Mar 05

Shale Gas the future for Poland?

By ckeddy shale gas, shale gas in Europe 2 Comments »

US know-how could quicken development of shale-gas extraction technologies in Europe, while Poland’s hopes for the technology rise Europe can learn much from the US about how to use its shale-gas sources, according to Halliburton’s ( NYSE: HAL) expert on unconventional resources.

Speaking at the recent  III CE Gas Summit 2010 about whether US shale-gas development could be cloned in Europe, Reinhard Pongratz said that using US know-how could significantly shorten Europe’s learning curve. “If we are more aggressive in trying to deliver US technology to Europe, the development phase can be shorter,” he said. Not all technologies can be copied, but Europe can make much use of the knowledge, he said.

Mr Pongratz was also optimistic about the price of shale gas. “If [extracting shale-gas] can be done economically in the US, we can do it here,” he said.

In early 2009, Realm Energy International Corporation (TSX.V: RLM) began collaborating with Halliburton Consulting on a global evaluation of shale plays with potential for natural gas and oil production with an initial focus on Europe.

The idea of extracting shale gas gained momentum in Poland earlier this year, when Wood MacKenzie experts estimated that the country could be sitting on 1,400 billion cubic meters of shale gas. Other estimates put the amount at as much as 3,000 billion cubic meters.

Poland consumes around 14 billion cubic meters of natural gas per year. If the Wood MacKenzie estimations are correct, shale gas extraction could bring the country gas independence for 100 years, at current consumption rates.

Currently, Poland’s annual gas production from domestic sources equals around 4.1 billion cubic meters. About 70 percent of Poland’s gas for consumption is imported.

“We will know how much shale gas there is in Poland in about four years, when the licenses granted to companies looking for this type of gas in Poland will begin to expire,” said Henryk Jezierski, deputy environment minister and chief national geologist.

The first test drills will begin this year and Mr Jezierski estimates that commercial exploitation of shale gas sources will be possible in 10 to 15 years. In the US, shale gas currently constitutes about 10 percent of gas production, but is expected to reach 50 percent by 2020.

Source: Natural Gas for Europe

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Mar 02

Unconvential Gas Conference to be held in London

By ckeddy shale gas in Europe No Comments »

The SMi Group will be presenting Unconventional Gas 2010 on March 15th and 16th in London, England.

Europe’s leading Unconventional Gas conference brings together industry experts and project operators to discuss the drivers, constraints and opportunities for non-conventional operations.

Unconventional gas resources are expected to steer the future of the energy sector in the coming years.  Held at London’s Marriott Hotel Regents Park, SMi’s 3rd Unconventional Gas  conference will be taking a practical look at unconventional gas production challenges, where the pressure is on to reduce costs and still deliver positive results.

Key Topics Include:
•    Common challenges of unconventional gas reservoirs
•    Shale exploration for new entrants in Europe
•    Improving returns on tight gas

Keynote speakers and presenters include representatives of BG Group, Statoil ASA,  Royal Dutch Shell, GFZ German Research Centre for Geosciences, and the British Geological Society and Realm Energy International Corp.

SMi is also presenting two associated events at the same venue on March 17th -  Data Acquisition and Exploration Strategies in Unconventional Gas: Enterprise Value Assessment and Critical Elements of Gas Shale Reservoir Characterization.

Source: SMi

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Feb 26

“North American players looking at shale gas opportunities in Europe”: The Canadian Press

By Trevor J. Murphy shale gas in Europe No Comments »

The same technology that unleashed a natural gas bonanza in North America over the past decade has the potential to transform the European energy industry.

“A year or two from now, the activity over in Europe is going to be absolutely frenetic, and so you’ve got to get in there early,” said Craig Steinke, executive chairman of junior explorer Realm Energy International (TSXV:RLM).

Realm, which has offices in Vancouver and London, is involved in eight different shale basins in seven European countries, though it doesn’t disclose specifics for competitive reasons.

The likes of ExxonMobil Corp. (NYSE:XOM), Royal Dutch Shell PLC (NYSE:RDS), ConocoPhillips (NYSE:COP) and Chevron Corp. (NYSE:CVN) have begun to grab stakes in shale formations in Poland, Germany, Hungary, Ukraine and other European countries.

Some may wonder why North American companies would look for shale opportunities across the Atlantic when there are plenty of promising plays in their own backyard.

“In North America as a whole, the lands have been bid up to significantly high prices,” said Steinke.

“If you don’t have the land, you’re on the outside looking in.”

In Europe, energy companies can negotiate directly with government authorities to acquire large, contiguous tracts of land – though it may not be that way for long if activity picks up, said Steinke.

“Realm’s goal is to be an early mover on acquiring the lands. It’s going to put the company in a very advantageous position as the momentum builds,” he said.

“The opportunity won’t be there forever, that’s for certain.”

Shale is a ubiquitous type of sedimentary rock that is as tough as concrete. Freeing natural gas molecules from within the rock is no easy feat as it requires enormous amounts of water, chemicals, sand and, above all, technical know-how.

North America’s shale gas industry has its roots in the Barnett formation in north-central Texas, where energy companies began honing their techniques about 10 years ago.

Since then, horizontal drilling and multi-stage fracturing have spread to the Marcellus play in New York and Pennsylvania, the Haynesville play in Texas and Louisiana and the Horn River and Montney plays in northeastern British Columbia.

Realm collaborates with U.S. energy services giant Halliburton Co. (NYSE:HAL), which has been active in virtually all of North America’s shale gas plays.

Halliburton has been helping Realm parlay expertise it garnered from North American shale gas plays into European ones, which share many of the same characteristics.

European shale gas is also on the radar of Talisman Energy Inc. (TSX:TLM), already a big landholder in the Marcellus and Montney formations.

“We haven’t done any deals yet, but we are looking hard and depending on how things go, we could see an entry into an international opportunity,” Richard Herbert, Talisman’s executive vice-president of exploration, said on a conference call with analysts and reporters earlier this month.

Another reason European shale gas could be attractive is pricing. North America is currently dealing with a glut situation, in which supply is outpacing demand.

European countries are also eager to stop relying on natural gas imports from Russia, which has had a history of suddenly shutting off supplies amid disputes with its neighbours.

It’s going to take several years of work before European shale gas is commercially viable, said Michael Dawson, president of the Canadian Society for Unconventional Natural Gas.

Energy companies already know all the ins-and-outs of North America’s geology because so much conventional oil and gas drilling has taken place there. That’s not the case in Europe, he said.

There also isn’t much there in the way of specialized equipment needed to drill the high-tech wells. So all of that has to be built or transported from elsewhere.

“I think there has to be a realization that while everybody seems to be getting on the bandwagon with shale gas right now, it just doesn’t happen overnight,” said Dawson.

“It’s not a slam dunk that the shale gas potential in Europe is going to be successful.”

- By Lauren Krugel for The Canadian Press

SOURCE:
MSN.ca: “North American players looking at shale gas opportunities in Europe”

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Feb 16

Oil Giants Head to Europe for Shale Gas

By Trevor J. Murphy shale gas in Europe No Comments »

Oil giants and explorers are jumping into the race to search for shale gas potential in Europe and commit to what analysts at Bloomberg are calling a “buoyant market.”

JPMorgan Chase & Co reported this week that Exxon Mobil has secured land in Europe, acquiring shale plays in Germany and Hungary, and has also applied for permits in Poland. Other companies like ConocoPhillips and Chevron are also exploring options in Poland, while Royal Dutch Shell has garnered contracts in Sweden. Other companies such as Vancouver-based Realm Energy have also made recent announcements of their intent to explore Europe’s shale potential (read “Realm Energy Makes Aggressive Play for European Shale Gas Deposits”).

Mark Greenwood, a Sydney-based analyst with JPMorgan, says the success of the US shale plays is driving companies overseas.

“A land-grab has occurred in Europe over the last two years with majors such as Exxon, Conoco, Chevron and Statoil ASA all participating, not willing to miss out as they did in the U.S.,” he says.

The International Energy Agency said in November the world may have an “acute glut” of gas in the next few years because production of so-called unconventional fuel, which includes shale gas, is set to rise 71 percent between 2007 and 2030.

Over the past three years, the development of technology to exploit shale gas and the boom in US shale success has led to major mergers and acquisitions between oil and gas companies, says Bloomberg.

A report by Wood Mackenzie Consultants Ltd. in the UK said overseas investment by national oil companies doubled from 2008 levels to $26 billion and accounted for 44 percent of spending outside North America.

Another analysis of shale gas done by Allen Brooks of Parks, Paton, Hoepfl & Brown anticipates that this unconventional gas is “likely to present a challenge for the market in 2010.”

SOURCES:
Bloomberg: “Exxon, Chevron ‘Land Grab’ for Europe Shale Gas, JPMorgan says”
Business Week: “Mergers in Oil, Gas Seen ‘Buoyant’ in 2010 by Wood Mackenzie”
Gerson Lehrman Group: “Excellent Analysis of Gas Shales Capabilities; Benefits and Problems for 2010”

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Feb 10

Environmentalist should take heart in shale

By ckeddy natural gas, natural gas in Europe, natural gas in the USA, shale gas, shale gas in Europe No Comments »

The last few months may have been disheartening to the environmental movement — a weak outcome from Copenhagen, broader attention to “climategate” and then the addition of “Himalayagate.”

But all this clamor may have some forgetting the better environmental story of late, notes Michael Economides at Energy (Geo)-Politics:

” This is the triumphant second coming of the supply of clean, far less polluting and far lower-emitting natural gas.

The International Energy Agency in Paris last November released its world outlook report http://www.worldenergyoutlook.org/. While some found controversy in the oil forecasts, it was the gas that shocked even the experts: “The long-term global recoverable gas resource base is estimated at more than 850 tcm [trillion cubic meters].” That translates to just over 30,000 trillion cubic feet (Tcf) of gas. That’s more than double the 2008 IEA estimate of 400 tcm.

The difference comes from unconventional gas headed by shale gas, arguably the shiniest recent success in the petroleum industry. Deploying technology that incorporates the latest in drilling and steering long horizontal wells and the spacing and placing of many large hydraulic fracturing treatments, made a mockery of peak gas theories. This is even more dramatic than what the massive offshore oil discoveries in Brazil and the forecasts of Iraqi oil production reaching 11 million barrels per day in ten years have dealt on peak oil alarmism. ”

Source: NewsWatch Energy

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Feb 09

Realm Negotiating on Additional European Shale Gas Play

By ckeddy natural gas in Europe, shale gas in Europe No Comments »

Further to the January 26, 2010 news release, Realm Energy International Corporation (“Realm Energy”) (TSX-V:RLM) (www.realmenergy.ca) is pleased to announce negotiations on an additional European shale gas play.

Realm Energy recently entered into direct and exclusive negotiations for petroleum and natural gas rights with a European Government in which the Company has identified a potential large-scale shale gas opportunity.  These lands cover an areal extent of over 182,000 hectares or 450,000 + acres. Consistent with most European countries, consideration for the award of these lands largely comprises a prudent work program over the life of the concessions.  Management is working toward reaching final agreement on these lands in the near future, at which time more detailed information will be disclosed.

Realm Energy is collaborating with Halliburton Consulting (NYSE: HAL) in aggressively evaluating high potential shale deposits throughout Europe and select emerging countries. Founded in 1919, Halliburton is one of the world’s largest providers of products and services to the energy industry. With more than 50,000 employees in approximately 70 countries, the company serves the upstream oil and gas industry throughout the life cycle of the reservoir-from locating hydrocarbons and managing geological data, to drilling and formation evaluation, well construction and completion, and optimizing production through the life of the field.

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Feb 09

Unconventional gas gaining momentum worldwide

By Trevor J. Murphy shale gas in Europe No Comments »

Developments in the US and Australian unconventional gas sectors have grabbed the headline in recent years, but new regions are about to step into the limelight

Unconventional gas has driven some of the biggest energy news stories in North America and Australia in recent years as production ramps up and companies look to build positions in this long-term growth play. There remain many growth opportunities in these regions and, despite the slowdown driven by the market turmoil over the past 18 months, unconventional gas remains an attractive long-term investment. Meanwhile, outside North America and Australia, momentum is also building and these new regions could create the headlines of the future.

The dramatic rise in shale-gas production in the US, following tight-gas and coal-bed methane (CBM) production growth, has demonstrated the scale of the effect unconventional gas can have on even the very largest gas market. Unconventional gas production in the US Lower 48 has risen from 33% of the total output in 2000 to 59% today, and this is expected to rise to 73% in 2020. North America now has the potential to be essentially self-sufficient in gas over the next decade or more, which not only has significant implications for the US’ LNG-import requirements, but will also have a knock-on affect on other gas markets.

The effect of unconventional gas on the market in eastern Australian has been just as dramatic and Queensland’s prolific coal seams have proved a reliable source of gas even at prices below $3/’000 cubic feet. As a result, long-held plans for pipeline imports from Papua New Guinea have been cancelled and projects to export large volumes of CBM as LNG are moving forward – 10 or more LNG trains are under consideration.

The promise of large resource volumes and long-term growth is an attractive mix. Companies with no, or limited, previous exposure to unconventional gas, such as BG, Petronas and StatoilHydro, have built substantial positions in a relatively short period of time. Additionally, others such as Shell, ConocoPhillips and BP have added to their positions over the last 18 months.

For companies looking to gain a position, the upheaval in financial markets is providing an opportunity, as the independents that have been the engine of unconventional-gas growth seek partners to help fund their plans. As a result, new partnerships are emerging such as StatoilHydro with Chesapeake and Eni with QuickSilver in the US, and Shell with Arrow in Australia.

There remains much to do in North America and eastern Australia, but attention has also turned to the next areas for potential unconventional gas production. Positive long-term gas-market conditions are driving interest, most notably in Europe, India, China and southeast Asia. Companies from the very largest down to new start-ups are hunting for the next Barnett Shale, Pinedale Anticline or San Juan basin. Areas with good potential for tight gas, shale gas and CBM have been identified across these regions, but many questions still remain including:

• Where are the sub-surface conditions right for commercial production?
• How do you gain access to the land, both in terms of licensing and then physical access?
• Can you access suitable low-cost equipment and resources to run an efficient, long-term drilling campaign over a wide area?
• Are the fiscal terms sufficiently attractive to support commercial development?
• Are there pipelines to deliver the gas to market, and can they be accessed?
• What effect will environmental and regulatory restrictions have? and
• Will the gas price sustain development?
Many of these questions are applicable to conventional gas production, but they become even more important for unconventional gas developments where, for example:
• More drill sites are required;
• Continuous drilling is needed to offset well decline rates;
• Land may be held by incumbent companies, or split between many land owners;
• No suitable supply chain may exist;
• Higher costs mean economics are marginal; or
• The additional environmental challenges, such as water management and surface footprint, can be challenging.

Despite the challenges, unconventional gas production will take off in new areas – the preliminary economics look attractive for many of these emerging plays, with rates of return above 10%. However, there remains much uncertainty as little or no pilot testing has been carried out on them and more work is required by operators to test their viability.

Many of the above ground issues are only just being encountered in these new areas, but in some regions they are already stalling developments. In India, for example, initial progress with licensing was rapid, with three CBM licensing rounds having been completed and a fourth on the way. But progress has been slowed by local demands and gaining access to land. By contrast, initial progress in China was very slow as companies entered protracted negotiations with China United Coalbed Methane, although momentum is now building and the government remains extremely supportive through both targeted regulation and fiscal terms.

In Europe, licences are being acquired across the continent and pilot testing is starting to progress. Issues with accessing land are yet to have a large effect as operations are at a small scale. But if developments progress, this will be a significant challenge because of the strong environmental lobby; an innate conservatism of local communities towards new developments; and diverse land ownership. The limited supply chain in Europe is also being tested even at this early stage and new equipment and expertise will need to develop.

While these issues vary on a play-by-play basis, understanding the above ground risks becomes essential for assessing the real opportunity that unconventional gas presents. As a result, companies need a solid understanding of these risks if they are to successfully drive growth.

As a result of the many uncertainties, it is too early to forecast exactly when unconventional gas will take off in these new areas. But unconventional gas is unlikely to have a substantial effect on regional energy markets outside North America and eastern Australia for more than five years. From the middle of the next decade, however, production in China could begin to make an important impact, particularly if strong government support remains in-place.

In Europe, India and southeast Asia, unconventional gas is unlikely to have a significant effect on regional energy markets for the next decade, but local supplies could ramp up over this period. Beyond this, volumes could increase and play an important role in the supply mix. And other areas should not be overlooked: possible plays are being examined, and in some cases progressed, in Latin America, southern and northern Africa, and the Middle East, for example.

In these new areas, important milestones will signal progress. Initially, these include: successful pilot projects with repeatable flow rates; the announcement of the first commercial projects, however small; continued licensing; and a flow of new pilot projects. After the initial phase, companies will need to demonstrate that they can scale-up developments in a play and this means overcoming land access, supply chain and environmental issues on a much larger scale. For this to occur, continued government support will be essential and positive market fundamentals must remain in place.

If these milestones are met across Asia and Europe, then it could be these regions generating the unconventional-gas headlines of the future.

By Rhodri Thomas for Petroleum Economist

SOURCE:
Petroleum Economist: “Unconventional gas gaining momentum worldwide”

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Feb 05

Bloomberg Video: Shale Gas Maybe ‘Total Game Changer’ for Energy Market

By ckeddy energy independence, natural gas in Europe, shale gas, shale gas in Europe No Comments »

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Feb 05

“Shale gas could alter European market dynamics, as demand rebounds” – Petroleum Economist

By Trevor J. Murphy shale gas in Europe No Comments »

E.On expects gas-demand growth in Europe this year, but shale-gas development could fundamentally alter the continent’s market, leaving Gazprom out in the cold

Unconventional gas is shaking up the energy world. That much is true at the corporate level, at least. ExxonMobil’s December take-over of XTO, a big shale-gas player, was the most obvious sign of that. Other independent producers will probably also be gobbled up soon.

But at what point will the world’s conventional gas producers, such as Russia’s Gazprom, begin to worry that their business models are under threat? The shale-gas optimists, such as BP boss Tony Hayward, talk of a “revolution” under way in the energy sector because of the new unconventional resources that are now considered exploitable (including coal-bed methane, which is already causing excitement in Australia, and so-called tight gas).

But there are sceptics. If it ever began developing its own potentially huge unconventional resource, Russia would remain the world’s leading gas producer. Yet Gazprom is cautious. Alexander Medvedev, the head of the company’s export division, told Petroleum Economist in October that many “myths” surrounded shale gas. It would remain expensive to develop, he said, because of the number of wells needed to produce the gas. Stop drilling, he added, and a field’s productivity drops almost instantly.

But as one executive from a shale-gas operator recently told Petroleum Economist, “Gazprom would say that, wouldn’t it?” After all, should the nascent shale-gas drilling in Europe prove half as fruitful as it has in North America, the energy-security anxieties among the continent’s consuming nations will quickly dissipate.

It was only a few years ago that US natural gas production was considered to have peaked and its reserves were thought to be in decline. Developers planned dozens of liquefied natural gas (LNG) receiving terminals to meet the forecast import requirement. The handful that came on line are now scarcely needed – and stand as testaments to the power of technology (in this case the advent of horizontal drilling and hydraulic fracturing) to change markets and the inability of the corporate world to predict “black swan” events.

Gazprom’s export-oriented strategy has relied on its partners in Europe making a cold calculation about their need to co-operate – or risk antagonising the supplier of their most important fuel. It works, so long as Europeans continue to perceive that Russia will remain their dominant supplier of natural gas. Even Gazprom’s difficulties in financing expensive upstream developments support this: give us long-term contracts, the company can argue, because they are vital to future supplies.

For the time being, there is little evidence to question this model, notwithstanding a drop in EU demand last year, because although unconventional gas has changed the dynamics of the North American energy market, drillers in Europe have yet to unearth the same riches in the continent. The earliest results of exploration in countries such as Poland and Austria, where the resource could be large, are only likely later this year.

So the continent’s importers can’t yet start looking beyond the existing paradigm, even if analysts are predicting a global gas glut. Furthermore, the dip in European natural gas demand brought by the recession could be ending. A spokesman for Germany’s E.On says the company does not foresee the “substantial pressure” on supply markets persisting.

“At present the European gas industry is undoubtedly in an oversupply situation,” he said. “This constellation is likely to shape markets for some time to come. However, we do not assume that this high liquidity will last permanently.” Indeed, E.On says improved prospects for economic growth in Europe and Germany mean gas consumption could grow this year. “It seems we have come out of the trough and it will probably not take too long until the present low level of demand is completely overcome.”

In theory, that would put Gazprom and other suppliers back in the driving seat. It would also re-establish the logic for Europe’s drive to build new infrastructure to meet its rising demand. This week, the US special envoy for Eurasian energy, Richard Morningstar, reiterated his government’s support for the Nabucco pipeline, while also pointedly mentioning that “questions have been raised” about Russia’s two rival proposals, South Stream and Nord Stream. Yet Europe needs more gas import infrastructure, he said, to guarantee its security of supply.

Yet all of this sounds dangerously similar to the debate in the US a few years ago about how to ensure more liquidity and greater gas supplies to its market. Yet that was all before the shale “revolution”.

Will things change in Europe? Greg Pytel, an analyst from the Sobieski Institute, a Polish think tank, and the UK’s Royal Institute of International Affairs, predicts that shale-gas development in Europe could render Nord Stream a white elephant. South Stream, he says, “has no prospects”, while Nabucco would make sense “in the other direction” as a “reversible pipeline balancing European gas distribution”.

“A lot of supply from Russia will be replaced by local shale gas production driven by multinationals,” claims Pytel. In the longer term, output from Gazprom projects such as the Shtokman gasfield in the Barents Sea could be destined for the Chinese market, not the European one.

All of this is speculative, because no one has cracked shale gas in Europe yet. But also speculative were the independent firms in the US that blasted open the market with their hydraulic fracturing. Unconventional gas is now drawing the majors to the European upstream. As the battleground for the gas wars of recent years, Europe offers a great prize for shale-gas developers. And if demand in the continent is recovering, as E.On predicts, there are sound financial reasons for the developers to exploit the shale, too.

from Petroleum Econonomist – February 4, 2010

SOURCE:
Petroleum Economist: “Shale gas could alter European market dynamics, as demand rebounds”

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Feb 01

Realm Energy Makes Aggressive Play for European Shale Gas Deposits

By ckeddy natural gas, natural gas in Europe, shale gas, shale gas in Europe No Comments »

Realm Energy has applied for oil and gas rights in multiple countries throughout Continental Europe. The applications were filed following a rigorous evaluation of high potential shale deposits throughout the continent and, if successful, will permit Realm Energy to bring North American technological advancements in shale gas and oil extraction to Europe.

Realm Energy is now concentrating on eight discrete sedimentary basins in seven European countries and submitted applications for oil and gas rights that collectively extend over 1.5 million acres of land. Realm Energy received confirmation of receipt from government bodies that its applications are under active consideration.

“After months of rigorous evaluation, confirmation that our applications are under active consideration is an important step toward our goal of acquiring oil and gas rights over significant lands containing high-potential shale formations,” said Craig Steinke, Executive Chairman. “We stand behind our extensive evaluation process and strongly believe that Realm Energy is positioned to maximize the possibility of favorable outcomes from these applications.”

SOURCE:  Scandinavian Oil-Gas Magazine

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