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 03

EU Parliament Draft Motion Supports Shale Gas Development in Europe

By Curve natural gas in Europe No Comments »

 

In a report obtained by Natural Gas Europe, the Committee on Industry, Research and Energy recommends the European Union to support assessing, exploring and developing shale gas reserves in Europe.

The draft motion for a European Parliament Resolution, prepared under supervision of the rapporteur Niki Tzavela (Greek MEP representing Europe of Freedom and Democracy political group), underlines the importance of promoting openness, monitoring and use of best practices.

According to the draft report, gas is a quick and cost-efficient way of reducing reliance on other fossil fuels – especially coal, still extensively used in some member states, including Poland.

By helping to lower greenhouse gas emissions and backing up renewables, gas may become a “bridge fuel”, leading the European Union towards the transformation of the energy system outlined by the Roadmap 2050 initiative.

The draft report also explicitly states that shale gas production will increase security of supply in Europe. The committee observes the growing role of natural gas as the source of energy and the role of shale gas production in ensuring energy security and diversity.

The document, obtained by NGE, notes the impact made by the shale gas boom in the US on global gas market, pays special attention to increasing gas-to-gas competition and underlines strengthening position of customers vis-à-vis gas suppliers.

With a view to taking full advantage of possible shale gas production, it also stresses the importance of interconnected and integrated energy market, calling on the European Commission and member states to enforce requirements of the EU third energy package.

The report states that although various estimates have been made, all of them point to the existence of a large indigenous energy resource in Europe.

The document encourages states to assess and map those resources and asks the European Commission to engage in determining the level of shale gas reserves, by combining results from reports prepared by member states and results from exploration projects.

According to the draft motion, member states should be urged to train labour force, by introducing the necessary skills into their mainstream education and training systems.

Importantly, the report notes the significance of establishing the necessary infrastructure, mentioning not only pipelines, but also roads. It also calls for further research and development into tools and technologies.

In the view of the authors, at the current stage of exploration works, the regulatory framework for licensing in the EU is adequate.

However, they propose to the EU Parliament to call on member states to ensure they put in place all the necessary administrative and monitoring resources for the further development of shale gas, by checking and improving – if necessary – their regulatory frameworks for future commercial scale production.

At the same time, the committee points out, that some member states did not hold public consultations during authorization phase, and it calls governments to provide proper transparency in this aspect.

The document recalls conditions that paved the way to the shale gas boom in the United States and pays special attention to the role of EU-US cooperation.

Comparing conditions for shale gas development in Europe and the United States, the committee observes, that it will certainly take time to build an adequate capacity for the large scale production, because of the lack of a sufficient number of rigs, necessary manpower and well-equipped and experienced service industry in Europe.

Therefore, the committee recommends to the European Parliament to encourage cooperation between European and American companies and to urge the exchange of best practices and information between different level administration in the EU and the US.

The committee observes, that unlike American landowners, European farmers do not own underground resources and thus do not benefit from extraction. Thence, it underlines the necessity for building relationships with locals and calls on shale gas companies to ensure, that communities will benefit from the shale gas development.

The EU Parliament motion would also call for better public information, declare the EU support for creation of portals providing access to wide range of data, and urge companies to provide full information, including disclosure of the chemicals, they intend to use in  fracturing operations.

The draft stresses, that operators should reduce flaring and venting and restore land used.

It also highlights the need for establishing minimum safety standards and organizing inspections, especially during stages of well construction and hydraulic fracturing.

Finally, the Committee on Industry, Research and Energy recalls, that according to the polluter – pays principle, companies would be liable for any damages.

As Natural Gas Europe learned, amongst proposed amendments to the motion, there is an invitation to introducing pressure testing of cement casing, testing of  wells before and during operations, and publication of the sesults of those examinations.

Source: Natural Gas for Europe

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Mar 20

French Chemicals Makers Seek Support on Shale Gas, Nuclear Power

By Curve Europe, shale gas No Comments »

French chemicals makers urged President Nicolas Sarkozy and contenders in the election to reconsider their objection to shale gas and preserve nuclear power as energy costs are key to the industry’s competitiveness.

“If we’re told no shale gas and less nuclear, and if we have to pay 50 percent more for energy, that’s a huge or even a life-threatening concern,” Olivier Homolle, who chairs the Union des Industries Chimiques, the French chemicals industry federation, said in a March 16 interview. “Nuclear energy is very useful. It’s one of the rare areas where we have an advantage over Germany, so let’s try to preserve it.”

French chemical production will probably increase 1.8 percent this year as Europe’s economic growth slows after climbing 5.9 percent in volume last year to 86.7 billion euros ($114 billion), according to the group. French production lagged behind China, the U.S., Japan and Germany last year. It’s now on par with Brazil and South Korea, Homolle said.

Socialist candidate Francois Hollande, who’s leading in opinion polls to replace Sarkozy as president, wants to cut the use of nuclear power in electricity production to 50 percent by 2025, down from about three-quarters now. Sarkozy, meantime, aims to extend the lifespan of nuclear plants.

Hollande also has said he plans to maintain a ban introduced by Sarkozy on shale gas exploitation through rock- fracturing techniques that use water and chemicals, saying the method harms the environment.

‘Ball and Chain’
“In a global competition, we can’t be burdened with a bigger and bigger ball and chain,” said Homolle, who also oversees BASF SE’s operations in France. Chemical companies based in France also need stability and a level-playing field with other European countries in terms of tax, technical and environmental rules, he said.

“The cost of gas in Europe is three times the cost of gas in the U.S. because of shale gas,” Thierry Le Henaff, chief executive officer of Arkema SA (AKE), a French maker of industrial chemicals, said on March 8. “Not only is Europe not competitive against the Middle East, it’s now isn’t competitive against the U.S.” and may soon lose ground against Asia in terms of gas prices, he said.

The French economy is also burdened by higher labor costs and the chemicals industry needs better pipelines and harbor infrastructure to compete with neighbors, Le Henaff said.

Arkema put on hold a 70 million-euro investment to expand production of polyvinylidene fluoride, used to make protective coatings, in France as long as unions refuse some productivity gains, according to Le Henaff.

“It would be less expensive and more profitable” to make the investment in the U.S. or China than in France, where Arkema makes 60 percent of its production and just 13 percent of sales, he said. “The ball is in the unions’ camp.”

Source: Bloomberg Businessweek

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Mar 19

Unconventionals in Europe: More Like Canada

By Curve Europe, unconventional gas No Comments »

Indeed, Canada might be a better analogue than the US for the development of unconventionals in Europe, according to Paul Chernik, Business Development Manager with ERC Equipoise, who was attending the Unconventional Gas Forum in Barcelona, Spain.

A Canadian himself, he recalled: “The major shale play in Canada is the Horn River, which did not have a large level of local oil and gas infrastructure, before it was brought in to investigation by the exploration companies,” he explained. “As a result, they’ve had to invest capital with limited return on investment to date. They’ve been going through the challenges of building pipelines and facilities, trialing different drilling and completion strategies, identifying markets, considering LNG facilities, improving operational efficiencies, etc. These are similar challenges that Europe will face from a capital development point of view.

“In addition, in Canada most landowners do not have freehold rights for their acreage; as a result they do not receive direct royalties from the production of oil, gas or condensate on their land, which is a similar situation to most of Europe as far as I’m aware. This is unlike the States, where many landowners receive a direct payment, and are more inclined to allow oil and gas activities on their land as a result.”

“So the lessons learned from Canada in terms of the amount of money that has to be spent on the development of shale gas play and the challenges with getting local buy in are similar to what Europe will face going forward. Quebec and Nova Scotia going forward will be especially similar as neither has a strong history of onshore development. ”

Still, he said, Europe would have to leapfrog over some challenges.

“The major challenge is that a certain level of capital investment is needed to make the decisions as to whether the reservoirs are suitable or not. Right now the number of wells and the number of technologies trialed is insufficient to ascertain whether the current shales being targeted are suitable reservoirs for hydrocarbon production. More investment is required.

“In addition, there needs to be a greater focus on raising public awareness as to the benefits to local communities and the country as a whole of shale gas developments. Without the support of local communities, it will be difficult to implement economic shale development on the scales required.”

Chernik said that ERC Equipoise, a reservoir evaluation specialist group that performs seismic interpretation, static modeling, reservoir simulation, reserve auditing, acquisition and divestiture advisory work as well as commercial analysis, had worked with clients focused on shale gas in the UK and in Poland.

One driver for the development of unconventional gas in Europe appeared to be significantly stronger in the “new” Europe.

“I think that Eastern Europe will play a more prominent role in the near future, because of the issues with gas supply coming from Russia,” he explained, taking note of this year’s cold winter. “As the cold snap hit Eastern Europe, the gas prices went up and therefore I think interest in an alternative gas source will be greater in those parts.

“For Western Europe, it’s hard to say – the greater access to LNG and to diverse infrastructure means that the pressure to diversify supply isn’t quite so high.”

Despite this, Chernik said that unconventionals development in the UK, where ERC Equipoise is located, was obviously progressing with Cuadrilla Resources’ activities in the north.

“There’s also some discussions with other shale gas landowners in the United Kingdom. I can think of several companies – one that’s publicly talking about it, IGas Energy – and a couple of others that are looking into it on a confidential basis at this moment, and the result will be that after a period of study, they will have a sense of whether their shale has a potential for shale gas or shale oil development. It depends whether or not companies invest the money in the next 2-3 years to be able to make that decision.”

He said land access was the biggest issue for unconventionals in the UK.

“There needs to be a concerted effort by producers to get landowner buy in to this whole shale gas/shale oil development concept,” he explained. “Historically the UK has been quite wary of onshore developments and people seem to dislike visual reminders of oil and gas activity. An example is Wytch Farm, which is a very successful field, but where the operator had to take special care to limit visual and environmental impacts. So I think that shale gas producers have to look at how conventional producers have had to deal with the challenges of landowner access to figure out how they’re going to do it, and then adapt it to the more large-scale fracture operations that shale gas needs.

“It will be a tough challenge because the lack of royalties,” he added.

Source: Natural Gas Europe

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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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