Jan 30

Ukraine Inviting Investors To Produce Shale Gas

By Curve natural gas in Europe No Comments »

 

Ukraine plans to hold a tender to choose investors to conduct geological surveys and produce shale gas in the country, Ukroil has reported. The tender is scheduled for February 2012. According to Ukrainian Natural Resources Ministry’s press office.

Natural Resources Minister Nikolay Zlochevskiy relayed the news to an American delegation headed by State Department Special  Envoy to Eurasia Richard Morningstar.

“We are interested in holding transparent tenders and for powerful investors to begin shale gas production in Ukraine. This will be a serious victory for our government team”, the minister said.

Morningstar responded, saying that the Americans were interested in producing on the Oleskoye and Yuzovskoye sections of Ukraine where the shale gas production is planned. “The United States is interested in Ukraine having energy independence”, he said.

The sides agreed to organize consultations with the US Geological Service and the Ukrainian State Geology and Mineral Deposits Service to exchange information on prospective geological formations.

Source: Oil and Gas Eurasia

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Jan 17

San Leon Reveals Prospects in Albania

By Curve natural gas in Europe No Comments »

 

An important announcement from San Leon Energy this week; details on the Durresi licence in Albania. Here’s the full press release:

San Leon Energy is pleased to announce significant progress on its 100% owned Durresi License (4,208 km2) in Albania. The Company has received the first final processed volumes from its 840 km2 3D seismic survey in late 2011. The survey was processed by Western Geophysical in London with a focus on detailed structural imaging incorporating relative amplitude preservation for the detection of subtle stratigraphic prospects on the flanks of the complex structural setting offshore Albania.

Continued processing of the new 3D and existing 2D and 3D seismic for the detection of stratigraphic traps is being performed in the Company’s Warsaw office in conjunction with continued detailed subsurface analysis. Initial modeling of the seismic response from existing well data has proven the potential for using seismic amplitude analysis for the direct detection of hydrocarbons. This means significantly reduced exploration risk for prospects.

The Company’s Albania subsurface team, located in its Warsaw office, continue to interpret the extensive 2D seismic database (>5,000 line km) over the license and is now integrating the new 3D seismic interpretation. Initial results of the new interpretation has identified several new large oil and gas prospects across the many petroleum systems that exists across the Durresi License.

To date the Company has identified numerous prospects and leads across the license with unrisked prospective recoverable resources of more than 1 billion barrels of oil equivalent across the proven petroleum systems. Six source rock intervals have been identified with several potential oil reservoirs expected in Mesozoic carbonates and flysch as well as numerous gas reservoirs in the shallower Tertiary clastic deposits. The San Leon subsurface team continues to identify prospects across the license.

The Company has recently signed Confidentiality Agreements with several large E&P companies regarding farming into the license; and continues to receive unsolicited interest from other large E&P companies. As a result of which San Leon have opened the data room early to select companies and have already recently been visited by several companies. Plans to drill the first of a two well exploration program on the block are being made for late 2012/2013.

Oisin Fanning, Chairman of San Leon, commented:

“We continue to make rapid progress on our Albania project. After being awarded the Durresi License in February 2011 we quickly shot our 3D program and, less than a year later, are identifying numerous high quality oil and gas prospects across the license. The new 3D has revealed several large structural oil and gas prospects and is showing the significant stratigraphic potential that exists across the license. The possibility of using seismic amplitudes to significantly reduce exploration risk further demonstrates the high potential of offshore Albania.

We are very excited by the potential of the Durresi License and the interest that we are receiving from industry leading E&P companies to gain access to this high potential area.

Albania is quickly becoming a core focus area for San Leon given the huge upside potential, lower risk exploration and the level of interest that we have received from leading E&P companies.”

Source: San Leon Energy

 

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Jan 12

European Unconventional Gas Summit Sees Real Picture

By Curve natural gas in Europe No Comments »

 

A presentation at the European Unconventional Gas Summit in Poland has shown the real face of unconventional gas exploration – and is encouraging the whole world to take a look:

They were images that did look a little bit destructive, images rarely – if ever – seen at an unconventional gas conference in Europe: a huge land moving “vibrator,” equipment that was leaving a giant furrow on the farmland in its path.

The pictures belonged to Jakub Kostecki, CEO of New Gas Contracting, a provider of sourcing, landman and permitting services to the nascent oil and gas industry in Poland, who showed his pictures from the ground to attendees at the European Unconventional Gas Summit in Krakow, Poland.

“When we get to local communities and say there will be a small footprint left by what we are all doing we have to remember that they will remember this picture,” he explained. “Of course there’s nothing wrong with this as long as there’s a crew right behind the vibe to appraise the damage and another one right behind them to fix it.

He recalled that many of the communities his company worked in had seen screenshots and video of vibrators “lurking in the forests,” an image that had been played over and over on Polish television.

Kostecki explained, “Local communities will have seen these images a couple of months before seismic crews come into the area.”

“If you take the ostrich approach – hiding your head in the sand – that’s not going to work,” he continued. “Some regions of Poland are used to seismic acquisition. Others are not. In places like Ilawa in the north, which has never seen vibes, this needs to be explained to the community. They need to be told what’s going on.”

He said that the visibility of these issues would become higher as activity increased in Poland.

“Most of the acquisition in Poland has been 2D. When the 3D, 3C and VSP work starts there will be a lot more equipment and people on the ground. Next year there will be many more crews and a lot more issues.”

In terms of wellsite permitting, Kostecki said: “We provide landman services, which basically means that we help the operators enter parcels in Poland and put rigs on the ground. O&G operators will encounter serious delays in Poland because their land issues aren’t sorted properly.”

He said his company, New Gas Contracting, was in the process of securing 220,000 permits for one of the 2D programs. In addition to providing landman services and wellsite permitting, NGC was negotiating with local landowners, and gminas, on where to set up rigs.

“Many (O&G companies) go in where it’s easiest to get equipment. Others will look at the plot from a technical standpoint – where the sweetspot is,” he said. “Still others will negotiate until they get the right price.”

Kostecki explained that after 8 September local communities had seen what a well looked like. “The 10 wells already drilled in Poland have made the public aware.”

He noted that because the shale gas industry was made up of majors, supermajors, and small companies from all over using different approaches with different corporate cultures, it affected how each of them interacted with local communities.

He showed a photo of a drilling site which he considered well organized.

“We need to remember that the local authorities are the local population, so you need to tread lightly,” opined Mr. Kostecki, who said that there could be up to 300 wells drilled in Poland by 2013.

“We’re talking about a lot of land, a lot of wells. It will be a huge issue and everybody needs to have a strategy going forward.”

In terms of roads, he said access was a huge issue in Poland. “The road capacity tonnage is way too low and the way we deal with communities affects what kind of exemptions are available. There’s a lot of talk about more federal, more standardized regulation,” he said.

He added, “A lot of traffic is needed to get the seismic, drilling and fracking equipment onto a given piece of property.”

Source: Natural Gas for Europe

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Jan 12

Shale Gas Technology: 30 Years in the Making

By Curve natural gas in Europe, unconventional gas No Comments »

 

Natural Gas for Europe tells us all about a research institute where unconventional gas is nothing new:

While unconventional gas was below the radar until the last several years in the United States, one research institute there has been working on the topic for decades.

According to Trevor Smith, Program Manager in Unconventional Gas Sustainability, the Gas Technology Institute (GTI) had been working on unconventional gas development for the last 30 years, and that included coal bed methane and shale gas studies. He told delegates in attendance at the European Autumn Natural Gas Conference in Paris, France of the Institute’s experience with unconventional gas.

He explained that GTI, which was based in Chicago, had 250 staff, and was the only not for profit in the US focused solely on natural gas.

“Although the technology has been developing for over 30 years, the stakeholders have only known about it for a short time. Society’s reaction so far has been mixed,” he explained. “A harsh spotlight has been based on the industry’s practices.”

“Industry knows the technologies are proven,” he contended. “For those outside the industry, technologies appear new, novel, dangerous, untested.”

Mr. Smith said it was necessary to separate the facts from fiction regarding the technologies – hydraulic fracturing and horizontal drilling – in Europe.

“This has occurred because of a significant vacuum,” he said of the public’s misconceptions. “There is little information about the science behind the technology. In the absence of good information, some people have formed their own conclusion.

“More difficult to change people’s beliefs after the fact,” he added.

He noted that instead of talking rationally with other groups, those protesting against unconventional gas “climbed up on ladders and shouted their judgments.”

“It’s as much about the science of human behavior as it is about unconventional gas technology,” explained Smith, who touched upon the environmental issues, real and perceived.

He said: “Water is obviously at the core of the environmental debate. Greenhouse gasses are at the forefront of people’s minds when they think about shale gas.”

His presentation showed a typical well site in the US, a farmer’s backyard in Arkansas, on which one could see construction debris, road damage, and the drilling footprint.

Smith commented: “With these images it should be no surprise about the lack of comfort over shale gas production.”

He went on to mention a better solution for Europe: multiple wellheads on a single well pad.

“Wells should be constructed with great integrity,” he said. “Fraccing fluids should not find their way into shallow sources of potable water.”

According to Mr. Smith, sound regulation built public confidence, as did a commitment to sustainable development.

“We must acknowledge that there are environmental impacts and that these impacts can be managed,” he concluded.

Source: Natural Gas for Europe

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Jan 12

Ukraine to Start Commercial Production of Shale Gas by 2015

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Deputy Head of Naftogaz of Ukraine Vadym Chuprun says in two or three years Ukraine will produce shale gas on an industrial scale.

At the same time, the Naftogaz deputy head noted that shale gas production was expensive. He said that when the company begins production, it drills 26-28 wells at the designated area, and up to USD 3 million should be spent on each of them.

Source: NCRU

 

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Dec 20

Shale Gas: Market Opportunities and Challenges in the EU and Ukraine

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Natural Gas for Europe has published a report from the Gorshenin Institute into the European Shale Gas market.  To read the report in full with illustrations and diagrams, click here. There follows the text version.

The EU Ukraine Business Council together with Konrad Szymanski MEP held a round table meeting in the European Parliament on 7 December to discuss the opportunities and challenges for Shale Gas in the EU and Ukraine.

Distinguished panellists included Konrad Szymnaski MEP, Pawel Kowal MEP, Pawel Zalewski MEP, Olaf Kopczynski of the Polish Permanent Representation, Boleslaw Rey of PGNiG, Oleksii Leschenko of the Gorshenin Institute and Olav Aamlid Syversen of Statoil.

In my short report I would like to focus on some critical issues, connected with opportunities and challenges that any investor will face in the sphere of Ukrainian shale gas production.

Ukrainian Natural Gas balance – strong dependence on energy imports from Russia. We import 60% of gas, mainly for the needs of our metallurgical and chemical industry and for heat generation. Most of the gas for communal heat generating companies is subsidized by Naftogas (Ukrainian gas monopoly), and this fact causes huge budget deficit of state enterprise in the amount of $2 bill. a year. The Ukrainian export potential, its competitive advantage strongly depends on imported gas price. Objectively Russia, as monopoly supplier has very effective leverage to promote its geopolitical interests in Ukraine. We even have such a term as gas-fleet relations, as Ukrainian gas debt, that has been accumulating for years is always connected by our Russian partners with prolongation of Black sea fleet dislocation in Sebastopol sea base.

Some experts also note the interdependence of Russia and Ukraine in gas relations, as Ukraine consumes about 20% of all gas exported by Gazprom to Europe.

According to the assessments of international research organizations, two large shale gas basins are located on the territory of Ukraine. One of them is in the Dniper-Donets region, the second one is shared with Poland, the Lublin basin. By the way, Dniper-Donets region accounts for 80% of Ukrainian domestic gas production.

The geological similarities and geographic proximity to Poland allows EuroGas to believe that the Lublin Basin, which lies under Poland and Ukraine, could be 10-15 times as large as the Barnett formation in the US, and have a pay zone close to 4000 ft compared to 200-300 ft for Barnett.

Ukraine is more suitable for horizontal drilling than the more densely populated parts of Europe because of the large area required to drill, the use of large amounts of water, and the chemicals used for shale gas drilling. The use of chemicals, although not proven to be an environmental hazard, has come under extra scrutiny in heavily populated areas.

Not all experts are convinced that shale gas will be a long-term alternative to conventional gas. Some experts believe that most shale gas wells are uneconomic and always will be unless operator costs come down, gas prices rise sharply, and high average prices are sustained. Analysis of wells in the Barnet formation reveal that 15% of wells drilled in 2003, had a lifespan of less than 5 years, compared with the average lifespan of gas wells in the U.S. of 30-40 years.

According to Gazprom the industry production of shale gas in Europe (GB, Poland, Ukraine) will be launched not earlier than 2015. But it is supposed that volumes of production by 2030 will not be so substantial – maximum 30-40 billion cubic meters.

According to researches even in Europe cost production of shale gas at the level of $270-340/1000 square meters will be profitable. For Ukraine this figure will be about $200/1000 square meters, which is substantially lower than Russian import gas price that tends to increase in the nearest future. More than that, exploration of shale gas fields in Ukraine will create thousands of new work places and provide for big contracts for pipes and equipment for domestic producers.

Ukrainian government is very interested in shale gas exploration, and regularly shows their interest to the foreign investors. But, as it is expected, foreign companies before starting to work on Ukrainian market, require changing the rules of the game.

Experts state that Ukraine has huge political risks which remain the main greatest impediment to gas investments in Ukraine. The Ukraine bureaucracy is not easy to navigate, whereas in Poland registering a concession and getting an exploration license is done through the Energy Ministry and takes approximately three months; it can take a year or more in Ukraine and it is a convoluted process involving several ministries and departments.

Foreign start-ups have complained about official pressure on their companies, ranging from price ceilings on gas sales to their licenses being challenged in court. Even larger players, such as Houston-based Marathon, the fourth largest U.S. integrated oil & gas company, exited the country in 2008.

In addition the new administration in Kyiv is perceived as being closer to Russia than the previous one and it is currently negotiating a new pricing model for Russian gas, which may reduce the price Ukraine pays for gas, create a domestic price ceiling for independent producers and increase the political and economic influence of Gazprom and Russia in the Ukrainian gas industry. Ukrainian Prime Minister Mykola Azarov recently said “The issue of the gas price is vitally important for us. If we fail to agree with Russia we will face very serious difficulties,”

Shell asks the Ukrainian Fuel and Energy Ministry to change legislation regarding shale gas production. Shell intended to invest in the segment if bigger areas are offered for production and license periods are lengthened and tax breaks introduced. Ukrainian government officials have said they are prepared to initiate these changes.

The problem of shale gas can only be solved in the context of energy sector reforms and reforming Naftogaz.

Among other challenges, that investors will face in Ukrainian shale gas industry, are the following:

- Technological issues. Water supply in suitable volumes sometimes will be an issue. We also know that Americans bought Ukrainian scientific research institute from Kharkov, that dealt with shale gas researches from the soviet times. It shows, that technology issues will be critical in the production of shale gas in Ukraine.

- Ecological issues. The Lublin basin area is not densely populated, but producers in Dniper-Donets basin area will encounter issues connected with ecological problems, that production may cause for local communities.

- Access to infrastructure

In long term shale gas production is a very prospective area in Ukraine.

Source: Gorshenin Institute

 

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Dec 20

PGNiG to Make Multi-Billion Investments; Shale Gas to Benefit

By Curve natural gas in Europe, Poland No Comments »

 

Polish gas monopoly PGNiG plans to spend zł.4.8 billion ($1.4 billion US) on investments next year. Some zł.1.1 billion of this figure will be spent on exploration and extraction in Poland and abroad – including for shale gas.

Source: Warsaw Business Journal


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Dec 07

Polish Oil Firm PKN Orlen Plans Shale-Gas Well

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Poland’s top refiner PKN Orlen next week plans to start drilling a new shale gas test well on one of its licenses in eastern Poland, the refiner’s exploration and production arm, PKN Orlen Upstream, said Wednesday.

PKN Orlen’s operations span refining and petrochemical operations across Central and Eastern Europe and the company hopes shale gas production will allow it to diversify operations into the upstream segment, an area into which the company has so far failed to make significant progress.

“In five to six months we will make a decision whether to start horizontal drilling on both of these locations,” PKN Orlen Upstream head Wieslaw Prugar said in a statement.

Earlier this year PKN Orlen, which holds eight unconventional gas licenses, conducted a first drill some 60 kilometres from the new location.

Poland’s unconventional gas deposits of 5.3 billion cubic metres are estimated to be one of the largest in Europe and attracted a number of global oil majors such as Exxon Mobil Corp. and ConoccoPhilips seeking exploration licenses.

Source: Marketwatch.com

 

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Nov 23

San Leon Energy Interest Begins Irish Appraisal

By Curve natural gas in Europe, Realm, San Leon Energy, Shale Gas plays in Europe No Comments »

 

Providence Resources has begun appraisal drilling operations on the Barryroe oilfield, located in the Standard Exploration Licence 1/11 in the North Celtic Sea Basin, offshore southern Ireland.

The company is now drilling the 48/24-J appraisal well in the Barryroe field using the GSF Arctic III semi-submersible rig.

The well will offset and primarily appraise the previous Marathon Oil operated 48/24-3 (1990) well, which tested about 45 degrees API light sweet oil at about 1,600bopd from Base Cretaceous sands.

Providence said the 48/24-J well is planned to acquire a modern set of wire-line logs, together with an orientated conventional core through the primary objective.

Providence is the operator of the licence with a 50% interest while its partners San Leon Energy and Lansdowne Oil & Gas hold 30% and 20% interests, respectively.

Source: Energy Business Review

 

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Nov 16

3Legs Announces Update of Baltic Basin Well

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3Legs Resources has today announced an update on its Warblino LE-1H2 well, located on the onshore Baltic Basin in Poland.

The company says the well has been shut in following an initial successful flow rate of 60 to 90 thousand standard cubic feet per day (mscfd) of natural gas and over 1,000 barrels per day (bpd) of fracture fluid. The figures dropped to 18 mscfd of natural gas and 300 bpd of fracture fluid after the shut in.

A seven stage hydraulic fracture stimulation (frack) was performed on the well before the shut in, using a gelled fluid, across a 500 metre horizontal section in the deeper lower Palaeozoic shales. The well is the second of two in the region to be fracked.

The company says the suspension of activity on the well will have a twofold benefit: better weather conditions and fracture stimulation recovery at the well.

The company will perform further production testing in the spring of 2012, when it says weather conditions will be more favourable.

A statement from the company also says “that the well could benefit from being shut in for an extended period of several months to recover from the fracture stimulation and to enable the fracture treatment fluid, potentially obstructing the flow of natural gas, to dissipate.”

An analysis of the results of coring, wireline logging, production and other data is currently underway, with results expected in the first quarter of 2012.

“We have now concluded our 2011 drilling and testing programme for the Baltic Basin, which has achieved its objectives of completing two wells with horizontal sections and multistage fracks,” Chief Executive of 3Legs Peter Clutterbuck said.

“We have demonstrated that shale gas can be flowed in both wells and in different horizons, and we have gathered extensive amounts of new data with which to advance further our understanding of the production potential of the reservoir.”

Mr. Clutterbuck also said that the company expected an improvement in the levels of gas as operations continue.

“Although flow rates have been low, we expect to be able to further improve well productivity, as is often the case in other shale plays in the US at this stage of appraisal.

“Our primary focus now is on developing improvements in hydraulic fracture and completion design which will further enhance well production rates, in addition to considering the acquisition of new 2D and 3D seismic and the drilling of a number of new wells in the near term. This is critical in order to convert this very large gas in place volume into commercial reserves.

“The benefits of developing a domestic energy supply from a clean fuel such as natural gas are potentially very significant, particularly in the prevailing economic climate.”

Source: Natural Gas for Europe

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