May 08

South Stream Pipeline: “Based on Parity”

By Curve hydraulic fracturing, natural gas in Europe, Realm Energy, San Leon Energy No Comments »

 

The South Stream natural gas pipeline project through the Black Sea is a Russian-EU partnership.

“Often our project is perceived as a purely Russian enterprise. In fact, it’s based on parity,” Sebastian Sass, Head of Communications & Spokesperson, South Stream Transport AG said.

South Stream Transport AG is in charge of planning and constructing the offshore section of South Stream, from Russia to Bulgaria. “That’s the competence and task of our company. The offshore crossing through the Black Sea is the key link, connecting the world’s largest gas sources in Russia with the consumers in the EU. We believe it’s in both sides’ interest that this is based on parity.”

The task of constructing the offshore section of the South Stream natural gas pipeline is a complex and ambitious endeavor.

“Comprising a 900 km underwater pipeline from Russia to Bulgaria through the Black Sea it will reach a maximum depth of 2,500 meters. When fully operational, the pipeline will have a capacity of 63 billion cubic meters per year, comprising four lines,” he said.

South Stream Transport AG, the company responsible for the planning, construction, and subsequent operation of the offshore gas pipeline through the Black Sea, was established in October of last year in Zug, Switzerland.

South Stream Transport AG’s Board of Directors, which had recently been appointed, has six members: “Three of which are from our Russian shareholder; three of which come from our EU-based shareholders and the interesting thing is that this really does reflect the fact that South Stream Transport is a project based on genuine parity between the Russian partner and the EU partners. The shareholding is divided accordingly and this is reflected in the composition of our board.”

He reported that 50% of South Stream Transport AG was owned by the Russian company OAO Gazprom; the Italian company Eni S.p.A. acquired a 20% stake; the French energy company EDF and the German company Wintershall Holding GmbH (BASF Group) had acquired 15% each.

“Russian gas deliveries to Europe have been stable for more than 40 years. Even during the Cold War, gas supplies from Russia have been uninterrupted. This proves that Russia is a stable and reliable gas supplier,” said Mr. Sass.

“The relative share of Russian gas in EU imports now stands at half of its 1980 level, despite the fact that total imports from Russia have grown,” he explained. “This shows that sources have been successfully diversified, with new suppliers entering the market such as Norway and Algeria. Today’s deliveries of Russian gas use in majority the same routes as in the 1980s. While the first line of the Nord Stream Pipeline started delivering gas into the European grid in November 2011, there is a clear need for yet more diversification.”

He added that the South Stream offshore crossing through the Black Sea did provide for diversification of routes and provided additional capacity.

“Growth demands have been revised,” he said. “While European gas consumption is rising, the region’s domestic production is declining. The revision of energy policies in some EU countries will somehow need to be compensated and renewables are not in a position to cover that fully.”

Mr. Sass reported that the Consolidated Feasibility Study for the South Stream offshore section had been completed.“We have the ambitious target to come to an FID (Final Investment Decision) and to start the construction of the South Stream Offshore Pipeline by the end of this year,” he said.

“We aim to be delivering gas by the end of 2015 through the first of four offshore pipelines. There will be altogether four, which will be taken into operation subsequently and our main aim is to deliver gas within that timeline.

“The milestones that we need to achieve ahead of that are all aiming at making this particular objective of delivering gas within that timeframe possible,” he continued.

Meanwhile, South Stream Transport AG has also recently launched its website.

“The website will be a tool to implement transparent communications. Currently, we’ve launched it in English and Russian but it will be expanded into a number of languages, and also as the project progresses there will be more detailed information on the project as such, on the Environmental and Social Impact Assessments for example,” he said.

Mr. Sass emphasized the importance of providing information about such energy projects as South Stream.

“With the launch of our website, we are initiating a proactive and timely information exchange with all interested stakeholder groups. We are committed to transparency and openness. Our website will be an essential element to fulfill our commitment,” he explained.

Source: Natural Gas Europe

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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 11

Shale Gas Arises in France and Bulgaria

By Curve natural gas in Europe No Comments »

 

The once solid bans on fracking technology to extract shale gas in Bulgaria and France are weakening. Both countries have established committees to examine the technology and practices throughout the EU. The Bulgarian parliament has established an ad-hoc committee to examine EU practices, while the French government will examine the technology and regulations.

The closer look at the technology is not an indication of weakening environmental protection, rather it acknowledges the role shale gas can play in each country’s energy mix.

Exclusion of fracking technology only weakens a country’s energy security. Gas deposits represent an effective source for domestic energy security. Just as gas storage and network interconnectors ballooned to a key security of supply concern after the 2009 Russian-Ukraine gas dispute, shale gas is emerging as another tool in the box of energy security.

In the EU, the contribution domestically tapped shale gas will be limited in each country, so there is no panacea of independence being held in the ground; however, it is not mana we are looking for in the ground – just a little bit for boosting energy security levels, which in a time of crisis can make a significant difference.

Domestically sourced shale gas, provides two elements for security of supply. It provides another source of gas, thus reducing foreign dependence and used as a bargaining chip to reduce pricing of Russian gas. It also boosts overall energy security. Therefore, ignoring the role that shale gas plays in a country’s energy supply is not in the interests of politicians. Gas pricing is an annual concern of politicians.

Also, if a crisis occurs, there will be calls as to why shale gas was not explored and possibly exploited in the past. Providing the right regulatory and business environment becomes an action of self-preservation for smart politicians. Objections of environmentalists can be addressed for the wider public. Politicians will be able to cite other extraction and regulatory practices in other countries to demonstrate the safety of using the technology in their own backyard.

Fracking technology is not in or out in Europe. Most commentators have adjusted and are getting it right. There will be shale gas in Europe, although at mixed levels in different EU countries. It will only be a game changer in so-far that it contributes to overall energy security – at the same level as other diversified energy sourcing. Through an effective regulatory regime shale gas emerges as a useful technology to meet Europe’s growing appetite for a lower carbon fuel. As the extraction technology becomes cleaner, more transparent, and proven, older objections will drop away, and shale gas will emerge as a solid technology.

Source: Natural Gas for Europe

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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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Apr 03

France Set to Revisit Fracturing, Shale Debate

By Curve natural gas in Europe No Comments »

 

The battle over the development of France’s unconventional hydrocarbon resources is set to reignite with the publication of a report in favour of research activities in hydraulic fracturing to investigate shale oil and gas resource potential.

A joint report of the Conseil Général de l’Industrie, de l’Énergie et des Technologies (CGIET – General Council of Industry, Energy and Technology) and the  Conseil général de l’Environnement et du Développement durable (CGEDD – General Council of the Environment and Sustainable Development), recommends the establishment of a national commission on shale exploration and exploitation techniques.

The commission will be broadly based, with representation from the legislative bodies (state representatives, territorial representatives, an MP and a Senator), representatives of industry, industry employee groups, NGO’s and scientific experts.

The commission’s duties will include collecting data in order to identify the potential resources and examining if they can be developed in a safe and environmentally friendly manner.

A key focus will be on determing the conditions for environmentally acceptable hydraulic fracturing operations, including establishing regulations for managing risks and protecting the environment during the experimentation of new techniques to operate on shale oil and gas.

The commission will initially focus on the oil shales of the Paris Basin. Test hydraulic fracturing could reportedly occur as early as Spring 2013.

The report immediately drew a reponse from organizations opposed to unconventional hydrocarbon development in France.  In a joint statement, Friends of the Earth, France Libertés, ATTAC, AITEC, RAC, Greenpeace, Helio, CSIR and WECF Network for Nuclear Phaseout, denounced the “hypocrisy of the government.”

The release of the report, eight months after France implemented a ban on the extraction of hydrocarbon resources by hydraulic fracturing, comes at a time when the energy mix and energy pricing is playing a heighted role in the French Presidential elections.

Speaking to RTL, the Socialist Candidate for President indicated a policy shift from the party’s previous unequivocal opposition to shale oil and shale gas development.

Francois Hollande commented: “You should never rule out anything, especially if research shows that one can obtain this gas without harming nature.”

Rising energy costs are increasingly impacting the purchasing power of the average French citizen, with estimates of upwards of three million French homes currently facing difficulties in being able to afford heat and electricity.

Source: Natural Gas for Europe

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Oct 18

Eni CEO: Europe Must Do More To Develop Shale Gas

By Curve natural gas in Europe No Comments »

 

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

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Oct 05

A Strategy For Exploiting European Shale Gas Resources

By Curve natural gas in Europe No Comments »

 

The vice president of the European Conservatives and Reformers in the European Parliament, Derk Jan Eppink, posted the following article on the EU Observer website, highlighting where the EU stands – or should stand – on shale gas decisions:

This week, the European Parliament will devote a committee meeting to the issue of shale gas development. It places shale gas, practically unheard of as an energy source five years ago, squarely in the spotlight.

No one denies that current fossil fuel reserves are finite. What has been denied, however, is that shale gas can play an important role in filling the coming gap between our energy needs and our resources.

Proponents of renewable energy see a future in which Europe’s grid is run exclusively on renewable sources like solar power, wind and water. Unfortunately, these renewable energy sources are not even nearly able to meet our current energy demands. For example, Germany’s 22,000 wind turbines produce just 27.2 gigawatts, or six percent of the country’s energy supply.

Similarly, even after extensive investment, solar power would still only meet 10 percent of the country’s energy needs by 2020. Short of cutting its energy consumption by at least 50 percent, there’s no way Europe’s largest member state could hope to meet its energy needs exclusively through renewable sources any time in the next half century.

It is clear then, that Europe needs an energy policy that isn’t limited to investment in renewables. Other sources must also be included. One of these sources must be nuclear energy. After all, nuclear power outclasses all of the other possible resources in terms of the amount of energy it can produce. Unfortunately, practical obstacles put limits on member states’ ability to expand rapidly the number of nuclear power plants on their territory. Other energy sources will therefore be required – sources like shale gas, of which Europe has significant reserves.

Enough gas for 60 years

A recent report by the European Centre for Energy and Resource Security (Eucers) calculated that European shale gas resources are enough to cover another 60 years of European gas demand. In other words, when the European Parliament votes in favor of shale gas, it votes for a century of energy security.

Proponents of green solutions sometimes claim shale gas is dangerous. Phenomena varying from earthquakes and gas escaping from kitchen taps to water pollution are all attributed to shale gas drilling. If it is difficult to take such examples of Luddite superstition seriously, the same cannot be said for a potentially more fundamental objection to shale gas development, namely that the extraction process is causing acceleration in the build-up of greenhouse gases.

Until recently researchers claimed that during the process of hydraulically fracturing the earth layers in which the gas is trapped, quantities of methane previously held in the earth’s crust were likely to escape into the atmosphere. As a consequence, it was thought, shale gas accelerated global warming. Fortunately, this hypothesis turns out to be unfounded. A recent study from Carnegie Mellon University in the United States revealed that extraction of Marcellus shale gas did not result in the emission of more greenhouse gases than conventional gas. The researchers even stated that ‘on average, the emissions of Marcellus shale gas were about three percent lower than liquified natural gas.’

Independence from Russian gas

The current EU presidency, Poland, have taken a lead in the discussion about Europe’s future energy provision, expressing a strong belief in shale gas. For Poland, and indeed much of eastern Europe, shale gas development would mean not just economic growth and environmental progress (clean shale gas replacing dirty coal as the main energy source) but also independence from Russian conventional gas supplies.

In its advocacy of shale gas, the Poles are supported by the UK, which has acted as a counterweight against French attempts to impose a blanket ban on shale gas development. It is now up to the parliament and indeed the European Commission to reconcile these positions by developing an energy strategy that allows for the full development of European shale gas resources, while still taking environmental concerns seriously.

To do so would also show a sense of political maturity that until now has sometimes eluded the European institutions. By taking a firm stance on the issue of shale gas development, it could show that it is no longer prepared to be subject to the political whims of other global players.

In times when the demand for fossil fuels continues to grow, but the conventional resources are showing signs of exhaustion and alternative energy sources prove to be insufficient, shale gas surely must be part of any credible energy mix. Shale gas development will boost economic growth and enable the EU to regain global political clout, while also helping it to reach UN climate goals. It is, in short, a win-win solution.

Source: EUObserver.com

 

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Aug 12

Poland To Begin Shale Gas Fracking “Within the Month”

By Curve natural gas in Europe, Poland No Comments »

 

Poland’s state gas company PGNiG has announced that it will begin its test drilling for shale gas in northern Poland this month.

PGNiG president Michał Szubski,told the Rzeczpospolita daily he was “cautiously optimistic” that the wells in Pomorania could be producing gas on an industrial scale by the middle of 2012.

Finding an independent source of gas could help wean Poland of its reliance on Russian energy sources.

Professor Stanislaw Nagy, a geologist from the University of Science and Technology in Warsaw told the newspaper, however, that there is still no certainty that shale gas production will be profitable.

“Everything will depend on how much gas will flow during the tests,” he says.

The prospect of tapping into Europe’s largest deposit of shale gas has had the world’s biggest multinationals queuing up to set up test drilling sites in Poland.

The US Energy Information Administration released a report in April concluding that Poland could have the largest and most accessible shale gas reserves on the continent.

On his visit to Warsaw this year, US President Barack Obama said the United States is eager to cooperate with Poland in producing shale gas.

 

Source: The News.PL

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Aug 12

Expert: Unconventional Gas Has “huge” Potential

By Curve unconventional gas No Comments »

 

Shale gas and unconventional gas have a huge future potential when compared with conventional gas supplies. But their lack of social acceptance, and the technological adjustments and regulatory framework required to develop them remain a challenge in Europe, Pawel Konzal, associate director for Energy Industries of the World Economic Forum (WEF), told EurActiv Czech Republic in an exclusive interview.

He was speaking to Jan Vitásek, Publisher of EurActiv Czech Republic.

Let us start with energy policy after Fukushima. Germany took a U-turn and announced that it will phase out its nuclear power. What do you expect to be Fukushima’s impact on the energy mix?

There was a period of uncertainty after Fukushima, but one thing that clearly emerges is that countries which wanted to pursue nuclear expansion will still do so, especially countries such as China, India or Russia, where the majority of nuclear capacity was planned or in construction. The same applies to some of the OECD countries like the UK, France or Poland. These programmes will continue, notwithstanding that they will probably review safety standards.

In relation to Germany and other countries which decided to shut down the nuclear power plants, of course there will be an impact on the energy mix. You can name four energy sources which will potentially fill the gap: coal, renewable energy, natural gas and the energy efficiency. But not all four of these are present in all the countries.

There is lots of talk about the expansion of coal, especially in relation to Poland which has many coal power plants. Do you think there could be any potential in this direction?

It is possible. And we should also mention other parts of the world, because in countries such as Malaysia or Indonesia new nuclear plants were also being considered, and now you can see that coal will be probably filling a much larger part of their future demand. Of course the picture is not exactly the same in Europe because of carbon pricing and so on, but coal will definitely fill part of the gap in Europe too.

You already mentioned that apart from Germany the nuclear phase-out has also been discussed in Switzerland which decided to stop all of its plants, and the same happened in Italy. Do you think that something similar will also happen in Poland?

I think that the nuclear program in Poland will still go ahead. There is always a possibility that a review of security standards will take place – which may always have impact on the tendering process – but I do not think that the programme itself will be cancelled.

But this will also depend on what people think because the President Bronisław Komorowskisaid that there could be referendum on this.

As in all OECD- or EU member countries, public opinion is the most decisive factor. Iwould have to examine the last polls of public support, but I think they still show support for the nuclear programme. I can also answer this question from other side of the coin. You have an energy triangle, which consists of security of supplies, competitiveness and environmental sustainability. These three policy objectives impact decisions in any given region. Of course you cannot try to focus to the maximum extent on all of these issues simultaneously. You can emphasise one – keeping the two others at some basic level which is acceptable to you. And I think that in countries such as Poland, which are fast growing economies with growing energy demands, the public will be favourable to nuclear energy.

In recent years or months there have been massive changes in the gas industry. How did the huge development of US shale gas extraction impact on natural gas transport routes?

These changes saw their origin with the development at the very beginning of the 1980s of horizontal drilling and hydraulic fracturing technologies. These two technologies have been improved and then deployed on a large scale in the last decades in the US, which has led to a huge surge in the supply of natural gas in the US.

A decade ago the United States was expected to become a vast gas importer through LNG and this is why a lot of important infrastructure was built in the last decades. Now, with the not only plentiful, but also cheap, gas shale gas present in the whole of North America, the picture changed first of all in the North American markets, but then other markets were affected too, because the LNG supplies originally destined for the US had to find a new home.

How could the unconventional gas markets develop in the future?

The important questions are: will North America become a major gas exporter, and for how much longer will this situation of vast supplies of cheap gas last? The answer is that even with the low price of gas, companies will keep producing the gas to keep their licenses and leases of land. You may also know that the American Congress recently granted the first permission convert an LNG importing terminals into an LNG exporting terminal. That means that the US will be able to ship part of its gas to other regions of the world. Another question is whether the unconventional natural gas revolution will spread to Europe and Asia. Either way, Europe will – or is already – benefiting from the unconventional gas in North America and I think even if unconventional gas were to develop in Asia, Europe would benefit anyway, because of the larger than expected free LNG supplies.

Is there any potential of developing unconventional gas in Europe itself?

There are many challenges and many adjustments that will need to be done if unconventional gas is to be developed in Europe. In North America there is a long history of onshore drilling, which is not the case in Europe. The issue is whether people are used to onshore drilling. If you have seen it for a hundred years, there is nothing surprising in having such things introduced to your landscape. Of course, there is a tradition of coal production onshore, but that is a different thing. On the other hand the unconventional gas production has undergone a dramatic change in technology in the last decades. The US is much less invaded than it used to be in the terms of its landscape.

Does the technological shift result in a longer usability of natural gas reserves? Can gas be a secure supply of energy?

Definitely. In the US, thanks to the supplies of the unconventional gas, projected supplies have almost doubled. Looking at the Energy Information Administration’s study estimating the potential of different countries’ shale gas, its main conclusion is: yes, there is a huge potential which is substantial also in comparison to the conventional gas supplies. But as already mentioned, the need for social acceptance, technological adjustments and regulatory framework around it. The second thing is that in the US the owners of the land are also owners of the resources. In Europe, the owner of the resources is the state. That is also changing the business model because in the U S the land owners do have the direct incentive in having the resources underground developed, because they receive rent. In Europe it is a question, whether the owners are incentivized enough.

Maybe in Europe it is not so easy to extract gas this way, but what about Russia or Arab and Middle East countries? Could there be the potential?

Of course, but Russia has also a big potential in conventional gas, so this is a different thing. Outside of the EU Ukraine is a country with a great potential. But the biggest country we should mention is China. The development of the unconventional gas in China would be a game changer. Speaking about the Middle East, I think that, putting aside different geology, water scarcity would be biggest challenge there, as shale gas production you use substantial amount of water.

If we shale gas extraction becomes a reality in Europe, what changes should be made to current distribution network?

For shale gas, the distribution network is a crucial thing. Unconventional gas is dispersed in production and so you need to bring it to the places with demand for it. And in North America, you have a vast and very well developed distribution network.

But if there is unconventional gas development on a big scale in Europe, either you would have to have a development of the gas distribution network, such as in the US, or the gas would be consumed locally in the place where it is produced. For example, it would be consumed in Poland to generate electricity and part of it could be exported.

In other words, either you transmit the gas as a molecule, and you have to build the gas distribution network, or you can transmit is as an electron and then you need electricity network.

Could there be any fall-out for the various pipeline projects that are being built or projected in Europe, like Nabucco, South Stream, and others?

In the World Economic Forum (WEF), we do not look so much about what particular projects will be changed, because at the end of the day it is the role of the companies. We are more interested in what are the macro trends, because they can change the energy architecture and landscape.

Anyway, there is a recent report on the natural gas market by the WEF. Half of that report is a research done by Cambridge and research associates, and half of the report are perspectives of CEOs of different companies, including GdF (Gaz de France), Total or Talisman Energy. These are very interesting perspectives and I can gladly recommend this reading material.

 

Source: euractiv.com

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Aug 10

Au Revoir? – Toreador Takes A New Direction

By Curve natural gas in Europe No Comments »

 

Stymied by French legislation banning hydraulic fracturing in unconventional hydrocarbon resource extraction, Paris based Toreador Resources Corp. is setting off in a new direction.

Toreador has announced that it has entered into an agreement to merge with a ZaZa Energy LLC, privately held oil and gas company based in Houston, Texas.

The merged portfolio comprises Toreador’s Paris Basin play in France together with ZaZa’s holdings in the Eagle Ford core and the emerging Eagle Ford/Woodbine (Eaglebine) resource plays in Texas with a current total of 423,000 net acres. Both the Eagle Ford and Paris Basin businesses have strategic partnerships with subsidiaries of Hess Corporation.

Some may view the deal as being driven by the difficult situation that Toreador finds itself as a result of French government position on fracking, particularly after the company had undergone an extensive corporate reorganization to focus solely on France’s Paris Basin shale play.

Toreador said that a one-rig oil exploration drilling program targeting traditional reservoirs is expected to commence by late 2011 in the Paris Basin. The Liassic drilling program comprising six wells (without the use of hydraulic fracturing) is expected to commence by year-end pending final review of permits by the French Administration.

However, the future focus of the combined entity is likely telegraphed by the fact that ZaZa equity holders will hold 75 percent of the new company, ZaZa Energy Corporation.

The transaction is subject to Toreador stockholder approval, regulatory approvals and other customary closing conditions. The transaction is expected to close in the fourth quarter of 2011.

 

Source: Natural Gas for Europe

 

 

 

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