American oil and gas giant Exxon Mobile said on Tuesday that two exploratory wells drilled in Poland in search of shale gas were not commercially viable.

“While we did find gas, it did not flow in commercial quantities in either of those two wells,” said vice president of investor relations David Rosenthal while discussing the firm’s Q4 2011 results.

Exxon has six exploration licenses for shale gas wells in Poland, two together with firm Total in the Lublin region and four in the Podlasie region with Hutton Energy.

Source: Warsaw Business Journal

Ukraine plans to hold a tender to choose investors to conduct geological surveys and produce shale gas in the country, Ukroil has reported. The tender is scheduled for February 2012. According to Ukrainian Natural Resources Ministry’s press office.

Natural Resources Minister Nikolay Zlochevskiy relayed the news to an American delegation headed by State Department Special  Envoy to Eurasia Richard Morningstar.

“We are interested in holding transparent tenders and for powerful investors to begin shale gas production in Ukraine. This will be a serious victory for our government team”, the minister said.

Morningstar responded, saying that the Americans were interested in producing on the Oleskoye and Yuzovskoye sections of Ukraine where the shale gas production is planned. “The United States is interested in Ukraine having energy independence”, he said.

The sides agreed to organize consultations with the US Geological Service and the Ukrainian State Geology and Mineral Deposits Service to exchange information on prospective geological formations.

Source: Oil and Gas Eurasia

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

The San Francisco Chronicle explains to readers why shale gas production is keeping their gas bills lower this winter:

Natural gas prices that slumped to a 10-year low this month could save U.S. consumers $16.5 billion on home energy bills over the course of a year, according to a senior economist at the U.S. Federal Reserve.

U.S. households might see total savings from lower gas prices of as much as $113 billion a year through 2015, including tack-on effects such as lower product prices and higher wages generated by cheaper fuel, according to energy industry consultants IHS Inc.

The projected savings is “an unbelievable amount of money,” said Greg Ebel, chief executive of Spectra Energy Corp., during a Jan. 17 interview. “That’s better than any tax cut you’ve seen out there, better than any government handout.”

If consumers end up pocketing more than $100 billion due to low gas prices, it could add a “significant” piece to U.S. gross domestic product growth for 2012 or 2013, said Robert Solow, professor emeritus at the Massachusetts Institute of Technology in Cambridge, who won the 1987 Nobel Prize in economics. “If that figure is right, it’s a substantial amount,” Solow said in a telephone interview yesterday.

The savings realized by the nation’s 113 million households will vary depending on location and how much gas makes up the home’s total energy bill. Gas utilities are passing along the lower prices they’re paying for the fuel because of a glut of new domestic production from hydraulic fracturing and horizontal drilling in shale formations.

The price of gas has plunged about 30 percent since the end of October on mild weather and oversupplies, according to data compiled by Bloomberg. Natural gas for next-month delivery fell to $2.322 per million British thermal units on Jan. 19, the lowest price since February 2002. Gas settled at $2.728 yesterday.

Consumers will likely spend about 95 percent of the direct savings they see from their gas bills, said Bernard Weinstein, associate director of the Maguire Energy Institute at Southern Methodist University in Dallas. While that amount is a fraction of the $10.245 trillion in consumer spending for 2010, “it’s a step in the right direction,” Solow said.

Electricity prices, historically tied to the gas market, also are falling, although not necessarily for consumers. That’s because many power companies have raised rates to upgrade an aging power grid, install pollution controls and build new generators.

The typical U.S. household gas bill this year would drop to $323.50 from $468.80 in the previous year at an average gas price of $2.50 per million British thermal units — a savings of $145.30, said Mine Yucel, vice president and senior economist at the Federal Reserve Bank of Dallas.

Residents are forecast to pay about 25 percent less this winter for gas used in stoves, furnaces and fireplaces than they did in 2008, when the fuel last touched highs of more than $13.50, according to the U.S. Energy Information Administration.

“I think of shale gas as a real game-changer for consumers of natural gas,” said Hank Linginfelter, executive vice president of Atlanta-based AGL Resources Inc., in a telephone interview. “It’s having a significant impact on prices.’

AGL Resources, the largest standalone local U.S. gas distribution owner, said December bills have fallen on average 25 percent from a year ago at its utilities in seven states.

Iowa gas bills fell about 19 percent in December compared to the same month a year ago on lower demand and prices, MidAmerican Energy Co., owned by Warren Buffett’s Berkshire Hathaway Inc., said. Piedmont Natural Gas Co., based in Charlotte, North Carolina, has proposed cutting rates next month that would bring the average bill down by 40 percent since 2008.

Source: San Francisco Chronicle

Wednesday, January 25th, 2012

San Leon Energy Plc (AIM:SLE) (“San Leon” or the “Company”) is pleased to announce that it has completed the acquisition of more than 2,280 km of 2D seismic across its Tarfaya and Zag Licenses onshore Morocco. The data was acquired by San Leon Energy’s wholly owned subsidiary, NovaSeis.

608 line km of high density 2D seismic data was acquired on the northern portion of the San Leon operated Tarfaya License across the J North prospect. This adds to the existing 2,289 line km of existing 2D seismic across the license. The Netherland, Sewell & Associates 2008 CPR placed 156 million barrels of recoverable prospective oil resources in the J North prospect with upside potential of more than half a billion barrels. In total San Leon currently has 12 leads and prospects across the Tarfaya license with net prospective resources of 711 million barrels of oil equivalent based on the Netherland, Sewell & Associates 2008 CPR. Several new adjacent leads have also been identified around J North as a result of the new 2D seismic data.

The new seismic data quality is significantly improved compared to previous 2D seismic data in the area as a result of longer offsets and higher density acquisition. The new data is currently being processed and interpreted by the Company in its Warsaw office.

1,674 km of 2D seismic data was acquired across the San Leon operated Zag License in Morocco (greater than 5 million acres). This is the first seismic data ever acquired across the Zag License. The combined Zag Basin aeromagnetic survey acquired in 2009 by San Leon and the adjacent license to the north was the basis for the layout of the 2D program. The Company is focusing on the Zag license for both conventional and unconventional oil and gas potential. The unconventional gas potential is primarily within the Silurian interval, whilst the conventional oil and gas potential is in the Ordovician and Devonian intervals.

The Company will continue integrating the new seismic results into its existing basin model in preparation for opening a data room to seek partners for the exploration drilling phase. Any future exploration activities in the Southern provinces will, as they have been to date, be in accordance with international law.

NovaSeis (“the Crew”) was established by San Leon to acquire its onshore seismic data at lower cost with the flexibility to optimise acquisition parameters in difficult data areas. The Crew currently has 1,200 channels of Geospace Technologies (subsidiary of OYO Geospace) cableless GSRs with five Sercel NOMAD vibrators. The Company plans continued investment into NovaSeis to expand its capabilities to 3D acquisition this year as part of upcoming seismic acquisition programs in Poland. While NovaSeis was created to serve the needs of the San Leon Energy group, it is also available to acquire revenue-generating projects outside the Company.

Oisin Fanning, Chairman of San Leon, commented:

“We view Morocco as a long term project for the Company with significant upside over a huge unexplored area. The excitement of the potential of Morocco is based upon the significant production in the same basin in Algeria as well as the huge potential for a Silurian shale gas play. The completion of our seismic program is the next step in bringing our projects closer to drilling.

I am also very pleased with our investment in NovaSeis which has helped us acquire high quality, low cost seismic and given us the flexibility to acquire more data per line km than we could have using a more conventional cable acquisition system. The next step for NovaSeis is to return to Poland where the wireless system will make a real impact by significantly reducing the surface impacts of seismic acquisition while giving us the flexibility to acquire data in areas that a traditional system would not be possible.”

Source: San Leon Energy

President Barack Obama on Tuesday pledged support for the U.S. shale gas boom, but said government must focus on safe development of the energy resource.

In his State of the Union address, Obama called for government to develop a roadmap for responsible shale gas production and said his administration would move forward with “common-sense” new rules to make sure drillers protect the public.

“America will develop this resource without putting the health and safety of our citizens at risk,” Obama said.

Obama’s proposals on natural gas were similar to previous administration comments, and would do little to satisfy oil and gas industry backers who argue that the federal government needs to stay out of the way of burgeoning shale development.

Some industry groups had hoped Obama might streamline government oversight or offer specific plans to increase access for oil and gas drilling.

Instead, Obama pressed again for ending tax breaks for the oil and gas industry in his speech, something he has pushed for repeatedly without success.

The American Petroleum Institute, the top oil and gas lobbying group, said the policies Obama promoted in his speech are at odds with expanding energy output.

“It’s a contradiction because he calls for further regulation that will slow down the production of energy and then increasing costs by raising taxes,” said the institute’s president, Jack Gerard.

Chris Jarvis, president of Caprock Risk Management in Rye, New Hampshire, said Obama avoided tackling key issues regarding natural gas, such as switching to using more gas in transportation.

“He was basically using his discussion on energy to deflect away from his critics versus really doing major changes with the U.S. energy sector and natural gas,” Jarvis said.

Improvements in drilling techniques have transformed the U.S. energy landscape in recent years by unlocking the country’s immense shale oil and gas reserves.

But the drilling boom has raised concerns about the safety of natural gas extraction techniques like hydraulic fracturing, or fracking, which environmentalists say could pollute water supplies.

Still, with fracking mostly exempt from federal oversight and most shale gas production occurring on private lands, the Obama administration is limited in its authority over the practice.

Obama said the administration would move forward with rules that would require companies to disclose chemicals used during the fracking process on public lands.

In wide-ranging comments about the energy industry, Obama also said he would direct his administration to open 75 percent of the country’s potential offshore oil and gas resources to drilling.

This proposal would be carried out in the latest offshore drilling plan released by the Interior Department in November.

Obama strongly defended his record in investing in renewable energy.

The high profile collapse of solar-panel maker Solyndra last year – after the company received $535 million in loan aid from the administration – led critics to argue that government should not be in the business of backing energy companies.

“Some technologies don’t pan out; some companies fail,” Obama said. “But I will not walk away from the promise of clean energy … I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here.”

Though Congress failed to move on a proposal he put forward last year to set a target for power plants to produce mostly clean electricity by 2035, Obama said the administration would establish zones to develop 10 gigawatts of solar and wind power projects on public lands.

In addition, the Defence Department will purchase one gigawatt of renewable energy, with the Navy purchasing enough capacity to power a quarter of a million homes a year.

Source: Reuters

The ban on the exploration and production of shale gas in Bulgaria has in no way affected the resolution of the Polish government to pursue the approach in Poland.

This was revealed by the Polish Ministry of Foreign Affairs to the Polish National Radio Thursday, a day after the Bulgarian Parliament voted to ban the hydraulic fracturing technique involved in exploring and producing shale gas.

Hydraulic fracturing – or fracking – is widely claimed to be environmentally hazardous, as it involves pumping undisclosed chemicals at exceedingly high pressures deep into the ground. Cases have been documented in which this has severely poisoned ground water.

In June, the Bulgarian government granted US gas giant Chevron a permit to explore for shale gas in a large segment of north-eastern Bulgaria, traditionally one of the country’s most productive agricultural regions.

This has led to a number of protests that culminated when last Saturday thousands came out in Bulgarian capital Sofia, Varna and Dobrich in the north-east, as well as a number of other cities.

Wednesday Bulgarian MPs voted with a large majority to ban for an indefinite time exploration and production of shale gas with hydraulic fracturing, imposing a BGN 100 M penalty for infringement.

“This will not change Poland’s existing position presented to the EU, in which every member state has the sovereign right to define its own position regarding energy resources,” the Polish Foreign Ministry said in a statement Thursday.

Some in Poland feared the country, among the first in Europe to have started exploring for shale gas, might get isolated when Bulgaria became second to ban hydraulic fracturing, following France who did so in 2011.

In Poland, as in Bulgaria, shale gas and oil are advertised as alternatives to imports of Russian energy.

A new Polish geological report says there are indications of large shale oil deposits near Warsaw, Radom (south of Warsaw) and Elblag near the Baltic coast, writes the BBC.

Source: novinite.com

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

Natural Gas for Europe tells us all about a research institute where unconventional gas is nothing new:

While unconventional gas was below the radar until the last several years in the United States, one research institute there has been working on the topic for decades.

According to Trevor Smith, Program Manager in Unconventional Gas Sustainability, the Gas Technology Institute (GTI) had been working on unconventional gas development for the last 30 years, and that included coal bed methane and shale gas studies. He told delegates in attendance at the European Autumn Natural Gas Conference in Paris, France of the Institute’s experience with unconventional gas.

He explained that GTI, which was based in Chicago, had 250 staff, and was the only not for profit in the US focused solely on natural gas.

“Although the technology has been developing for over 30 years, the stakeholders have only known about it for a short time. Society’s reaction so far has been mixed,” he explained. “A harsh spotlight has been based on the industry’s practices.”

“Industry knows the technologies are proven,” he contended. “For those outside the industry, technologies appear new, novel, dangerous, untested.”

Mr. Smith said it was necessary to separate the facts from fiction regarding the technologies – hydraulic fracturing and horizontal drilling – in Europe.

“This has occurred because of a significant vacuum,” he said of the public’s misconceptions. “There is little information about the science behind the technology. In the absence of good information, some people have formed their own conclusion.

“More difficult to change people’s beliefs after the fact,” he added.

He noted that instead of talking rationally with other groups, those protesting against unconventional gas “climbed up on ladders and shouted their judgments.”

“It’s as much about the science of human behavior as it is about unconventional gas technology,” explained Smith, who touched upon the environmental issues, real and perceived.

He said: “Water is obviously at the core of the environmental debate. Greenhouse gasses are at the forefront of people’s minds when they think about shale gas.”

His presentation showed a typical well site in the US, a farmer’s backyard in Arkansas, on which one could see construction debris, road damage, and the drilling footprint.

Smith commented: “With these images it should be no surprise about the lack of comfort over shale gas production.”

He went on to mention a better solution for Europe: multiple wellheads on a single well pad.

“Wells should be constructed with great integrity,” he said. “Fraccing fluids should not find their way into shallow sources of potable water.”

According to Mr. Smith, sound regulation built public confidence, as did a commitment to sustainable development.

“We must acknowledge that there are environmental impacts and that these impacts can be managed,” he concluded.

Source: Natural Gas for Europe

Deputy Head of Naftogaz of Ukraine Vadym Chuprun says in two or three years Ukraine will produce shale gas on an industrial scale.

At the same time, the Naftogaz deputy head noted that shale gas production was expensive. He said that when the company begins production, it drills 26-28 wells at the designated area, and up to USD 3 million should be spent on each of them.

Source: NCRU