May 01

Fracking Europe: A Tentative Shale-gas Win for British Energy Users, Who Need All The Help They Can Get.

By Curve hydraulic fracturing, natural gas in Europe, shale gas in Europe, Shale gas production No Comments »

The British government will allow shale-gas exploration to resume in northern England. Monday’s preliminary finding from the Department of Energy and Climate Change (DECC), to be finalized this summer, comes nearly a year after Lichfield-based Cuadrilla Resources suspended its hydraulic-fracturing activities near Blackpool. The finding could be the harbinger of some very good news for consumers in the U.K. and throughout Europe.

The U.K. government said that Cuadrilla Resources Ltd. should be allowed to proceed with shale gas exploration in the north of England, despite evidence showing the company’s operations caused two earth tremors last year. Alexis Flynn reports. Photo: Reuters

The DECC report confirms that Cuadrilla’s test-fracking likely caused two small tremors last year. But the report also said the company could proceed exploring the area if it follows a new set of expensive safety measures. Cuadrilla clearly thinks those measures are worth it: Initial estimates suggest that the land under exploration could hold up to 200 trillion cubic feet of natural gas, of which between 10% and 30% is likely recoverable. Even the 10% figure would more than triple Britain’s current proven reserves and could make the country a net exporter of gas.

An employee on the base of the drilling rig at Cuadrilla Resouces Ltd.’s shale gas exploration site in Singleton, U.K.

If Cuadrilla decides to proceed pending further tests, it would still need approval from the Lancashire County planning authorities, the national Environment Executive and the Health and Safety Executive before obtaining a final go-ahead from the DECC. Only then can it gain a permanent license and start producing gas commercially.

British energy users need all the help they can get. In March U.K. households paid between £9.60 to £11.19 ($15.36 and $17.88) per million BTUs for natural gas, compared to spot prices in the U.S. of about £1.25, or $2. American natural gas prices have plunged in the last decade as shale production has taken off. Britain and Europe could be on the brink of a similar energy revolution—or at least an end to chronic undersupply—if its governments don’t stand in the way.

On that point, the U.K. isn’t the only good-news story. Poland, which is keen to throw off the yoke of dependence on Russian fuel, continues to press forward with shale-gas exploration. Efforts from Greens in the European Parliament to ban or restrict fracking throughout the European Union have gone nowhere.

So far, only France (and Bulgaria) have bought into the anti-fracking hype and banned the practice. With French retail natural-gas prices at least 25% higher than in the U.K., cheaper domestic gas would be a particularly welcome reprieve for the French economy.

Source: The Wall Street Journal

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Apr 30

Poland – Factors to Watch on April 30

By Curve natural gas in Europe, Realm Energy, shale gas in Europe No Comments »

 

MONETARY POLICY

Poland will face increasing problems with maintaining economic growth in the long run, despite a relatively low level of real interest rates, Monetary Policy Council member Jerzy Hausner wrote in an article co-authored by former finance minister Miroslaw Gronicki.

DNB NORD

DnB Nord, the Polish arm of Norway’s biggest bank DNB , will announce a new strategy next week assuming an abandonment of the country’s retail segment and giving up on plans to launch services for small and medium-sized firms, Puls Biznesu wrote citing a source at the bank.

SHALE GAS

Poland’s shale gas reserves might amount to 1-3 billion cubic metres, a few times more than estimated in a state study from March, Dziennik Gazeta Prawna wrote in a comment to a report by Canada’s LNG Energy on estimates of resource volumes at its three licences in the Baltic basin.

SWEETER BID FOR EM&F

Czech private equity group Penta Investments and investment group Eastbridge raised their joint bid for Polish retailer Empik Media & Fashion (EM&F) on Friday, valuing the group at nearly 1.1 billion zlotys ($349 million).

Source: Reuters 

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Apr 27

Keep An Open Mind On Shale Gas Potential, Morningstar Tells EU

By Curve domestic oil and gas production, gas, hydraulic fracturing, natural gas, natural gas in Europe, shale gas in Europe No Comments »

As competing ideas continue to swirl around over which energy sources and projects Europe should prioritise, the US special envoy for Eurasian energy has urged the EU to seriously consider the potential of shale gas.

While environmental groups continue to raise concerns about the risks to water supply posed by extracting shale gas – a process known as hydraulic fracturing or ‘fracking’ – Ambassador Richard Morningstar called on policy makers not to rule it out until further investigating. “The EU should not let politicians hijack the precautionary principle” the way it did with genetically modified organisms (GMOs), the ambassador said during a conference on transatlantic energy security organised by Johns Hopkins University in Washington DC, on 26 April. “If you insist on a ‘zero risk’ principle, nothing will happen because you can’t prove a negative,” he argued.

Recent explorations indicate that there are significant shale gas deposits in Europe, including in Poland, Ukraine, France and Lithuania. While Morningstar was anxious for the EU not to reject shale gas out of hand as a solution to its energy shortages, another speaker, David Koranyi, an energy policy researcher at the Atlantic Council think tank, said “I think the overall approach of the European Commission is quite positive” on shale gas, and he did not expect “serious impediments for fracking in Europe”. Also addressing the conference was a representative of US oil and gas company Chevron, Gregory Hild, who insisted that fracking was “a proven and safe technology,” although he admitted “it is not risk-free”.

Rival Plans Overtake Nabucco

The ambassador also weighed in on a major hot button issue of the day: the questionable future of the EU-backed Nabucco gas pipeline project. While the US strongly supported the so-called Southern Corridor – the multiple pipeline projects aimed at bringing more non-Russian gas to Europe – “we do not think that Nabucco will be the initial pipeline,” he said. “We support any of the alternatives” to Nabucco as long as those pipelines were “expandable” and “supply gas to vulnerable countries,” he added.

In that context, he felt that Hungarian Prime Minister Viktor Orbán’s recent remarks indicating that Hungary may pull out of the Nabucco project was “non-news” as it had been clear “for the past year” that Nabucco would not be the initial pipeline. The three Southern Corridor projects are Nabucco, the Trans-Adriatic Pipeline and the Interconnector Turkey-Greece-Italy. Asked if he thought that Turkey, still a partner country in the Nabucco project, was undermining European energy security by proceeding with separate pipeline projects with Azerbaijan and Russia, he said “I am fully confident that Turkey will continue to be a reliable transit partner”. Though the source of Nabucco’s gas remains unclear, the transit countries are supposed to be Turkey, Bulgaria, Romania, Hungary and Austria.

Source: Europolitics

 

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Apr 24

Exclusive: UK Has Vast Shale Gas Reserves, Geologists Say

By Curve gas, shale gas in Europe, shale gas reserves No Comments »

UK offshore reserves of shale gas could exceed one thousand trillion cubic feet (tcf), compared to current rates of UK gas consumption of 3.5 tcf a year, or five times the latest estimate of onshore shale gas of 200 trillion cubic feet.

Reserves of 200 tcf would put the UK in the top 20 countries with the highest shale reserves, alongside Brazil, and 1,000 tcf would put Britain in the same league as estimates for China, the United States and Argentina, top dogs in global shale potential.

There are still no reliable figures available for the UK, and some experts doubt preliminary onshore reserve figures by private companies. Also only around 10 to 20 percent of total reserves are currently deemed recoverable.

But experts say that whatever the final recoverable reserve figure is, it is likely to be big enough to make Britain energy self-sufficient.

“There will be a lot more offshore shale gas and oil resources than onshore,” Nigel Smith, subsurface geologist and geophysicist at the British Geological Survey (BGS) said. UK offshore reserves could be five to 10 times as high as onshore, said.

On Tuesday, a UK government report backed the drilling of shale gas onshore after a temporary ban on the controversial extraction technique known as hydraulic fracturing, or fracking.

Britain is well placed for offshore development, with its North Sea oil and gas sector long established.

“We were pioneers in the North Sea with conventional oil and gas and the technology has gone around the world, so why not become one in the unconventional sector,” Smith said.

Offshore geological information is already available, and superior to onshore shale reserves data, he said.

He told the British parliament’s House of Commons shale gas energy and climate change committee that Britain could become energy self-sufficient if it went offshore with its unconventional oil and gas industry.

The parliamentary committee said that “we recommend that DECC encourage the development of the offshore shale gas industry in the UK, working with HM Treasury to explore the impacts of tax breaks to the sector.”

EUROPEAN OFFSHORE SHALE BOOM?

Petroleum engineers say that shale oil and gas reserves of vast potential stretch over different formations across Europe.

“We have potentially huge volumes present in the subsurface – the volumes are mind-blowingly big,” Melvyn Giles, global head of unconventional gas and light tight oil at Shell, said of Europe’s unconventional gas resources.

“The figures appear to suggest the shale resources are so large that the question is not how much is out there, but how much can be retrieved – how much can be economically accessed in an environmentally acceptable way,” he added.

Giles said that although the pace of shale oil and gas development was hugely faster in North America than elsewhere, interest in the industry was building up quickly elsewhere.

“The challenge is being taken on, and there comes a point when this industry will explode out of North America, and in my opinion it will happen when we start to get a few test results showing an economic development outside North America. Just one success will breed interest elsewhere and will help develop these industries outside North America,” he said.

Shale is soft, finely stratified sedimentary rock that formed from consolidated mud or clay.

Hydraulic fracturing is the process of creating small cracks, or fractures, in underground rock formations as much as 7,700 meters below ground level to extract gas (and oil) from shale.

Scientists have known for years that shale and other common forms of rock in Europe held hydrocarbons, but until recently they were ignored as either insignificant or uneconomic.

Energy services company Schlumberger said in a research report that there are large shale gas and oil reserves in the North Sea – along the German, Dutch and Danish coasts – as well as in the Baltic Basin.

Geologists at other leading energy companies spoke on condition of anonymity due to the sensitive nature of the dramatically higher estimates, but a consensus of optimism about potential European reserves has grown in the hard-headed commercial sector.

Much of the development in Europe may focus offshore after onshore exploration hit setbacks when France and Bulgaria banned exploration over concerns about ground water pollution. Poland, previously thought to be a European leader, recently slashed its reserves estimates by 90 percent.

An offshore future would avoid many of the legal and regulatory challenges that the industry faces in Europe.

Unlike in the United States, where mineral exploration rights are with the private property holder, most European law gives mineral exploitation rights to governments, which provides a serious obstacle to speedy development of onshore shale.

Legal procedures, bureaucracy and haggling over resource valuations can delay exploration and production indefinitely. In France, political opposition to fracking has brought a stop to development of the Paris shale basin.

Source: Reuters

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Apr 18

Britain May Become Major Global Shale Gas Producer, Alongside China And U.S.

By Curve shale gas in Europe No Comments »

 

The United Kingdom may have enough offshore shale gas to propel it into the top tier of global producers, making the country energy self-reliant, analysts have predicted.

Reserves of the hard to extract, “unconventional” gas deposits could exceed 1,000 trillion cubic feet, experts now believe, ranking the UK alongside China, the U.S. and Argentina, according to Reuters.

The news comes as a UK government report on Tuesday backed the exploration of shale gas using the controversial hydraulic fracturing, or “fracking,” drilling method blamed for two small earthquakes in Britain last year.

“There will be a lot more offshore shale gas and oil resources than onshore,” Nigel Smith, subsurface geologist and geophysicist at the British Geological Survey, told Reuters.

“We were pioneers in the North Sea with conventional oil and gas, and the technology has gone around the world, so why not become one in the unconventional sector,” Smith said.

He added that UK offshore reserves could be five to 10 times as high as those found onshore, enabling the UK to become energy self-sufficient.

Experts have cautioned, however, that whatever the final reserve figure is, only around 10 to 20 percent will actually be recoverable.

The use of fracking to extract shale gas is an extremely expensive and relatively new technology, pioneered in the United States and Canada over the last 20 years.

Fracking uses explosives and vast quantities of heavy “mud’ — a mixture of chemicals, dense material such as ceramic and water — to open up cracks in reservoir rocks, allowing trapped gas to escape through an oil well and reach the surface.

It has been blamed for contaminating water supplies and causing earthquakes, and it has been banned in parts of the U.S. and Canada pending further investigation.

The practice has also recently been banned in France and Bulgaria.

Despite the setbacks, engineers say Europe is poised to uncover vast reserves of shale gas that stretch across the continent.

“We have potentially huge volumes present in the subsurface — the volumes are mind-blowingly big,” Melvyn Giles, global head of unconventional gas and light tight oil at Shell, told Reuters.

“The figures appear to suggest the shale resources are so large that the question is not how much is out there, but how much can be retrieved — how much can be economically accessed in an environmentally acceptable way,” he added.

Source: Reuters via Nasdaq

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Apr 18

Shale Gas Fracking Gets Green Light in Britain

By Curve shale gas in Europe No Comments »

 

A UK government report on Tuesday backed the exploration of shale gas, which has transformed the U.S. energy market, nearly one year after temporarily banning the drilling method because it had triggered two small earthquakes in Britain.

An expert report commissioned by the government said it was safe to resume fracking, in which pressurised water and chemicals are pumped underground to open shale rocks and release trapped gas, but with tighter rules on seismic monitoring and drilling surveys.

“The risk of seismic activity associated with hydraulic fracking operations is small, and the probability of damage is extremely small. We suggest fracking can continue under our recommendations,” one of the report’s authors, the British Geological Society’s Brian Baptie, said at a briefing.

Activists on both sides of the Atlantic have lobbied politicians to ban hydraulic fracturing also on environmental concerns, including the dangers of pollution of ground water and leakage of gas into the atmosphere. The report did not address those concerns.

The energy ministry is inviting public comment on the report’s findings over the next six weeks, after which it will issue its final ruling on the future of UK shale gas exploration.

The experts published their findings after reviewing a series of post-earthquake studies published by Cuadrilla Resources, a UK firm that was forced to halt operations near Blackpool in northwest England after fracking triggered tremors in May 2011.

They also recommended the use of a “traffic light” control system, in which operations are suspended if a red light indicates seismic activity at a threshold of 0.5 or above, well below a level that could cause structural damage on the surface.

The tremors measured near Blackpool last year reached a level of around 2 .

UK engineers welcomed the report’s safety recommendations, and the “traffic light” warning system in particular.

“These proposed precautions are a good example of how to help mitigate the risk of any damage caused by seismic activity as a result of shale gas activity,” Tim Fox, head of energy and environment at the Institution of Mechanical Engineers, said in a statement.

While the experts agreed with Cuadrilla’s studies as a whole, they also said there was not enough data to confirm the company’s claim that it was unlikely similar earthquakes would recur.

Environmental group Greenpeace said the support for fracking to go ahead was “bad news”, saying hydraulic fracturing could pose a threat to efforts to diversify away from fossil fuels.

“This would … be a major blow for the British renewable energy industry, which would see investment hijacked by a new dash for gas,” Joss Garman, Greenpeace’s senior energy campaigner, said.

France, which has some of Europe’s largest shale gas reserves, last year banned the use of fracking on worries about environmental damage.

However, shale gas exploration is seen by some as a positive force in the battle against climate change since the gas releases less carbon into the atmosphere than coal when used to produce electricity.

“Provided safety standards are observed, shale gas could unlock significant new infrastructure investments, help meet our carbon reduction goals and create many new jobs around the UK,” a representative of the Confederation of British Industry said in response to the government’s fracking report.

In the UK, Cuadrilla has said its site near Blackpool had 200 trillion cubic feet of gas in place, enough to cover UK demand for generations, although experts have cast doubt on the claims.

In the United States the exploration of shale gas has pushed gas prices to 10-year lows, and companies such as Cheniere Energy are gearing up to export the excess fuel.

British gas prices would also come under increasing pressure if UK shale gas exploration were to take off, a representative of British energy supplier npower wrote on the company’s energy blog.

Source: Reuters

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Apr 18

Shale Gas Fracking Risks Exaggerated, Insurance Broker Claims

By Curve shale gas, shale gas in Europe No Comments »

 

A leading City firm has defended the controversial practice of fracking for shale gas on the day the government received advice to give it the green light in Britain.

“Shale gas is here to stay,” said Neil Smith, chief operating officer of global energy at insurance brokerage Willis. “It’s a very cheap form of extraction.”

Thousands of new shale gas wells could be drilled across the UK as ministers are expected to accept the advice of the first official government report into fracking. It came despite concerns around the safety of fracking in areas of known seismic activity, such as Lancashire where two wells have caused earthquakes which have damaged the integrity of at least one of them.

Friends of the Earth called for a full scientific assessment of all the impacts of fracking. Tony Juniper, the former director of the green group, said the environmental impact of fracking was “comparable to coal.”

An energy report from Willis published on Tuesday looked at the risks posed by fracking – from groundwater and soil contamination to earthquakes – and concluded that as long as shale gas companies adhere to industry best practice, the risks can be significantly reduced.

The casing of the well is crucial, the report said. A well drilled simply with surface and production casing could indeed allow drilling fluid and gas to seep into the water supply, it admitted. But best industry practice is to drill a well with intermediate casing 4,000 feet deep into the layer of rock beneath which lie the vast majority of gas deposits.

“‘A Macondo in the shale is a highly unlikely scenario,” the report said, referring to the BP oil spill in the Gulf of Mexico. The report noted that fracking has been around since the 1950s.

Smith said: “The issues are of a political nature and a lot are born out of ignorance of what the operations are.” He expects that with more information, and “greater insistence on best practice being adopted” – possibly through legislation – the concerns around fracking will diminish over time.

The US Environmental Protection Agency, however, found in December that fracking could be to blame for groundwater pollution.

Willis has drawn up a checklist of questions to ask when dealing with shale gas. “In general the market seems to be happy to write this business,” said Robin Somerville, global communications director at Willis.

Mark Miller, the chief executive of Cuadrilla Resources, the company behind the Lancashire wells, which caused earthquakes of 2.3 magnitude, was cited in the Willis report as saying: “How far is it between a 2.3 and a 7.5, which knocks down buildings? It’s literally millions and millions of times different.”

Dominick Hoare of Watkins Syndicate at the Lloyd’s of London insurance market said the firm, which is managed by Munich Re, is heavily involved in insuring US shale exploration and production. “With a proper assessment it’s a good risk to assume,” he said.

Matt Yeldham, the head of casualty at Aegis’ marine and offshore liability division, echoed Hoare’s comments. “Provided fracking is conducted in an appropriate fashion, it would appear on the whole to present a reasonable risk profile.” But he added: “Underwriters are not there to cover long-term health hazard and other latent issues.”

The coverage provided and the premium charged depends on the nature and extent of the underwriting information, Willis said. This is especially the case in the environmental impairment liability arena, which offers protection for gradual pollution liability risks associated with hydraulic fracturing.

The Willis report also showed that 2011 was the worst ever year for non-windstorm related losses for the energy market, due to unusually large losses in Canadian oil sands and floating offshore platforms. There were close to $9bn (£5.64bn) of insured and uninsured total losses.

Source: The Guardian

Apr 11

U.S. Offers Shale Gas Advice in Warsaw

By Curve shale gas in Europe No Comments »

 

Unconventional natural gas reserves could have a substantial economic benefit if developed responsibly, a U.S. official said in Poland.

Poland has some of the richest deposits of unconventional gas, including shale, among European countries.

Robert Cekuta, U.S. deputy assistant secretary for energy and business affairs, told a delegation in Warsaw that Washington was convinced unconventional and shale gas reserves meant good things for the global energy outlook.

“Our sense is that there needs to be informed dialogue if we are to get out ahead of potential problems in unconventional gas development,” he said in a statement.

Warsaw estimates it holds as much as 3.3 trillion cubic feet of natural gas, lower than the 187 trillion cubic feet estimated by the U.S. Energy Information Administration.

The country, however, said shale gas analysis carried out in conjunction with the U.S. Geological Survey confirmed the country remains in position to become a major energy producer and that more drilling will likely reveal greater reserves.

“However, we also need to bear in mind the important reality that the development of unconventional natural gas, like the development or realization of other industrial or extractive processes, needs to be done carefully with due attention to potential downsides,” said Cekuta.

Source: UPI

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Mar 15

Poland May Start Shale Gas Production in 2014

By Curve Poland, shale gas, shale gas in Europe No Comments »

Poland’s treasury minister said Thursday that the country may start producing shale gas for commercial use in 2014, a move that should help the country limit its reliance on neighbouring Russia for a large chunk of its energy needs.

Mikolaj Budzanowski said that commercial production of up to 1 billion cubic meters per year could start in late 2014. He said the deposits could be up to 2 trillion cubic meters, enough to add to Poland’s energy mix for decades.

Poland is seeking to diversify its energy sources to cut dependence on Russian imports and its shale gas deposits are a major element in the plan. Nuclear energy and renewable sources are also to be added to the energy mix.

Poland’s annual gas consumption is 14 billion cubic meters and 70 percent of that comes from Russia, at prices dictated by its Gazprom monopoly.

The nation’s reserves are still being estimated and a state assessment based on geological research done in the 20th century is to be presented on Wednesday. It is expected to be well below the 5.3 trillion cubic meters estimated by the U.S. Energy Information Administration.

Some 20 international companies – many of them American – have obtained licenses to explore for shale gas and some have done some test drilling.

The technology of extracting gas from shale rock through hydraulic fracturing was developed in the United States. The move gave the U.S. a level of independence in the gas sector and led to sharply lower gas prices.

Source: The Seattle Times

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Jan 26

Polish Gas Giant Makes Shale Deals

By Curve shale gas in Europe No Comments »

 

State-owned oil and gas company PGNIG will work with other state-owned energy producers PGE, Tauron and copper miner KGHM in shale gas exploration in Poland.

The company said it had signed three letters of intent to cooperate with the three domestic heavyweights.

The government said recently it wants state-owned companies to make a ‘strong’ contribution to developing domestic shale gas.

Shale gas could start production in 2014, according to the government.

Poland has the largest deposits in Europe estimated at 5.3 trillion cubic metres and enough to meet domestic gas needs for up to 200 years, according to some projections.

At present Poland relies for its energy supplies mainly from Russia and environmentally unfriendly but domestically mined coal.

The government is becoming increasingly interested in maximimising domestic benefits from shale gas production, hence PGNiG’s and the country’s main oil refiner PKN Orlen’s plans to ramp up cooperation with local players.

The move is important in that it indicates a shift towards greater interlinkage of domestic resources, and possibly away from a reliance on foreign majors.

PGNiG holds 15 such of about 100 shale gas exploration licenses, with global majors such as Chevron and Exxon Mobil also eager to get in on the act.

The three agreements are for exploration in the Wejherowo acreage in northern Poland.

Wejherowo is one of 15 concessions held by PGNiG and believed to be one of the largest, although exact figures have not been released, if they are known at all at this stage.

The three domestic power producers will reportedly be responsible for infrastructure works above ground.

The total investment will be somewhere between 400 million and 500 million zlotys, PGNiG said.

Tauron said it plans to build a gas-fired power plant and plans to work with PGNiG on a 600 megawatt plant at Stalowa Wola. It also plans to build an 800 megawatt plant with KGHM, both fired by shale gas.

Source: theNews.PL

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