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    Producers Scramble to Find Viable Shale Gas Play in Europe

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Summary

European shale gas plays continue to draw interest across the industry, with both major international oil companies and smaller independent producers...

by: C_Ladd

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Poland, Sweden, , Shale Gas , News By Country,

Producers Scramble to Find Viable Shale Gas Play in Europe

European shale gas plays continue to draw interest across the industry, with both major international oil companies and smaller independent producers rushing to snap up acreage across the continent.

Europe’s unconventional gas potential is estimated at a relatively modest 510 trillion cubic feet, compared with North America's 6,000 Tcf and China's 4,000 Tcf.  Nevertheless, factors such as proximity of the resource to markets and a political drive to reduce energy dependency on Russia make European shale gas an attractive proposition.

Poland in particular has seen a scramble to acquire exploration acreage.  The country recently issued 44 shale gas licenses covering hundreds of thousands of acres, with US majors ExxonMobil, Chevron and Marathon Oil among the companies picking up permits.
ConocoPhillips is also active in Poland through its joint venture with Lane Energy, a subsidiary of UK-based 3 Legs Resources. A consortium led by Conoco will be the first to drill for shale gas in Poland in the middle of this year, according to Henryk Jezierski, the country’s chief geologist.

Exxon also has positions in Germany and Hungary. The oil giant expects to drill 10 test wells this year in Germany’s Lower Saxony basin but it has not announced any further plans in Hungary after disappointing results last year. Exxon and partners Mol and Falcon plugged and abandoned a well they drilled in Hungary’s Mako Trough after it produced more water than gas. Meanwhile, Royal Dutch Shell started a test drilling program in southern Sweden in January. It plans to have drilled three wells by the end of March.   Shell is also testing shale formations in the Ukraine along with several exploration programs outside of Europe. For example, Shell and PetroChina signed an agreement in November to jointly develop shale-gas resources in southwestern Sichuan province. BP and Sinopec are in talks intended to produce a similar agreement.


Back in Europe, smaller firms are also flocking to shale plays. So far this year, EuroGas Ukraine Ltd, a subsidiary of New York based EuroGas acquired three unconventional gas concessions in eastern Ukraine, while Vancouver-based Realm Energy said it had submitted applications for oil and gas rights in seven European countries, extending over 1.5 million acres of land.  Realm is collaborating with oil field service giant Halliburton to explore and develop shale plays in Europe and elsewhere.

The rush to emulate the success of the North American shale gas boom in Europe drew a skeptical response from the chief executive of one of the leading US shale gas producers last week.  “It is a little bit curious if not a little bit funny that a lot of the majors that missed the US shale plays are now describing themselves as shale experts and Poland and places like that,” Chesapeake Energy's Aubrey McClendon told the Credit Suisse Energy Summit in Vail, Colorado.
 McClendon noted that Chesapeake had looked into the global potential for shale gas as part of its joint venture with Norwegian firm Statoil. “I haven’t seen anything yet that is going to rival anything we’re doing in the US from a return perspective,” he said.
 He went on to say that he thought companies would have a hard time in Europe because it would be hard to find viable plays with the necessary combination of factors: “the right rocks”, reasonable commercial returns, favorable laws, infrastructure and indigenous demand for gas.

By Deirdre Daly for Oil Daily