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    Bulgaria: Exploring Natural Gas for Energy Security

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Summary

Bulgaria seeks shale gas production as a possible way for the country to diversify its gas supply and diminish its dependence on Russian imports in the years to come.

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Bulgaria: Exploring Natural Gas for Energy Security

In the context of tightening resource supply, Bulgaria is more than ever keen on exploring any possibility to guarantee its energy security.

Recent months have been rich in events related to shale gas production as a possible way for the country to diversify its gas supply and diminish its dependence on Russian imports in the years to come. However, much like in the rest of Europe, shale gas did not miss to spark environmental controversy provoking civil protests across the country.

When in June 2011 the government announced that it issued permission for U.S. based Chevron Corp. to carry out seismic tests and eventually start shale gas production after a couple of years in North-Eastern Bulgaria, a series of protests swept the country. The resistance was so great that in February then energy minister Traicho Traikov saw no other option than to pass to the parliament a ban on all activities, including preliminary tests, related to hydraulic fracking. Social awareness about the potential environmental risks from exploiting this yet unexplored resource rose, thus making Bulgaria the second European country after France to strike out shale gas as an option in the near future.

A premature decision?

Society was more or less divided on the subject. Stating that pro or contra moods prevailed at the time of the ban would be precarious most of all because there was not enough clear and unbiased information about shale gas and fracking and the better-safe-than-sorry approach was adopted in order to avoid further social tension.

Ruling party GERB and PM Boyko Borisov, known for their good relations with the U.S. and European leaders, periodically re-confirm their support of the shale gas exploration and production.

Nevertheless just days after the prohibiting text was passed there was a strong scientific opposition to it probably shown the best in an interview of geologist Prof. Kristalina Stoykova for the Bulgarian National Radio. Stoykova, who worked in the early 1990’s with U.S. company Texaco on conventional oil and gas projects in Bulgaria, stated that the ban on shale gas was hasty, given that the potential stocks could provide more energy independency for the country now tied to its sole gas provider Gazprom.

Furthermore, Delian Dobrev, named the new minister of economy, energy and tourism, after Traicho Traikov resigned due to a failed business forum in Qatar (so claimed Borisov), recently openly said that “the ban could be lifted, should there be enough evidence that the technology is not that harmful to the environment and the health of the population in the affected areas”.

Even though the ban is already a fact, the “battle” with environmental harms of possible shale gas production would not be complete unless the geological factors of the region are considered. Bulgaria and Romania sharing a common geological area which is of great interest for gas companies, the lack of similar restrictions in Romania were also considered a possible threat to Northern Bulgaria’s nature. Despite recent speculations that Chevron would also retreat from shale gas prospects in Romania, the company announced that throughout 2012 it would proceed with exploration and seismic data surveys in Constanta province, situated just a couple of kilometers from the Bulgarian border.

A reconsideration of the shale gas ban?

On April 4th, a special temporary parliamentary commission was created. Its main purpose is to explore and analyze “good practices and regulation” concerning shale gas. The commission came to reality after a joint proposal by ruling party GERB and the democrats from the Blue Coalition.

During the first meeting of the temporary commission in charge of re-evaluating the shale gas moratorium, Dobrev has offered that the restrictions on the pressure of liquids used when drilling for oil and gas be abolished.

These restrictions have been included in the text that bans shale gas production but they also hinder the conventional output, Dobrev said.

The energy ministry said it would send the commission a proposal in order to allow conventional oil and gas extraction.

“The shale gas ban does not allow drillings deeper than 200 m. The gas storage at Chiren is also blocked because natural gas cannot be compressed due to the restrictions. It cannot be repaired because pressure of drilling is limited to only 20 atm”, Dobrev said.

He concluded that Bulgaria is the only country that restricted voluntarily domestic conventional gas when the prices of fuels are soaring.

Environmentalists stated that this is rather a speculation an d that the shale gas ban does not hinder conventional drilling.

Bulgaria still relying on conventional gas

Scrapping shale gas prospects in the next years does not mean that conventional gas is also declining. Even though Bulgaria is a rather small gas consumer with some 3 bcm (billion m3) annually, with the global economic crisis pushing this number down to almost 2.5 bcm in 2009 – the lowest level since 1976, there is a significant growth potential. Only 3% of the nation uses natural gas for domestic needs and the government sees further opportunities for stimulating energy efficiency through including household gasification and gas infrastructure development in its long-term energy efficiency strategy.

Meanwhile more and more district heating utilities are looking to replace ageing coal units due to be closed in the next decade with gas-fired turbines which seem to offer more flexibility in meeting fluctuations in demand.

All these factors, along with the fact that local gas output amounts to only 5%, the other 95% coming from Gazprom via one pipeline through Ukraine, clearly justify the determination of Borisov’s administration to seek diversification opportunities as fast as possible.

More gas routes

In the past month PM Boiko Borisov and energy minister Dobrev took on a series of visits to Turkey, Georgia, Armenia and Azerbaijan – the latter being the homeland of what currently seems to be the most promising gas field for transporting gas to Europe - Shah Deniz II. Rivaling gas pipeline projects such as the Trans-Adriatic Pipeline (TAP), the Trans-Anatolian Pipeline (TANAP) and EU-backed Nabucco have been racing with varying success to secure gas quantities from Shah Deniz.

Without a doubt the yet insecure realization of the European megaproject Nabucco, in which the state-run Bulgarian Energy Holding holds an equal share of 16.67% together with Botas (Turkey), MOL (Hungary), OMV (Austria), RWE (Germany) and Trasgaz (Romania), have motivated Borisov to seek other opportunities that will give result in the next couple of years.

This is why the government has been working in order to speed up the construction of gas interconnectors with neighbor-countries, especially with Turkey, setting it with highest priority.

“Caspian gas is basically the only viable option for Bulgaria to diversify its supplies”, Borisov stated during his visit in Georgia on April 2.

Relying more on domestic capacities

The “Caspian tour” of Borisov was prolific in ideas of using or creating local opportunities for natural gas developments. The prime-minister launched the idea of creating gas LNG terminals at Bulgaria’s Black Sea ports in Varna and Bourgas which would receive tankers with Azeri gas. This would only be possible, if Georgia invests into finishing its LNG terminal at the port of Poti.

The visits of PM Borisov and minister Dobrev have also rekindled the idea of finding more significant gas deposits in Bulgaria’s Black Sea blocks.

“These unexplored blocks at sea could hide tremendous quantities which would bring imminent benefits for the end-consumers despite the high costs of a potential output”, Borisov stated.

If such projects are developed at a certain point however, the current text prohibiting fracking and the use of “fluids” concerning shale gas would have to be modified. “The ban about shale gas exploration and production hinders certain aspects of conventional gas output and it will have to be changed”, energy minister Dobrev said.

This is evidence that even though put on hold shale gas development is not indefinitely scrapped. Currently it should be regarded more as a background opportunity, as importing non-Russian natural gas and searching for local resources is clearly with higher priority and will remain in the spotlight during the next years in Bulgaria.

This article by Lyudmila Zlateva is produced by Natural Gas Europe in media partnership with Publics.bg