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

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Jan 25

International Shale Gas Propels U.S. Technology (and Profits)

By Curve shale gas No Comments »

Seeking Alpha contributor Kent Moors published a very informative article on shale gas today:

Last week, there was a meeting on shale gas that was standing room only. That’s hardly major news these days, as producers, consumers, environmentalists, analysts, regulators, and, oh yes, investors all focus upon the new major player in the energy market.

Except this meeting took place in The City – London’s financial district.

This may come as a surprise. After all, the way the European Union structures its energy pricing makes it more difficult for companies to make a profit.

On the other hand, rising dependence on imported gas (especially from Russia) does not sit well with Brussels.

Domestic shale gas, therefore, is increasingly regarded as the solution.

It will not eliminate the need for imports. But it may well allow Europe to renegotiate terms on pipeline contracts. And that’s more than enough to accelerate the interest in shale gas.

Gas in Europe, the Middle East, North Africa, Asia…

Now, the U.K. itself has some possible shale plays, but that nation has barely even begun to estimate the possibilities.

Elsewhere in Europe, the development has advanced beyond the discussion stage. Production is underway in Sweden (Alum), Hungary (Makó Trough, Szolnok), Austria (the Vienna Basin),and Germany (Lower Saxony).

But the real breakthroughs are likely to come from five major plays in Poland, three in France, and Ukraine – where there may actually be more shale gas potential than the rest of Europe combined.

This is taking place elsewhere, too. Geologists tell us there is more shale in MENA (Middle East and North Africa) countries than anywhere else in the world.

Saudi Arabia had ignored its natural gas until recently. Now, that kingdom is involved in an energetic pursuit of both freestanding gas and shale.

In addition to the Saudis, substantial shale gas is expected elsewhere in the Middle East – especially Syria, Iraq and Jordan.

I have already talked to a delegation from Morocco on their oil and gas shale opportunities (“Shale Gas Initiative Brings Morocco to My Doorstep,” December 13), and Algeria, Tunisia, and Libya have high prospects, as well.

However, the main global target these days is China.

There, the government has already committed to emphasizing gas as the future for electricity production. The attempt is to wean the country from its reliance on polluting, low-quality coal as fuel for power generation.

The Global Leader in Shale

Wherever you are in the world, the primary advantage in the development of shale gas is its ability to satisfy a larger portion of domestic energy requirements from local or regional production. Natural gas is also a rising source for the industrial and petrochemical applications that are essential for economic development.

The downside, of course, remains the environmental impact and water quality considerations.

Hydraulic fracking is the technology used to break open the rock and release the gas, and it employs large amounts of water. That, coupled with the chemicals used in the process, result in a fear of releasing toxic substances in flowback.

The U.S. is the global leader in shale gas (and oil) technology – both in extraction and in addressing the environmental consequences.

There are more than two dozen producing shale gas basins in the American market, along with several additional huge plays in Canada.

In response to the explosion of international interest in shale gas, the U.S. Department of State (DOS) launched the Global Shale Gas Initiative (GSGI) in April 2010.

The organization seeks to provide expertise and advice to developing countries worldwide on the exploitation of shale gas and its economic, policy, and market ramifications.

One of the reasons for the GSGI is the opportunity it presents American companies to profit from shale gas development elsewhere in the world.

Certainly, producers are interested…

Who’s Positioned to Profit

In addition to those leading the shale gas production list – such as Chesapeake Energy Corp. (NYSE:CHK) – major oil companies have used M&A to move into the sector.

Exxon Mobil Corp. (NYSE:XOM) acquired XTO, and Chevron (NYSE:CVX) absorbed Atlas Resources to target shale gas. XOM has an immediate reason, since it is already involved in several European shale plays.

Others, such as Shell (NYSE:RDS.A), Total (NYSE:TOT), Statoil (NYSE:STO), as well as the Chinese majors CNOOC Ltd. (NYSE:CEO) and Sinopec (NYSE:SHI), are farming into already-producing basins or joint venturing with experienced major producers.

There are certainly opportunities for the investor to make some profit for what the operators are doing. Yet the main advantage may well come from the technical side.

Here, the current leaders in shale gas applications remain the largest oilfield service (OFS) companies: Halliburton Co. (NYSE:HAL), owner of the patent on the primary frac technique, and Schlumberger Ltd. (NYSE:SLB), the worldwide leader in OFS.

The most significant potential for investor interest will be with those companies developing improved drilling techniques, non-chemical fracking processes, and larger-horsepower pumping equipment. Each of these categories becomes more essential as the number of shale gas wells grows – bringing renewed environmental concerns right along with it.

It has been less than a decade since the combination of horizontal drilling and fracking made the exploitation of shale gas profitable. In the interim, an initial stage of technical improvements has reduced the cost of production.

Another stage of improvements is now necessary, both to address the declining pricing of gas in the U.S. market (resulting from the rapidly increasing volume coming from shale development) and the need to make the process safer for the environment.

Currently, a number of small companies are rising to the challenge with advances in equipment, pumping techniques, and water treatment. This is going to be the next great example of the entrepreneurial spirit.

And it will receive a major boost from what is now happening elsewhere in the world.

Source: Kent Moors, Seeking Alpha

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Oct 22

Shale Gas to Radically Transform Global Energy Landscape

By Curve global energy landscape, shale gas No Comments »

New technology raises the prospect of shale gas to replacing other fuel types and radically transforming the global energy landscape, according to a new report from independent business analysts Datamonitor.

In its report, entitled “The shale gas industry outlook”, Datamonitor claims that shale gas will become cheaper than conventional sources due to technological advancements that make it easier to extract.

Shale gas is a natural gas that is retrieved from shale formations and was previously expensive to produce due to its high density. However new horizontal drilling and hydraulic fracturing technologies have reduced the cost.

The shale gas revolution began in America and according to the report, is gaining momentum in other parts of the world, with potentially huge ramifications. Sierra Highcloud, Datamonitor analyst, said: “There has been strong growth in production in the US and this is now starting to affect markets in other regions, where the implications could be massive. In particular, it has the potential to drastically alter China’s energy market.

“The country’s gas use is set to soar, driven by rising demand and government policy, which aims to increase the role of gas as a primary energy source to 10 per cent by 2020. Currently, this would result in a production shortfall. China has large shale reserves so the ability to extract from them will be key.”

According to the report, China is tapping into US expertize to extract from its shale gas reserves and companies such as Total and Shell are already making moves. In Europe, Germany has taken the lead in promoting the transfer of the skills and technology needed to boost shale gas output. Meanwhile India is exploiting its good energy ties with America and is working to catch up with China in terms of knowledge transfer.

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Feb 13

Shale gas could be paving the way for an oil-less society

By Trevor J. Murphy shale gas No Comments »

A recent article for PriceOfOil.org suggests current developments in both the oil and natural gas sectors could be heralding the “final chapters of the oil age.”

On the heels of a world economic crisis, the shift from oil to other energy sources is proving to be an entrenched reality across the globe.

Coupled with announcements by oil giants such as BP and industry analysts such as the International Energy Agency that the global demand for oil is on the verge of peaking, other energy resources – like shale gas – are taking over.

A major reason people are abandoning oil is its price. The Organization of the Petroleum Exporting Countries (OPEC) has warned that the slow pace of global economic recovery in 2010 would lead to a subdued improvement in oil demand this year.

Though the global economy suffered over the last year, oil prices remained stagnant while people were forced to cut costs wherever possible, in some cases causing them to look elsewhere for energy sources.
The allure of “cleaner” gas is also drawing people to gasses like shale because it does not emit as much pollutants into the air when consumed nor does it use as much energy, water and resources to extract.

The shift is causing major problems for the oil industry.

This week French oil giant Total said more closures to refineries around the world due to “fuel product overcapacity,” and last month Russian gas mogul Gazprom announced plans to re-evaluate a large Arctic gas extraction project because of the boom in shale gas (read Russian Gas Giant Feeling The Effects of Shale Gas).

SOURCES:
PriceOfOil.org: “Is an oil-less recovery on its way?”
PriceOfOil.org: “Peak Demand Will Happen Before Peak Supply”
Reuters: “An oil-less recovery dims the future for oil”

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Jan 29

Russian Gas Giant Feeling the Effects of Shale Gas

By Trevor J. Murphy energy independence 1 Comment »

The exponential potential for shale gas exploration overseas and the shale boom in the United States is forcing one of Europe’s gas giants to re-evaluate what was once considered to be a largely ambitious gas extraction project in the Arctic.

Gazprom, Russia’s biggest gas company and Europe’s biggest gas supplier, said this week they would have to reassess its plan to develop the 3.8 trillion cubic meter Shtokman gas field in the Barents Sea.  Together with partners Statoil and Total, Gazprom has planned to send as much as 90 per cent of Shtokman’s extracted natural gas to the North America, but the company admits that alternative gas suppliers and quickly developing markets for shale gas in the US and abroad is putting Shtokman development plans in jeopardy.

Andrew Neff, an energy analyst at HIS Global Insight says shale gas is “playing havoc” with Gazprom’s prices and projects.

“The potential spread of the shale gas production revolution to Europe, which is believed to have significant untapped reserves of its own, would clearly have a profound impact on Gazprom’s production and marketing strategy,” he told The Guardian.

In an interview with Russia Today television in December, a Gazprom spokesman called shale gas “a joke” and dismissed concerns that a growth in the production of shale gas would pose a threat to the company’s foreign sales.

But the reassessment of the Shtokman fields demonstrates that Gazprom is now taking the threat of shale gas and energy independence very seriously.

Over the past two years, gas exports and revenues fell dramatically for Gazprom. While high monopolistic prices and European dependency on the Moscow-based company certainly played a role in causing country’s to look elsewhere for gas, the role of shale and the desire for energy independence by some countries in Europe such as Poland has undoubtedly been affecting Gazprom.

Oddgeir Danielson, an oil and gas expert in the Norwegian Barents Secretariat, said the repeated postponement of the Shtokman project illustrates current uncertainties in that market and highlights Gazprom’s conflict with shale.

Directors at Shtokman Development will meet again on February 5, 2010 to agree on a new marketing plan for the offshore field. There is a possibility the directors may also delay a final investment decision on the venture.

SOURCES:
Alaska Dispatch: “Gazprom eating crow on shale gas?”
Barents Observer: “Gazprom might abandon Shtokman”
The Guardian: “BP chief hails American breakthrough in gas supplies from shale rocks”
The Moscow Times: “Shtokman Meeting to Consider Gas Buyers”
Business Insider: “Gazprom: Shale is a joke, and it can’t possibly compete with gas”

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Jan 28

Exploring France’s Shale Potential

By Trevor J. Murphy shale gas in Europe No Comments »

Though French energy giant Total recently announced a $2.25 billion joint venture with Oklahoma-based Chesapeake Energy Corp., the venture isn’t saying much about the potential for shale gas in France.

This particular deal will see Total invest billions of dollars to acquire 25 per cent of Chesapeake’s Barnett Shale assets – a natural gas field in Texas – rather than staying close to home and exploring the rich resources the European country has to offer.

“There is much shale gas in France,” said Francois Laurant, the man in charge of shale gas at Institut Francais du Petrole. “It has been seeping for centuries around the town of Grenoble in midsoutheastern France. But the disputed areas hold black shale in shallower ground than elsewhere in France like the Paris basin.”

Since late 2008, several companies have been seeking permits to explore shale gas prospects in the southern regions of the country. In August 2009, Toreador was granted a contract for the exploitation of the Paris Basin Oil Shale earning the right to develop 649,000 acres (with an additional 153,000 acres pending approval) where an estimated 65 billion barrels of oil are believed to remain in shale plays.

France’s potential – and, undoubtedly Europe’s potential – was further highlighted when oil giants BP, Shell and Statoil began talks of buying Toreador earlier this month (read: Oil giants BP, Shell and Statoil in talks to buy US-based Toreador Resources) in the interest of acquiring its French shale opportunities.

Shale gas is experiencing an unprecedented boom in the United States, but its popularity is pushing companies and entrepreneurs to look beyond US borders for prime investment opportunities. Recently, Vancouver-based Realm Energy publicly threw its hat into the ring for European exploration, concentrating on eight discrete sedimentary basins in seven European countries and submitted applications for oil and gas rights that collectively extend over 1.5 million acres of land.

SOURCE:
Oil & Gas Journal: “Shale Gas Acreage, European Database Draw Interest”
Rigzone: “Toreador Zeroes is on Paris Basin Oil Shale for Future Developments”
Toreador: “Global Activity – France”
Realm: “Realm Energy Makes Aggressive Play for European Shale Gas Deposits”

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