Jan 26

Polish Gas Giant Makes Shale Deals

By Curve shale gas in Europe No Comments »

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: theNews.PL

Tagged with: • • • •
Jan 20

Total Appeals French Shale Ban

By Curve shale gas in Europe No Comments »

 

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

Tagged with: • • • • •
Jan 12

European Unconventional Gas Summit Sees Real Picture

By Curve natural gas in Europe No Comments »

 

A presentation at the European Unconventional Gas Summit in Poland has shown the real face of unconventional gas exploration – and is encouraging the whole world to take a look:

They were images that did look a little bit destructive, images rarely – if ever – seen at an unconventional gas conference in Europe: a huge land moving “vibrator,” equipment that was leaving a giant furrow on the farmland in its path.

The pictures belonged to Jakub Kostecki, CEO of New Gas Contracting, a provider of sourcing, landman and permitting services to the nascent oil and gas industry in Poland, who showed his pictures from the ground to attendees at the European Unconventional Gas Summit in Krakow, Poland.

“When we get to local communities and say there will be a small footprint left by what we are all doing we have to remember that they will remember this picture,” he explained. “Of course there’s nothing wrong with this as long as there’s a crew right behind the vibe to appraise the damage and another one right behind them to fix it.

He recalled that many of the communities his company worked in had seen screenshots and video of vibrators “lurking in the forests,” an image that had been played over and over on Polish television.

Kostecki explained, “Local communities will have seen these images a couple of months before seismic crews come into the area.”

“If you take the ostrich approach – hiding your head in the sand – that’s not going to work,” he continued. “Some regions of Poland are used to seismic acquisition. Others are not. In places like Ilawa in the north, which has never seen vibes, this needs to be explained to the community. They need to be told what’s going on.”

He said that the visibility of these issues would become higher as activity increased in Poland.

“Most of the acquisition in Poland has been 2D. When the 3D, 3C and VSP work starts there will be a lot more equipment and people on the ground. Next year there will be many more crews and a lot more issues.”

In terms of wellsite permitting, Kostecki said: “We provide landman services, which basically means that we help the operators enter parcels in Poland and put rigs on the ground. O&G operators will encounter serious delays in Poland because their land issues aren’t sorted properly.”

He said his company, New Gas Contracting, was in the process of securing 220,000 permits for one of the 2D programs. In addition to providing landman services and wellsite permitting, NGC was negotiating with local landowners, and gminas, on where to set up rigs.

“Many (O&G companies) go in where it’s easiest to get equipment. Others will look at the plot from a technical standpoint – where the sweetspot is,” he said. “Still others will negotiate until they get the right price.”

Kostecki explained that after 8 September local communities had seen what a well looked like. “The 10 wells already drilled in Poland have made the public aware.”

He noted that because the shale gas industry was made up of majors, supermajors, and small companies from all over using different approaches with different corporate cultures, it affected how each of them interacted with local communities.

He showed a photo of a drilling site which he considered well organized.

“We need to remember that the local authorities are the local population, so you need to tread lightly,” opined Mr. Kostecki, who said that there could be up to 300 wells drilled in Poland by 2013.

“We’re talking about a lot of land, a lot of wells. It will be a huge issue and everybody needs to have a strategy going forward.”

In terms of roads, he said access was a huge issue in Poland. “The road capacity tonnage is way too low and the way we deal with communities affects what kind of exemptions are available. There’s a lot of talk about more federal, more standardized regulation,” he said.

He added, “A lot of traffic is needed to get the seismic, drilling and fracking equipment onto a given piece of property.”

Source: Natural Gas for Europe

Tagged with: • • • • • • •
Jan 06

Shale Gas Turns the Tables on Petroleum Powers

By Curve shale gas No Comments »

 

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

Tagged with: • • • •
Jan 03

Poland Says Firms Should Team Up Over Shale Gas

By Curve Poland No Comments »

 

Polish state-linked companies should work together in shale gas exploration, with utilities teaming up with gas monopoly PGNiG and oil refineries PKN Orlen or Lotos, the country’s treasury minister was quoted as saying.

PGE, Tauron, Enea or Energa could later use the non-conventional gas to produce energy, Mikolaj Budzanowski added.

Asked by daily Rzeczpospolita what he would like to see in local shale gas extraction, Budzanowski said: “Joining forces by as many companies controlled by the Polish treasury as possible.”

“It’s thus not only about such companies as Lotos, PKN Orlen or PGNiG, but also the whole energy sector, or generally speaking about using the synergies between producing gas and its usage in the energy sector.”

The minister set a goal for the launch of Polish shale gas production at the turn of 2014 and 2015, with the country planning to use its estimated at 5.3 trillion cubic metres of deposits to wean it off its reliance on Russian energy sources.

Coal-reliant Poland is particularly dependent on Russian gas imports, receiving 10 out of 14 billion cubic metres (bcm) a year from Russia.

Source: Reuters

Tagged with: • •
Dec 21

Demand: Good News for Shale Gas

By Curve shale gas No Comments »

 

Davide Calcagni, Vice President of Unconventional at Italy’s oil and gas firm ENI S.p.A. had a number of “good news items” for delegates at the European Unconventional Gas Summit in Krakow, Poland: conventional gas was declining, each government wanted gas to secure electricity production, and a more balanced energy mix and reduction of emissions.

With those factors top of mind, his talk was focused upon future gas demand in Europe and what that meant for the development of unconventionals.

“We know that the demand is growing, but there are many factors that play a role in how the gas market will change in Europe,” he said.

Mr. Calcagni spoke of the EU’s “20/20/20” targets for reductions of 20% of greenhouse gasses and implementation of 20% of renewables by year 2020. He said he thought it would have a great effect in the next decade, especially for demand.

“Sooner or later it will affect all the countries that are leveraging on the production of electricity with coal, because it won’t be suitable for producing electricity.

“Renewable sources are intermittent in the way they are producing,” he added. “Regarding nuclear, we know what’s going on in Japan and at least one third of the nuclear power stations will be shut down. Different sources will fill in for that, which means that gas is likely to play a role in the situation that’s opening up in front of us.”

According to Mr. Calcagni, unconventional gas in Europe would not play the same role of ‘price cooler’ as it had in the US as Europe was much more fragmented.

He recalled, “Since 2004 when we had a peak in conventional gas production from the North Sea it is now quickly declining and opening up a gas demand that is quickly becoming massive. The first answer to that demand is import.

“We don’t feel that even in the latter case, that unconventional gas will represent a solution for European gas demand – probably complementary, but not filling in the gap.”

He said the scenario could be completely different if Europe was looked at on a country level.

“We know that gas import is set to grow,” explained Calcagni. “Europe is already importing 65% of its natural gas and if you look at the projection, it will continue.”

He continued: “In the last three years we’ve had 12 major events drastically changing the scenario. It seems that we are accelerating the changes, making it less predictable and changing the profitability. One thing is clear that Europe will need about 80% of gas imports to meet demand by 2020.”

The competition with Asia, he noted, had had an effect, with Europe paying three times the Henry hub price.

“The fact that there are huge reserves in Norway, Russia, and North Africa is coming back,” said Calcagni. “These governments will need to establish a cash flow very quickly. And LNG is coming back: Qatar is bringing LNG into the European market, and it’s likely to play a significant role.”

It was a competitive scenario, he said, that competition on unconventionals was set to grow.

“That will trigger mergers and acquisitions activity,” he said. “We have impact factors that can influence the evolution of the gas business. It’s important that exploration be successful.

“The advantage is that the time to put a shale gas asset to market is definitely quicker, so this is a positive,” added Calcagni, who touched upon the capability of operators to produce at low costs.

He said the presence of governments to put together a regulatory framework was of utmost importance.

Surveying the situation around Europe, he made his observations.

“Poland is the hotspot, and Germany has potential for CBM. In the UK shale gas is accepted but lacks materiality. Romania has limited activity; Hungary has tight gas but not too much at the moment. In the Scandinavian region it needs to be proved.”

Calcagni said: “Proving it in Poland will make everyone confident about the profitability of shale gas.”

“Shale gas has a high resource potential. It’s important to have access to very large acreages,” he said. “The presence of infrastructure, markets and an efficient supply chain, as well as the existence of a regulatory framework are all crucial.”

Adaptation and innovation, he said, were also important.

“Shale gas projects must be quick lean and effective,” said Calcagni. “It is a capital and operational intensive business, and it’s mandatory to reduce the operational footprint. You have to pre plan this at the early stages. The margins are coming but only if these are in place.”

He said that ENI was ready to learn by doing, and was going very swiftly up the learning curve.

He noted the sustainability challenges in shale gas exploitation, with the need to focus on the acreage with the highest potential.

“It will become only become reality if operators are able to produce at low cost,” Calcagni said. “If these are not proven, the future of shale gas is uncertain.

“The public acceptance, capability and willingness of government in establishing incentive frameworks and competition of conventional gas import and the coal lobby – these are the main factors that are playing against the success,” he said.

Source: Natural Gas for Europe

Tagged with: • • •
Dec 01

3Legs Resources: Going South in Poland

By Curve Poland No Comments »

 

After Pomorze in the North and Lubelskie in the Eastern part of the country, unconventional gas and oil exploration in Poland moves southwards:

3Legs Resources announced the start of exploration program on its licenses in Slask (Silesia) and Malopolska (Lesser Poland) regions. The three licenses (Glinica-Psary Bytom-Gliwice and Dabie –Laski) are controlled by the company’s subsidiary Lane Resources Poland Sp. z o. o.

According to a 3Legs announcement, the company has agreed changes to the terms of these licenses with the Polish Ministry of Environment and license amendments have been issued.

“These changes enable the company to acquire approximately 70 km of 2D and approximately 50 sq km of 3D seismic data, to be followed by the drilling of an exploration well.”

Katarzyna Terej, the press representative of the company in Poland emphasized that the licenses allow exploration activities for both oil and gas, both unconventional and conventional.

Terej said that preparations for seismic works has been finished in the area of Zawiercie and Jaworzno between Katowice and Krakow.

In addition, the local paper Dziennik Zachodni writes, that surveys will start soon in the area of Kozieglowy, between Katowice and Czestochowa.

Seismic works will be provided by Acoustic Geophysical Services. The Houston-based firm claimed to be the first foreign company to complete seismic survey service in Poland last summer.

Lane Energy Poland Sp. z o. o. holds six licenses in the North, where it has been prospecting for shale gas for two years, completing two wells and executing the first multistage stimulation of a horizontal shale gas well in Poland.

3 Legs CEO Peter Clutterbuck says, that commercial  development of the Baltic Basin remains primary focus for the company: “We are continuing to  do further analysis on the results of our two recent wells and we are engaged in a planning process for the 2012 programme”.

Source: Natural Gas for Europe

 

Tagged with: • • •
Nov 28

Total Will Appeal French Ban on Shale Exploration

By Curve France No Comments »

 

Total is to appeal against the French government’s decision earlier this year to cancel its permit for the exploration of shale gas, company CEO Christophe de Margerie said at the weekend.

The government said in October it had decided to annul the three shale gas exploration permits it allocated in 2010 following a law enforced in July banning the use of hydraulic fracturing, or fracking, for shale gas and oil on French territory.

Total held a permit to explore a 4,327 sq km site around Montelimar, southern France. The two other shale gas permits were held by US company Scheupbach Energy.

The ban on fracking was a response to rising public and political opposition to shale drilling. It stipulated the permit holders had two months to declare which method of drilling they would use and their permits would be repealed if they indicated the fracking technique.

In October, Total CEO Christophe de Margerie said the company had declared to the government it would not use the fracking technique and at a forum in Lyon on Saturday, he said the company would appeal against the government’s decision.

Total was told by the government its plan was not believable and the company wanted further explanation, a company spokesman confirmed Monday.

According to French law, the French company has until December 12 to appeal and the company is considering two options.

One is to formally ask the energy and ecology ministries for a detailed explanation on why the permit was canceled.

The second option is to file a formal appeal to a French administrative Court.

Total had not planned to begin exploration drilling on the site until 2012 at the earliest.

Source: Platts.com

Tagged with: • • • •
Nov 23

San Leon Energy Interest Begins Irish Appraisal

By Curve natural gas in Europe, Realm, San Leon Energy, Shale Gas plays in Europe No Comments »

 

Providence Resources has begun appraisal drilling operations on the Barryroe oilfield, located in the Standard Exploration Licence 1/11 in the North Celtic Sea Basin, offshore southern Ireland.

The company is now drilling the 48/24-J appraisal well in the Barryroe field using the GSF Arctic III semi-submersible rig.

The well will offset and primarily appraise the previous Marathon Oil operated 48/24-3 (1990) well, which tested about 45 degrees API light sweet oil at about 1,600bopd from Base Cretaceous sands.

Providence said the 48/24-J well is planned to acquire a modern set of wire-line logs, together with an orientated conventional core through the primary objective.

Providence is the operator of the licence with a 50% interest while its partners San Leon Energy and Lansdowne Oil & Gas hold 30% and 20% interests, respectively.

Source: Energy Business Review

 

Tagged with: • •
Nov 14

Former Realm CEO Talks About Shale “Powerhouse” in Europe

By Curve Realm Energy No Comments »

 

According to the former CEO of Realm Energy there’s only one phrase appropriate to the newer, bigger San Leon Energy following its pending acquisition of Realm Energy: “shale powerhouse.”

In the wake of the deal, which was announced on 26th August and formally closed November 10th, James Elston, former CEO of Realm commented: “San Leon effectively becomes a shale powerhouse in Europe. The combined San Leon-Realm is so big in so many different plays that in my mind it’s almost got a ‘can’t fail’ sticker on it”

Mr. Elston, now Director of Palladian Energy Advisory, said that the broader shouldered San Leon had the likelihood of some good assets in the Paris Basin, a lot of good assets in Spain and interesting things in Morocco – that they already had – as well.

“If you combine that with San Leon’s acreage in Poland, and the fact that they’re in two plays in Poland: on one they have their JV with Talisman Energy Inc., which was the best farm out deal anyone had achieved at the time, and I think it still ranks pretty highly – San Leon got a good deal in getting Talisman in, and Talisman are brilliant shale players, so they’ve got a brilliant partner in Talisman.

“With Realm they’ve got a lot of un-farmed out acreage close by,” he continued. “So if you like Talisman are effectively going to de risk quite a lot of the combined San Leon-Realm acreage position, while San Leon keeps 100% of that – they keep the upside there and don’t need to spend that much money at the moment.

“It builds real scale in Poland,” said Elston.

On top of that, he added, San Leon had a million acres in Poland’s Carboniferous shale play.

“What’s interesting about the carboniferous is that there are lots of successful carboniferous shale plays – the Barnett, the Fayetteville and the Woodford are all Carboniferous, so the great thing about it is you know that the tiny fossil animals have formed the right kind of pore structures in the shale. You know that that’s going to work.”

In slight contrast, he said that what one might not know with the Silurian or Cambrian shale plays – like that which had been drilled in eastern Poland – is whether or not the tiny fossils in the rock provided the right kind of pore structure for shale. “That’s one of the things that we’re waiting to see with all the testing taking place,” stated Mr. Elston.

He summed up: “In Poland, San Leon now has two massive opportunities in different shale plays and it’s really augmented that with Realm.

“But in terms of what Realm brings to San Leon, there’s this JV with applications in the Paris Basin, which is the play closest to my heart. San Leon will acquire ConocoPhillips as a partner there for when they get license awards in Paris for the future time when I believe that fracking will be allowed again.”

In August, he believed that in other places Realm had made massive moves. In fact, on 21 September Realm was awarded two out of the 10 permits it applied for in Spain, with a likelihood of a further six 100% awards for concessions comprising over 1.7 million acres.

“Despite the market collapse after the deal was announced, effectively Realm shareholders who took San Leon stock or exchangeable shares will hopefully get the chance to see the rise in value over the coming months with the security at a greater scale that there is in working with the San Leon team for whom there’s a tremendous set of opportunities to exploit. They’ve got the capital, staff and systems – it’s a operationally much bigger company than Realm; they’ve got 15 people just working in Warsaw on the Polish plays.”

“For former Realm shareholders who took San Leon stock or exchangeable shares you’ve got the chance, to actually follow that through and see the upside,” he explained. “This wasn’t a cash deal that capped the upside for the Realm shareholders, it’s the opportunity to really see the growth through San Leon shares into the future, so it’s a ‘win-win’ situation.”

Regarding James Elston’s relationship with Realm, he recalled he was lucky enough to meet a gentleman called Craig Steinke (Realm Energy International’s Executive Chairman) at a conference in London in late 2008.

“We started talking, which ended up in the formation of Realm Energy, which I think was really timely because we were able very rapidly to get up the learning curve on shale in Europe, with Halliburton’s help, and quickly build a business at a time when things were getting immensely competitive. The Majors had woken up and you were up against them in a lot of jurisdictions, you had to move very rapidly.”

“In North America, with his previous vehicles he’s been an early mover in basins where coal bed methane (CBM) and to a degree shale gas have been developed” he explained of Mr. Steinke. “So he’s made his first fortunes from those plays, which was the attraction to me to get it together with him. We basically got together with another angel investor, started the company and then reversed it onto the Toronto Stock Exchange.”

Elston recalled, “I was CEO for the first year, but with the movement towards rapidly getting more operational on the ground, particularly in France (Pre the frack ban surfacing), and just bigger in general, there was a need for someone operationally more experienced in the senior management team than me. So it was the right time to move on.”

He explained Karl DeMong, Realm’s new VP of Operations, who is well versed in operating very complex shale drilling and fracking operations in Canada, was from large E&P Apache Corporation. Recently Realm strengthened their team further adding Lindell Bridges, the eminent shale geoscientist, as VP Exploration. Mr. Bridges has helped large US E&Ps EQT, EOG Resources, Inc.and Chesapeake Energy Corporation crack the shale codes in the Marcellus, Barnett and Fayetteville respectively in leading their geoscience teams in those plays.  Elston added “Lindell is probably the most renowned shale geoscientist working in Europe at the moment.”

Meanwhile, Mr. Elston said he had a mixed initial reaction to San Leon’s pending purchase of Realm Energy.

“The team at Realm was strengthened tremendously in second quarter, and I think they really had the ability to take things forward themselves. I thought Craig and the team could’ve done a lot more on their own. The two main shareholders in Realm, (one of which is Quantum, a George Soros vehicle) are also shareholders in San Leon, so I think it was shareholder driven consolidation really,” Elston explained of the merger.

“I would’ve liked to have seen Realm go on for a bit longer on its own. C’est la vie.”

Without the merger, he contended that Realm was not going to have any “drilling newsflow” for some time, but that San Leon had plans to drill a lot of wells in Poland.

As Director of Palladian Energy Advisory, James Elston now spends his time helping small energy companies raise money by working with small investment banks and private equity firms. Elston is working on several startups, as well as giving sermons as a “rational evangelist” on shale gas.

Source: Natural Gas in Europe

Tagged with: • • • • • •
Previous Entries
preload preload preload