Jun 23

Legal Action Over French Shale Ban?

By Curve France, hydraulic fracturing No Comments »

 

Could there be legal implications to the French ban on shale gas exploration?  It seems that way, as reported by Natural Gas for Europe this morning:

Environment Minister Nathalie Kosciusko-Morizet has confirmed that France faces the possibility of legal actions over legislation banning the exploration of hydrocarbons using the controversial technique of hydraulic fracturing.

Speaking on LCI television, Kosciusko-Morizet said: “There could be court cases.”

Legislators originally proposed the repeal of licenses already granted for shale gas and shale oil exploration.  However the government argued that revocation of licenses would likely result in extensive litigation and the requirement of financial compensation.  Accordingly, the draft legislation was subsequently amended on first reading by the National Assembly to prohibit only the technique of hydraulic fracturing.

Kosciusko-Morizet’s comments indicate the despite the legislation being designed to “minimize legal risks,”  the government is anticipating that it could “open the way” to compensation claims.

France’s upper house, the Senate, recently adopted the ban, but included a critical amendment to the legislation proposed by the National Assembly, leaving the door open to hydraulic fracturing for “scientific purposes”.

The adopted bill stipulates that the current holders of shale exploration permits would have two months to notify the authorities of which technique they planned to employ in extracting unconventional resources.  If they were to use hydraulic fracturing (now prohibited) or did not respond within the allotted time frame, the license would be revoked.

France has already granted permits to companies including Toreador Resources Corp., Vermilion Energy Inc., Total SA and Schuepbach Energy LLC for shale oil and shale gas exploration.

Toreador, whose shares have fallen over 70 percent from their highs, did not respond to a Natural Gas for Europe request for its position on possible legal action.

Vermillion, whose permits are mostly held by existing production, commented: 

”We are striving to work closely with (not against) the French government in forwarding our understanding of the shale oil potential in the Paris Basin and will continue on this positive path.  It remains too early in the process to determine if any legal action may be required, but it would be a path of last resort.”

 

Source:  Natural Gas for Europe

 

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Jun 09

Japanese Company Enters European Shale Operation

By Curve Poland, Shale Gas plays in Europe No Comments »

In a move that is the first of its kind, a Japanese trading house has entered into the European shale gas market.  The company involved, already has interests in the Marcellus shale exploration in the U.S. and will be using that knowledge in its venture into Poland. This report is from MarketWatch:

WARSAW -(MarketWatch)- Japanese trading house Mitsui & Co. Ltd. (8031.TO) said Thursday it has agreed to acquire a 9% stake in Polish shale gas exploration concessions from subsidiaries of Marathon Oil Corp. MRO +0.63% .

Mitsui is the first Japanese company to enter into a European shale gas project, the company said.

Poland could have 5.3 trillion cubic meters of shale gas, equal to more than 300 years of the country’s annual gas consumption, the U.S. Department of Energy said in April. If it turns out to be economically viable to extract, shale gas would reduce Poland’s natural gas supply dependence on Russia’s OAO Gazprom (GAZP.RS).

The 10 concessions, encompassing 2.1 million acres (850,000 hectares), are located in a band spanning from north Poland to its eastern border, according to a map enclosed in Mitsui’s statement.

“Seismic and other geological analysis, as well as drilling of exploration wells to evaluate technical potential of the concessions will be carried out over the next five years,” the company said.

Nexen Inc. NXY +1.50% , another partner, owns a 40% working interest in the concessions. The closing of the transaction is contingent on approval by Polish government authorities and Nexen, Mitsui said.

“Poland is considered to be one of the most attractive shale gas potential areas in Europe, where the development of shale gas by the major oil and gas companies is expected to accelerate,” the company said.

“We are conducting shale gas development and production activities in the Marcellus Shale, Pa.,” Mitsui said. “With our experience and knowledge acquired from this project, we intend to expand our presence in the European gas market, which follows the U.S. gas market.”

Source:  MarketWatch

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Mar 29

Poland Pledges Maximum Use Of Shale Gas

By Curve natural gas No Comments »

Poland will do its utmost to extract natural gas from its shale reserves, Prime Minister Donald Tusk said Tuesday.

“We are determined to turn the prospecting for and use of shale gas from plan into fact,” Tusk told a conference in Warsaw.

“As prime minister, I pledge personally to create the optimal conditions for prospection, scientific research and the economic framework for the use of shale gas,” he said.

“If possible, we should exploit every single cubic metre of this gas,” he added.

Poland is thought to have substantial reserves of gas trapped in shale, sedimentary rock containing hydrocarbons.

Though generally more expensive to extract than conventional natural gas, it is seen as a way to cut dependence on imports.

Poland already covers 30 percent of its gas needs from domestic natural gas sources, while over 40 percent is imported from Russia and the remainder from other countries.

Tusk said that Warsaw’s plan to exploit shale-gas was a plank of the “energy-security strategy of the whole of Europe, including Poland.”

He underlined, however, that a future shale-gas industry in Poland would have to be environmentally friendly.

Last year, Poland agreed to join a US research programme which is focused on tapping into unconventional gas resources.

Warsaw has also issued prospecting licences to international gas groups including Italy’s ENI, and reportedly to US giants ExxonMobil, ConocoPhillips and Chevron and British-Dutch group Shell.

Read the full article here.

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Mar 10

Europe May Match North America in Unconventional Gas Promise

By Curve gas, unconventional gas No Comments »
Significant contributions from unconventional gas are expected in the next 10 to 15 years, though key challenges remain

The size of European unconventional commercial gas reserves rival that of North America, according to a major new study by IHS Cambridge Energy Research Associates (IHS CERA).

The study, Breaking with Convention: Prospects for European Unconventional Gas estimates Europe’s total unconventional gas in place could be 173 trillion cubic meters (Tcm), or 6,115 trillion cubic feet (Tcf).

Breaking with Convention is the first of a series of essential analyses of the prospects for unconventional gas development in Europe and the world. Based on the systemic analysis of the key unconventional gas plays in Europe (both shale gas and coal bed methane) and drawing on extensive IHS proprietary databases, the study explores the extent to which the sizeable potential of unconventional gas is likely to be realized and what it means for European gas markets.

“The technological revolution in unconventional gas has been the single most important energy innovation so far this century,” said IHS CERA Chairman and author of the Pulitzer-Prize winning book, The Prize, Daniel Yergin. “Its tremendous potential has already transformed North America’s energy landscape and may now transform the global gas industry.”

Unconventional gas in Europe is likely to make significant contributions to supply in the next 10 to 15 years, the report says. IHS CERA estimates production levels ranging from a minimum of 60 billion cubic meters (Bcm)—less than half of current shale gas production in North America—to 200 Bcm around 2025.

Among the key challenges that will determine the ultimate productivity in Europe is a regulatory environment that is currently ill-suited to unconventional gas, the report says.

“Regulations designed for traditional exploration and production have not been adapted to reflect the character of unconventional gas,” said Jonathan Parry, IHS CERA global gas director. “But there are significant challenges ahead, including uncertainties over length of tenure, permitting regimes and norms and water management, among others.”

The delivery price of unconventional gas is also expected to be higher than the current prices of Europe’s present import sources. However, IHS CERA’s oil price assumptions place the cost of unconventional gas on par with the long-term average price of contract gas, given the expectation that long-term contracts incorporating some linkage to the price of oil will remain the norm for some considerable time.

“Unlike in the United States—where the revolution in unconventional gas production has made the market nearly self-sufficient—unconventional volumes of gas in Europe are likely to keep domestic supplies stable in the face of declining conventional production,” said Jan Roelofsen, IHS Global Senior Product Manager.

The impacts of the stabilization of domestic supply, though not as revolutionary, could be substantial, the report notes. A stabilized domestic supply could alleviate current fears over security of supply and increase the level of comfort with higher levels of reliance on gas, including imports. European policymakers could then be faced with an important strategic choice between a domestic secure and relatively-clean unconventional gas and more costly zero-emission alternatives.

“There is no question that substantial production of unconventional gas in Europe would have a major impact on the dynamics of Europe and Asian gas markets,” said Shankari Srinivasan, IHS CERA Managing Director Europe, Global Gas.

Source:  Natural Gas For Europe

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Feb 24

Natural Gas, Key For Europe’s Greenhouse Gas Emission Target For 2050

By Curve natural gas No Comments »

Natural gas should play a key role in reaching Europe’s 2050 climate targets in the most cost-efficient manner, according to a report published today by the European Gas Advocacy Forum (EGAF).

Statoil participates in the EGAF together with a number of other key gas players. The EGAF report addresses how Europe can reach the target of at least 80% reduction in its carbon dioxide emissions in 2050.

“Europe is facing a huge challenge as the energy demand is growing while carbon emissions need to be reduced,” says Rune Bjørnson, senior vice president for Natural gas in Statoil.

“The EGAF report presents a roadmap where one of the main measures is replacing coal with natural gas in the power sector in the next decades. This will cater for immediate and major emission cuts, and is a realistic and cost-efficient way of reducing climate emissions in Europe.”

Natural gas is cost competitive, CO2-emission are up to 70% lower than those of coal, it is based on known technology and provides a robust and predictable power supply.

Source: offshoreenergytoday.com

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Feb 13

EU Could Meet Carbon Targets More Cheaply With Gas Than Renewables, Say Gas Firms

By Curve Energy, gas No Comments »

Europe could save €900bn (£762bn) and still hit its 2050 carbon reduction targets if it built fewer wind farms and more gas plants, a coalition of gas producers including Gazprom, Centrica and Qatar Petroleum has told the European commission.

The industry is lobbying against the possibility of the commission setting new renewable energy targets and phasing out the use of gas. Next month, it will publish a draft “road map” energy strategy to 2050.

The Guardian has obtained a copy of an unpublished report by consultancy McKinsey, commissioned by the European Gas Advocacy Forum, which also includes ENI, E.On, GDF Suez, Shell and Statoil. The report, which has been sent to the commission, describes gas as a clean, plentiful and relatively cheap form of energy.

It challenges the idea that renewable forms of energy should be the primary way to cut emissions.

Maria McCaffery, chief executive of trade body RenewableUK, acknowledged that burning gas resulted in fewer carbon emissions than coal or oil, but said: “Gas is no substitute for renewable energy. Never in a million years would we call it green.”

The report estimated the costs of building thousands of wind farms and vast new electricity grids to connect them to meet the EU’s legally binding target of reducing carbon emissions by 80% against 1990 levels by 2050. One authoritative study has estimated that 60% of energy would have to come from renewable sources to hit this ambitious target.

But the McKinsey analysis suggested the same carbon emissions reductions could be achieved with far less renewable generation – significantly less than half the total energy mix. It argued that the emissions reductions could be made by using less coal-fired generation, which is twice as carbon intensive as gas, and three times as much gas generation.

It said this would save €900bn by 2050, although hitting the targets would still need about €350bn more investment than is envisaged on current policies. The plan assumed that from 2030 most gas plants would use carbon capture and storage to reduce emissions, though the technology remains unproven on a large scale.

The outlook for global gas supplies has been transformed recently by new technologies that make it possible to exploit previously untapped deposits, particularly shale gas in the US. In November the International Energy Agency predicted this would lead to a “global gas glut”, bringing cheaper prices for consumers and making renewables and nuclear less competitive.

BG’s chief executive, Frank Chapman, said last week the “conservative” IEA was “on its own”, arguing that growing demand, particularly from Asia, would keep prices high.

National Grid estimates that as supplies from the North Sea run out, the UK will be forced to import 70% of its gas by 2020. McCaffery added that a greater reliance on gas would expose Britain and the rest of Europe to volatile prices. “Relying on imported gas still gives us vulnerability of supply and volatility of prices. Once renewables like wind farms have been built, they have very low costs – only operation and maintenance.”

The McKinsey report also said Europe’s own largely undeveloped shale gas resources could meet the continent’s needs for 30 years based on current demand. But Brook Riley from Friends of the Earth said: “Member states are getting more and more keen on shale gas. The problem is that you can’t go into such a risky energy source like shale gas when you have a proven technology like renewables, and energy efficiency should also be prioritised.”

Source: Guardian UK

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Jan 06

Realm Energy in World Oil Magazine

By Curve Realm, Shale Gas plays in Europe No Comments »

Realm Energy was featured in the December 2010 edition of World Oil Magazine.

Click on the image below, to read Chief Operating Officer Mike Mullen’s contribution, discussing the state of shale gas plays in Europe.

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Nov 19

A European Kuwait?

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

According to geologists, Poland could become the largest gas supplier in Europe after Norway and Russia. It would make the eastern European country rich – much richer than previously assumed.

Winter is approaching – a time in which Europe particularly feels Russia’s grip on the energy market. This power play has caused Poland many headaches. But new know-how in gas production could mark a turn in events.

Practically every winter, Russia and its neighbors Ukraine and Belarus disagree on gas supply technicalities. This dispute has endangered deliveries to Poland.

The Baltic Sea Pipeline, which will connect western European markets with major Russian gas fields, has made matters worse. Warsaw’s politicians feel they will be at Moscow’s mercy because Russia can then shut off the supply without endangering its deliveries to Germany.

But this headache could soon be over. The largest deposits of shale gas in Europe are assumed to be located on Polish territory. New technology from the United States could make it possible to exploit these gas reserves. Test drillings are planned all across the country.

According to geologists, Poland could become the largest gas supplier in Europe after Norway and Russia. It would make the eastern European country rich – much richer than previously assumed, said energy expert Pawel Nierada from the Sobieski Institute in Warsaw.

“Conservative estimates already show that Poland could suddenly become a serious exporter on the European gas market,” Nierada said. “The reserves exceed our country’s consumption many times over. It’s hard to imagine what it would be like if the more optimistic estimates of the US government were to turn out to be true. Then, here in Poland, we would have more gas than Norway.”

Skeptics question new technology

Natural gas which is produced in Europe and Asia has so far been relatively easy to access. It lies in enormous bubbles under impermeable layers of earth, for example out of clay. Shale gas, on the other hand, is located in the middle of rock beds.

It’s nothing new that this valuable resource exists there. But no one was ever interested in it before, because production was considered to be difficult and therefore uneconomical. But that has changed.

In the United States, shale gas already covers 20 percent of gas consumption. New technology used over the past few years has made this possible. Special drills first make their way into the ground vertically and then, when they reach the rock bed with the gas, bend into a horizontal position. There, they pump a chemical liquid into the ground, which causes the rock bed to burst open. The gas can then flow.

But many people are skeptical about this procedure, Nierada said.

“There are also critical voices which say that the technology is still in its infancy – the experts from the Russian gas company Gazprom, for example,” he said. “But in the United States, the production works. And international firms believe it will be successful in Poland, too. Otherwise, they wouldn’t have already invested so much money in licenses and test drilling.”

The Polish government has already issued some 60 licenses for test drillings, mainly to American companies. It’s no wonder that this is cause for concern further to the east – in Moscow. After all, gas exports make up a significant part of Russia’s gross domestic product. They could stagnate or even decrease as a result of the Polish finds.

Gazprom has already admitted that it isn’t able to sell as much to the United States as it used to because of the shale gas reserves there. In a report, the company even said shale gas could “fundamentally change” the worldwide gas market. [...]

Even if there are factual reasons for the skepticism, experts have long criticized Polish politicians for being too passive. For years, Poland has relied on imports from Russia without even considering the exploitation at least of conventional gas resources in the country. This was mainly due to the monopoly of the state-owned gas firm PGNiG.

“The company was never interested in producing gas itself,” Nierada said. “It earned its money very easily, after all, by buying gas from Russia and simply adding its margin. The company didn’t care about how high the final price was.”

This passivity is now costing Poland dearly. In order to have enough gas for the coming winter, the state-owned company had to close a deal with Gazprom for additional gas deliveries. It even risked a battle with the EU Commission, as Brussels said Russia was dictating unacceptable conditions. The two sides finally reached an agreement at the end of October ensuring deliveries of Russian natural gas until 2022.

But such problems will possibly no longer exist in a few years – at least, not if Poland turns into a European Kuwait.

Source: The Global Warming Policy Foundation

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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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