Oil giant Total has lodged an appeal against the withdrawal of its permit to drill exploratory wells for shale gas in the south of France.

The government withdrew drilling permissions in October after widescale summer protests about the environmental impact of the only known technique for exploiting shale gas, hydraulic fracturing.

Total Gas Shale Europe managing director Bruno Courme said at a press conference in Paris that Total “respects the law” however, he added, “our position is that the law does not justify the withdrawal of our permits”.

He was speaking after a meeting of oil company heads and Ecology Minister Nathalie Kosciusko-Morizet on shale gas entitled “The French ban: how to get out?”.

UMP MP François-Michel Gonnot sparked fears among environmentalists that the government was preparing to overturn the ban as he said: “I do not see why the debate cannot continue just because we voted a law based on circumstance. It’s not a taboo subject.”

Hundreds of thousands of people had campaigned against shale gas exploration and the use of hydraulic fracturing last summer and the government introduced an outright ban despite permits already having been issued. Oil firms were told to submit new applications that did not propose the use of now-banned technique.

Total’s application to drill the Montélimar prospect (which covers 4,327sq.km from Montélimar to Montpellier) said specifically that it would not use hydraulic fracturing but the government criticised it for not being “sufficiently explicit” in explaining alternative techniques.

Hydraulic fracturing is a technique where shale gas tightly bonded in deep rock structures is freed using underground explosions to fracture the rock.

Known as “fracking”, the technique has been criticised as millions of litres of chemical-laden water is used to force the gas up to the surface and there are fears this will contaminate aquifers and other underground water sources.

Environmental protesters also fear the impact of widescale drilling rigs and access roads being set up across the Ardèche, Drôme and Gard departments.

Shale gas has not yet been confirmed in the French sites but protesters say that if Total’s exploratory wells do strike gaz de schiste there will be immense pressure on the government to authorise “fracking” no matter the feared consequences.

Source: The Connextion

Countries that have always depended on imported oil and gas, like Chile, Paraguay, Poland or Ukraine, and especially heavy consumers such as the United States and China, could become self-sufficient in natural gas in the near future and even start exporting it.

Shale gas – natural gas extracted from shale rock – may well be several times more abundant than the proven reserves of conventional natural gas on the planet, according to the U.S. Energy Information Administration (EIA). Moreover there are large volumes of natural gas in sandstones, and other non-conventional sources.

But the real news from EIA studies is that shale gas is abundant in territories previously regarded as poor in fossil fuels or dependent on imports: China, the United States and Argentina head the list, but large reserves are also found in South Africa, Australia, Poland, France, Chile, Sweden, Paraguay, Pakistan and India.

“The global energy chessboard is changing, and markets will be realigned. Countries that have never had so much available energy will become self-sufficient, and perhaps even exporters,” Luis Alberto Terrero, head of the Venezuelan Gas Processors Association (AVPG), told IPS.

As gas supplies grow, “fossil fuels may become cheaper, the growth of alternative energies will slow down, and new alliances, investments and trade networks will be established,” Terrero said.

Global proven reserves of conventional gas total 6,608 trillion cubic feet (Tcf), according to statistics from British-based oil giant BP, and the largest deposits are in Russia (1,580 Tcf), Irán (1,045 Tcf), Qatar (894 Tcf) and Saudi Arabia and Turkmenistan (283 Tcf each).

An EIA study published in April 2011 found practically the same volume (6,620 Tcf) of shale gas deemed recoverable in just 32 countries, and the reserves are differently distributed, with China possessing 1,275 Tcf, the United States 862, Argentina 774, Mexico 681, South Africa 485 and Australia 396 Tcf.

Furthermore, some countries long dependent on foreign suppliers would have a huge resource base compared with their consumption: for example France and Poland, which import 98 and 64 percent, respectively, of the gas they consume, are in possession of shale gas reserves estimated at over 180 Tcf each.

In South America, giant oil producer Venezuela is estimated to have only 11 Tcf of shale gas, barely one-twentieth of its conventional gas reserves, while Brazil and Chile, which currently import about half the gas they consume, possess estimated shale gas deposits of 226 and 64 Tcf, respectively.

Paraguay has an estimated 62 Tcf of shale gas, nearly three times the conventional gas reserves of Bolivia, the top exporter of natural gas in South America. Uruguay, which imports all of its oil and gas as it lacks both, has at least 21 Tcf of shale gas.

“So far this century, this is the biggest innovation in energy, in terms of scale and impact,” according to U.S. analyst Daniel Yergin, author of a classic history of the oil industry, “The Prize: The Epic Quest for Oil, Money and Power”, who emphasised that one-third of all the gas produced in the United States is already extracted from shale gas reserves.

High volumes of water are used for hydraulic fracturing, or fracking, the method of extracting shale gas, which can also cause seismic activity. Disposal of the waste water may cause pollution of surface and groundwater. Extracting shale gas from a platform with six wells can use 170,000 cubic metres of water.

Therefore exploration for non-conventional gas must go hand-in-hand with technologies to reduce water consumption and the other harmful effects, including destruction of the landscape.

Terrero noted, for example, that exploitation of extra-heavy crude in Venezuela’s Orinoco Belt or under the North Sea used to be regarded as technologically non-viable, yet today production is going full steam ahead, while drilling for oil and gas in the Arctic will proliferate from 2012 onward.

Furthermore, high oil prices of over 100 dollars a barrel encourage operators to explore for, produce and sell not only shale gas but also “tight gas” (trapped in impermeable, non-porous sandstone or other rock formations) as well as shale oil and “tight oil”, similarly locked underground.

“We’re heading toward greater availability of fossil fuels. Oil, gas and coal represent 80 percent of the global energy mix, and will continue to predominate for decades,” Kenneth Ramírez, a professor of geopolitics and energy at the Central University of Venezuela, told IPS.

In 2010, world consumption was 12 billion tonnes of oil-equivalent, including 4.03 billion tonnes of oil (up from 3.57 billion in 2000), 3.56 billion tonnes of coal (2.4 in 2000), 2.86 billion tonnes of gas (2.17), 776 million tonnes of oil-equivalent in hydroelectricity (600), 626 million in nuclear energy (584) and only 159 million in renewable energies (51 million in 2000), according to BP.

In Ramírez’s view, “the abundance and new distribution of reserves of shale gas and other non-conventional fossil fuels will affect predictions about the relationship between energy and the economy, and will have major geopolitical effects.

“An initial effect is that the largest and best discoveries are outside the Organisation of the Petroleum Exporting Countries (OPEC),” which will see its influence on the global energy market diminish in the long run, the expert said.

At the same time, Ramírez said, Russia will embark on the race to consolidate its position as a major global actor on the basis of its energy resources; Canada will emerge as a world oil power; and the United States, its supply secure, could feel freer from the vagaries of Middle East conflicts.

The same could be said for emerging nations of the global South, such as China, India, South Africa and Brazil, which will be able to avail themselves of abundant non-conventional gas.

In Latin America, production in Bolivia or Trinidad and Tobago, or the offshore projects in Venezuela, no longer appears so essential for the long term, while in the northern Mexican state of Coahuila and the southern Argentine province of Neuquén, drilling is under way for the first shale oil and gas extractions.

The big disadvantage of shale gas, despite the industry’s hopes for developing more eco-friendly technologies, is its impact on the environment during production and transport.

The extraction of shale gas requires large quantities of water mixed with sand and chemical additives. The carbon footprint - the amount of carbon dioxide-equivalent greenhouse gases emitted by the process – is much greater than for conventional gas production.

Fracking involves injecting this fluid under pressure into drill holes deep in the earth’s crust, to create fractures in the rock that increase the rate of recovery of shale gas. This process runs the risk of damaging the subsoil, soils, surface and underground water tables, the landscape and communication routes if the arrangements for extracting and transporting the material are defective or mishandled.

More methane, a potent greenhouse gas, is released during shale gas extraction and use than with conventional methods, and this adds to global warming. But so far, environmental concerns have not abated the global thirst for energy resources like those trapped in shale formations.

Source: Inter Press Service

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

Source: Warsaw Business Journal

Sterling Resources Inc. is interested in exploring shale-gas blocks in the southern Romanian region of Oltenia.

Alexandru Patruti, head of the Bucharest-based Mineral Resources Agency, disclosed the information while speaking at an energy conference today in Bucharest.

Any company that has permits to explore oil and gas in the country may also explore resources of unconventional gas, Patruti said.

In July 2010, Chevron Corp submitted winning bids for three shale-gas exploration blocks in the south-eastern region of Dobrogea, totaling 2,700 square kilometers. The company also has exploration rights for a block in Barlad (Eastern Romania). MOL Group has also expressed an interest in searching for unconventional gas in the nation.

Sterling today announced that it had reached agreement with the Government of Romania on a package of issues that will resolve the notice of dispute filed on June 20th, 2011.

At a meeting with Ion Ariton , Minister of Economy, Commerce and Business Environment and the President of the National Agency of Mineral Resources (NAMR), an agreement was reached to grant assignments to Sterling’s designated partners, PetroVentures International Ltd. (20%) and Gas Plus (15%).

In addition, the Government will confirm that all of Sterling’s offshore licenses will now initially run to May 2014 with two further extension periods, each of three years in duration. The Company and NAMR now expect to finalize the administration of this resolution within 10 days.

“While we must still receive the final documentation on the agreements reached, we can confirm that meetings held today in Bucharest herald a new era in our future plans in Romania. The recent amendment to the Construction Permit Law, the granting of assignments and a resolution on our license periods will enable Sterling to resume work activities and investments in the Romanian Black Sea,” stated Mike Azancot, Sterling’s President and CEO.

In April, Sterling has declared Force Majeure on its Midia and Pelican Blocks in the Black Sea after it was unable to undertake operations for reasons it said were outside of its control.  Sterling claimed that lack of clarity on the applicable procedure and authority for issuance of construction permits constituted Force Majeure under its Concession Agreement.

Source: Natural Gas for Europe

Europe must do more to develop shale gas–the fast-growing technique of cracking open shale rock to release natural gas–and better integrate its pipeline network in order to improve energy security, the chief executive of Italian energy company Eni SpA (E) said Tuesday.

Gas infrastructure is increasingly important because Europe will one day consume more gas than oil as it offers a cleaner alternative, Paolo Scaroni said on the sidelines of the International Energy Agency ministerial meeting here.

“We should be doing the most on shale gas in our continent, because domestic conventional gas is decreasing rapidly in traditional gas producing countries,” Scaroni said.

“Gas consumption will be in excess of oil consumption in Europe simply because the best way to meet CO2 targets is to replace coal with gas,” he said. “If some countries really want to get out of nuclear, I don’t see any other way to provide electricity,” than natural gas.

Greater reliance on gas means Europe needs to improve cross-border pipeline connections, he said.

“Creating a network of pipes which connect the different countries of Europe is essential to give security of supply,” he said, adding that this could require the creation of a single European pipeline authority.

Source: Wall Street Journal

The recent announcement from the Bulgarian Ministry of Energy that US oil company Chevron has been awarded a shale gas exploration licence in the north of the country, has brought a new urgency to the long-simmering debate on shale gas in Bulgaria. The Bulgarians are asking themselves whether shale gas would be the best way of achieving greater energy independence and what its potential environmental hazards might be. For the Russians in particular there is more at stake than may be apparent at first sight. Atanas Georgiev reports from Sofia.

The Bulgarian government is extremely enthusiastic about the prospects of shale gas for Bulgaria. Energy Minister Traycho Traykov has even said that 1 trillion (1,000 billion) cubic metres of gas could be found in Bulgaria, which would cover the country’s consumption for 300 years. The government claims that shale gas production would improve diversification of supply and could bring various economic benefits: domestic gas supply at reasonable prices, revenue from royalties and taxes, increased employment, investments in infrastructure and improved geological knowledge.

Yet the government’s support for shale gas cannot be viewed in isolation from geopolitical considerations. The ruling rightist party GERB and Prime Minister Boyko Borissov tend to have good relations with the US, whereas the opposition Bulgarian Socialist Party (BSP) is traditionally more aligned with Russia. Shale gas development is heavily pushed by US companies and the US government in Eastern Europe, both for commercial and political reasons – and just as heavily resisted by Gazprom and the Russian government. With presidential and local elections coming up in October, the shale gas issue will no doubt remain strongly politicized for the time being.

Bulgaria is a small gas consumer. In the last ten years its consumption averaged 3 bcm (billion m3) annually, with the global economic crisis pushing this number down to almost 2.5 bcm in 2009 – the lowest level since 1976. To compare, a country like Belgium uses some 20 bcm. In Europe only Sweden consumes less gas than Bulgaria.

However, natural gas has a lot of growth potential in Bulgaria. Currently only about 3% of households use natural gas, as this market segment was not developed until the 1990s, but the Energy Strategy of Bulgaria until 2020, which was adopted this year, envisions a further development of gasification for household consumption. District heating companies have been gradually replacing other fossil fuels with natural gas, and there are plans for construction of the first natural gas power plants. There are also plans for building gas interconnectors to Romania, Greece, Serbia and Turkey. And last but not least, the planned gas pipelines Nabucco and South Stream, if they are built, will both cross the country, promising the possibility of new connections to the gas network, for instance for some of the municipalities that now have no access to gas and no distribution networks. All of these developments augur well for gas consumption in the coming years.

With gas use likely to grow, diversification is becoming an all the more urgent issue. Bulgarians of course remember the Ukranian-Russian gas crisis of 2009 when the country was left without imports for a month. With Ukrainian-Russian relations cooling off again, there are fears that another crisis may occur during this winter or later on.

There currently is no real gas market in Bulgaria. The country depends for 95% of its consumption on Russian gas, which is all supplied by one wholesale supplier, Gazprom, transported via one pipeline (through Ukraine), and bought and resold by Bulgargaz, a subsidiary of the state-owned Bulgarian Energy Holding EAD. The remaining 5% of supplies is also delivered to Bulgargaz, which likes to include alternative sources in the mix to keep prices down. Bulgargaz sells the gas at regulated prices to industrial consumers, power companies and households. This means that there is no diversication whatsoever in the national gas market, making business and households extremely vulnerable to supply crises and price changes.

Domestic production from conventional wells amounted to just 74 million bcm last year, according to data from the energy ministry. Currently known conventional gas reserves are a mere 10.5 bcm.
The lack of large oil and gas fields in Bulgaria has always been regarded as a disadvantage for the country. Most of the exploration drilling was done after 1947 in Northern Bulgaria and the Black Sea and currently the total number of wells is about 1,000. Local production of natural gas from the Black Sea coast, operated by the Edinburgh-based company Melrose Resources, almost reached 7% of national consumption in 2008. Currently the company is exploring new fields, but there is no sign that significant discoveries will be made.

So this explains the euphoria among some energy experts when the shale gas potential of Bulgaria became known in the last year or so. After the rise of shale gas exploration and production in the United States and the start of exploration in Poland, American companies turned their attention on Bulgaria. In June, Chevron became the first company to receive a (5-year) exploration license. The company has announced that it expects technically recoverable shale gas reserves in Northeastern Bulgaria to amount to between 300 bcm and 1 trillion cubic meters. This is colossal in comparison with the current gas consumption and reserves of the country. The Ministry is currently preparing for a second concession procedure for shale gas exploration in Northern Bulgaria.

However, the Minister’s price comparison seems rather premature. Shale gas production is not expected to start until at least five years after the exploratory drilling. Moreover, it is difficult to make a comparison with Russian gas prices, as there is still no renewal of the long-term contracts of Bulgargaz, with Gazprom and its subsidiaries which expire at the end of 2012. Gas prices are also hard to predict because the future liberalization of the national gas will bring new logic to price formation and contracting. Analysts expect that the construction of Nabucco and of the planned interconnectors to Bulgaria’s neighbouring countries will introduce new suppliers to the market. If this happens, spot markets are expected to grow and replace at least some of the long-term contracts.Energy Minister Traycho Traykov has said that domestic production of shale gas may turn out to be cheaper than alternatives. The energy ministry has also pointed out that Chevron pays €30 million for its drilling concession. This is more than the revenue from all other gas concessions combined. In addition, shale gas drilling, the Ministry says, will have other positive economic effects, e.g. on employment and on the infrastructure in the drilling region.

One of the most talked-about options is the IGB (Interconnector Greece-Bulgaria) that could be used to supply gas from the Revithoussa LNG terminal. Its construction is expected to start next year and it will be connected to the planned ITGI (Interconnector Turkey-Greece-Italy) pipeline as well. In addition, Bulgaria has an understanding with Azerbaijan for 1 bcm of gas supplies annually, but currently this gas cannot be transported, as the only pipeline connecting the two countries is owned by Gazprom, which refuses to allow such a deal. IGB and ITGI could make this import possible and thereby support the liberalization of the market. If these plans come through, alternative sources may have a better price than local ones. Ironically, shale gas production in the US has already affected European markets by decreasing global spot prices of LNG, and if this trend is maintained, it could make shale gas production in Europe relatively expensive. All these factors make economic analysis extremely difficult and suggest that decisions taken now, out of short-term considerations, could prove to be disadvantageous in the medium and long run.

It is also not certain whether diversification is best served by going for shale gas. It may turn out that better diversification results could be achieved with decisive action on alternative gas supply routes (interconnectors, Nabucco, South Stream, etc.), alternative sources (Caspian gas, LNG) or alternative suppliers (competitors to the current monopoly supplier Gazprom and its subsidiaries). All these gas supply diversification options have been widely discussed and could be implemented in a reasonable time frame. Moreover, they are conventional solutions and none of them includes environmental risks as shale gas does.

Any developments in shale gas in Bulgaria will have geopolitical and economic repercussions that extend beyond the immediate commercial impacts. In particular for Russia, the future of the Bulgarian gas market is of some importance. Even though currently Bulgarian national consumption amounts to about 1.6% of Gazprom’s exports, the country has an important geostrategic position – both for the existing Russian natural gas transit pipelines to Turkey, Greece and Macedonia (transporting about 17 bcm of natural gas annually) and for future projects like Gazprom’s South Stream (up to 63 bcm) and its rival European pipeline Nabucco (up to 31 bcm).  If additional bi-directional interconnectors to Greece, Romania, Serbia and Turkey are constructed in the next several years, the country also has the chance to become a gas hub for the region.  Nor are the Russian interests confined to the gas market.  The Russian company Atomstroyexport/Rosatom has a contract to build the planned Belene Nuclear Power Plant and Russian is also involved in the planned Burgas-Alexandroupolis (Trans-Balkan) oil pipeline.

What should be noted in this context is that shale gas exploration and production by American companies in Bulgaria will not just increase domestic production, it will also bring new players into this market that may challenge the hegemony of the Russians. It could also lead to increased demands for liberalization.

Currently the strongest opposition to shale gas in Bulgaria is motivated by environmental fears. Some of the environmental arguments are used by the political opponents of shale gas, but this does not mean that these concerns are not genuine. The shale-gas rich region of Bulgaria is in the North-Eastern part of the country. This is an important agricultural region. In addition, communities here get their drinking water from underground aquifers. The US Environmental Protection Agency (EPA) has not given a clear answer yet as to whether the process of hydraulic fracturing can be done safely without affecting underground waters.

A report published by the Atlantic Council in June describes some of the known risks related to shale gas drilling. The report, a result of two US-EU meetings of industry and institutional experts, suggests that environmental hazards exist and the proper way to deal with them is to compensate affected stakeholders. In the case of remote farms in the US this could mean providing a reserve water source if the primary one is damaged, but this could not be applied so easily to larger communities in Europe, where density of population in gas-rich regions is larger. The report also points out that exploration and production of shale gas should observe national and European legislation related to surface and underground water sources. The most important piece of legislation in this field is the European Water Framework Directive (WFD), which requires that EU member states ensure ‘the least possible changes to good groundwater status, given impacts that could not reasonably have been avoided due to the nature of the human activity or pollution’.

Ultimately the government will have to decide, with the active participation of society, which options to pursue: conventional energy diversification policies or unconventional gas exploration and production. Poland is now cited as a model for shale gas exploration, but the case of Bulgaria is somewhat different for several reasons. First, the political bias against Russia is not so strong in Bulgaria. Energy cooperation with Russia has been a fact of life and most probably will be for a long time to come. Secondly, the geographical position of Bulgaria is better in terms of energy routes – the country is on the path of both Nabucco and South Stream, with prospects for several interconnectors connecting it to other sources as well. Bulgaria also has the possibility to use more renewable sources for electricity and heat production and increase its energy efficiency potential. Thus, diversifying energy supplies by banking on shale gas may not be the most logical route to take.

Source: European Energy Review

Polish Oil and Gas Company (PGNiG) has announced the technical production of shale gas from its concession at Pn Lubocinie near Wejherowo.

The Polish Prime Minster was amongst representatives of PGNiG and government, who took part in what was called a “landmark event” for Poland.

PGNiG provided Natural Gas Europe with a photograph of what is indicated as a continuously burning flare (“candle”) at the Lubocino-1 well.

PGNiG said that analyses of gas from the Silurian and Ordovician shale have confirmed positive initial indications including the lack of hydrogen sulfide and low in nitrogen. Additionally, the analysis confirms the presence of heavy hydrocarbons.

PGNiG SA is now preparing to drill horizontal holes and fracturing treatments for the concession. This work is expected to take at least several months.

Should activities proceed as planned, PGNiG will start a test operation in the second half of 2013, with commercial production will begin in 2014.

PGNiG commenced exploratory drilling for shale gas near to Wejherowo last December, with the drilling of a vertical borehole with a depth of about 3.5 kilometers.

Drilling concluded in March.  At that time, PGNiG deputy head Marek Karabula commented that indications were encouraging and the company planned to spend the next few months testing the outcome of the exploration.

PGNiG currently holds 15 concessions for exploration of shale gas. In its statement, PGNiG said that it plans to acquire further concessions.

The company also holds several concessions for tight gas in the region of Wielkopolska.

The company said that it was currently preparing to start drilling on the next concession Bingley, Royal Lubycza.

Source: Natural Gas for Europe

Prime Minister Vladimir Putin has said that Russia would begin pumping the first gas through the Nord Stream pipeline on Tuesday, with European clients receiving gas supplies next month or in November.

“Tomorrow we will start pumping technical gas near Vyborg,” Putin said on Monday.

“Gradually, in a calm manner we are departing from the diktat of transit states,” Putin remarked, alluding to past and present difficulties with Ukraine, through which 90 percent of Russian gas to Europe transits.

Nord Stream consists of two 1,224 kilometre natural gas pipelines through the Baltic Sea, linking Europe to Russian gas reserves. When fully operational in the last quarter of 2012, the twin pipeline system will supply 55 billion cubic metres (bcm) of gas annually.

Source: Natural Gas for Europe

In the wake of the French ban on hydraulic fracturing, Jacques Sallibartant, President of the Drillers Union and Gerard Medaisko, a Geology Consultant, are adamant that shale gas and shale oil are important to France.

They opine that there is not one simple answer, but that gas and oil are part of a reasonable and realistic energy mix.

There follows an English translation of their Op-Ed submission in today’s Le Monde newspaper:

Shale gas is indispensable

The debate should remain open

The 26, 27 and 28 of August, opponents of shale gas and oil (also called tight oil) will gather in Lézan (Cévennes). But why? To congratulate themselves on having deprived France of a new energy source or to propose solutions for the country’s energy problems?

In light of current energy issues, there cannot be a single, hasty and simple answer. An energy mix, uniting and optimizing different energy sources – from wind to nuclear and gas and oil – is the only realistic and reasonable option. It is also absurd to affirm that the national production of fossil fuels would halt the development of renewable energy.

In fact, the eventual production of shale gas and oil on the French territory, would not aim to substitute the development of renewable energy sources but rather to replace extremely costly energy imports (for example, metropolitan France currently imports 99% of its oil consumption). It would be, at the very least, paradoxical to, in a few years’ time, import shale oil from Poland while the resource lies beneath our feet.

While the Jacob law to ban hydraulic fracturing was voted on in Parliament early this summer and promulgated on July 14, only the implementation of experimentation provided by by the law would provide a clear answer to a presently confusing situation.

The implementation of hydraulic fracturing tests would fully meet the requirements of the principle of precaution; namely a scientific assessment of potential risks. In the case of shale gas [production] the risks have been well known and manageable for years.

The Mining Code should also evolve not only to respond to new technological challenges posed by tight oil and gas, but also to provide maximum security and respond to the understandable concerns of the public.

Another route

Several lines of thought should be developed: better regulation on drilling and stricter control on behalf of authorities in order to guarantee the compatibility of research and production operations and respect of the environment and quality of life; better distribution of production revenues for departments, municipalities and communities; and finally the possibility for landowners to benefit from a percentage of revenues earned on production from their soil.

In the United States, a new report mandated by the Obama Administration highlights that, in order to guarantee clean production of shale gas, it is necessary to promote and encourage best practices among oil companies, to exercise tighter drilling controls and publish fracturing fluid ingredients (which are already disclosed by most operators). This report is a reminder French ideologists that there is a route other than total refusal of scientific and technical progress (shale gas, GMOs, nanotechnology): the route of regulation.

Source: Natural Gas for Europe

Ukraine opened shale gas development to Western giants on Thursday, assigning its first exploration contract to the Anglo-Dutch firm Shell in a deal worth up to $800 million (555 million euros).

“In case of successful exploration work and the start of intense project development, Shell’s total investment under the agreement may come to $800 million,” the state-own Ukrgazvydobuvannya gas exploration company said.

Ukraine is widely believed to be one of Europe’s largest holders of the new energy resource with estimated reserves up to 1.5 trillion cubic metres, according to industry analysts.

But it lacks the technology to reach the deeply-buried rock that can be transformed into fuel in a difficult operation called fracking, and continues to rely heavily on gas imports from its eastern neighbour Russia.

The decision to award the contract to Shell comes amid a swell of foreign interest in Ukrainian shale, with such gas production already booming in the United States and slowly beginning to make its way into Europe.

Other Western majors as Chevron and ExxonMobil have also expressed an interest in Ukrainian shale projects, and the Anglo-Russian joint venture TNK-BP signed a preliminary agreement with the government in October.

The deal also coincides with a drive by Ukraine to reduce the price for the gas it buys from Russia, with the two sides now engaged in a new row that threatens to disrupt European supplies for the second time since 2009.

“The time will come when Ukraine will meet all of its own gas needs,” news agencies quoted Prime Minister Mykola Azarov saying after the signing ceremony.

“This is the first big joint activity agreement capable of quickly raising gas production in our country,” added Energy Minister Yuriy Boiko.

The agreement will see Shell dig up to 1,000 exploration wells in northeastern Ukraine, each of which will run up to six kilometres (3.7 miles) below ground.

With the rock buried so deeply and no technology available for reaching it, Ukraine has never officially studied how much shale it might actually have.

Neither Shell nor Ukraine has estimated how much gas may be hidden in the six blocks awarded to Shell near northeastern city of Kharkiv.

But the agreement could lead to the first successful development of shale in Ukraine, providing Shell with privileged status in a potentially huge market.

Shell launched its operations in Ukraine in August 2006 when its signed a broad agreement covering both oil and gas exploration.

The company has previously operated by holding 50-50 stakes in local joint operations ventures, while not getting rights to the fields themselves.

News reports said Thursday’s agreement will see Shell make the operating decision in the project, with more strategic moves decided jointly with the state-run company.

Source: AFP