in the US and beyond.

Firstly, the huge surge in natural gas production is a recent development in the US, and it remains to be seen if its shale plays are sustainable.

In its 2011 annual energy outlook, the US Energy Information Administration (EIA) estimated that the Marcellus shale region holds technically recoverable reserves of 400 trillion cubic feet (tcf), nearly five times as much as the estimated 84.2 tcf provided by the US Geological Survey (USGS). Last year, the EIA updated its figure to 140.6 tcf.

Secondly, while gas is thought to emit less carbon than oil and coal, GlobalData said gas-fired plants are still responsible for a substantial amount of pollution. With emissions targets to meet, the US government will focus on commercialising renewable energy-generated electricity.

According to GlobalData, natural gas will account for just over 39.5% of US electricity production by 2020, down from more than 41% in 2011. The consulting firm expects renewable energy to take market share away from natural gas.