NGFE Reports: Facing a Brave New Energy World in New Europe

NGFE is pleased to report from Global Shale Gas Forum in Berlin, Germany organized by Marcus Evans. The following is our brief summary of the events of Day 1 of the conference:

The movers and shakers of the global shale gas revolution are now gathered in Berlin, Germany, 6-8 September to review the Prospects for Europe and Emulating the USA’s Success in Capitalizing from Unconventional Gas Reserves.

Over 20 years after the reunification of Germany’s divided city, the dynamic business dynamo, Berlin, arguably the capital of the new Europe, is proving to be an apt choice of venue for discussing how the continent will fulfill its energy needs in the coming decades.

While presenters at the Global Shale Gas Forum noted European mandates in the coming decades to cut emissions in regards to electricity generation, presumably by embracing natural gas, for now, Europe is still highly dependent on imported gas.

One place in which Europe’s natural gas fortunes could change, though, is Ukraine.

Wolfgang Rauball, CEO & Chairman Chief Geologist, Eastern Europe for EuroGas, Inc. spoke about his company’s long-term commitment to the Silurian shale basin in eastern Ukraine which, given the political will, could help that country move towards self-sufficiency.

“Today, Ukraine is not energy self sufficient, but is an energy giant which has not realized its potential,” explained Rauball. “It imports a majority of the oil and gas that it consumes. The awareness to achieve self-sufficiency is not yet there. The present business climate lacks transparency and is one reason you don’t have the major oil companies trying to get concessions in Ukraine – none have been issued to date on this side,” he said (in contrast to Poland).

Pending movement by the Ukrainian government, which froze many business developments following the election of new leadership earlier this year, EuroGas, reported Rauball, will soon choose a European oil and gas major – Total and ENI are in the running – to begin its shale gas drilling operations in Ukraine this year.

For the most part, though, presenters at the Shale Gas Forum offered their enterprises’ experiences in North America and how the know-how gathered there might be transferred to shale gas operations in Europe.

“We’ve learned a great deal in the last few years,” said Talisman Energy’s Unconventional Gas Specialist, New Plays, Basim Faraj PhD, whose speech at the Global Shale Gas Forum was entitled Shale Gas: A Growing North American Reality and Its Global Implications.

“We know the geochemistry is critical,” he said, “and now the argument for gas – ‘where is it going to come from?’ is over, due to the emergence of shale gas.”

Faraj added, “Commitment is needed to make a transfer of the technology from the US.”

Senior Advisor Science & Technology at M-I SWACO, Thomas Geehan Ph.D spoke of the possible impacts on local communities affected by drilling at nearby shale plays in North America. He said, “Barnett shale water usage is equivalent to that of a town with a population of 4,000. The two most sensitive points in Europe are going to be the water usage and the waste disposal.”

Geehan listed the fracking fluid additives that need to be dealt with, like friction reducer, biocide, oxygen scavenger and scale inhibitor (sand), mentioning that this aspect has been generating public concern.

“This is the hysteria that is being generated at the moment, that people’s drinking water is being affected by nearby fracking,” he said.

Still, optimism prevailed. Reflecting upon his company’s experience at the Barnett shale in North America, ENI’s Enrico Cingolani, Senior Vice President of the Italian energy enterprise’s East Europe Program, spoke about the critical factors for realizing margins in European shell gas.

“The development costs will no doubt be high in Europe,” he explained. “The margins in the US are very tight, but in Europe the market makes for a different story. I have no doubt that we will need gas for the future in Europe, and it’s no doubt that it will be an importer in the years to come. If we take into account the sharp decline in gas production, we can have no doubt that the development of shale gas will be utilized.”

Among the crucial questions posed at the summit by Prof. Mike Stephenson, Head of Science, Energy at the British Geological Survey, was, “Can US technology be applied in Europe. Do all of the things developed there work in our shales?”

He answered, “In the longer term what we have to realize is where we are with shale is where we were 30 years with conventional, for example like sandstone. After a while you had to start thinking about sandstones, put more science into it and got more oil out of it.”

“It’s always an exciting time to be at the start of a new adventure. Unconventional gas is particularly new in Europe,” said Andrew Jennings, Unconventional Resource Manager at WesternGeco, who spoke about where surface seismic data can specifically help in reducing risk when it’s designed for shale gas development.

“The data overall is sparse in the European shale gas plays,” reported Jennings. “There’s limited seismic and limited wells being drilled. The presence of faults and natural fractures need to be understood.”