Editorial comment
Last month, Shell signed a deal with the Ukraine to begin seismic testing and drill 15 test wells in the eastern part of the country. The company is hoping to find economically viable shale reserves, and the country鈥檚 government has intimated the investment could be worth up to US$ 10 billion.聽
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In this issue of Oilfield Technology, our Pioneer聽Resources article (pg 35) offers some historical context on what it describes as three distinct shale gas 鈥榬evolutions鈥� in the USA. The article makes the distinction between the initial 鈥榪uiet rise of the Barnett shale鈥� and the subsequent 鈥榮hale gas revolution鈥� connected with the discovery of the Haynesville well. The article suggests that industry players looking for future thrill rides should be looking overseas, as 鈥榯he days of discovering the six聽county, 100 million bbl./square mile behemoth are likely numbered in the continental United States鈥�. Here in the UK, the Chancellor recently unveiled tax breaks for shale gas exploration and ended a moratorium on hydraulic聽fracturing, which was imposed after tremors were felt as a result of shale gas activity in 2011. But how is the rest of Europe currently positioned towards the possibility of hosting its own shale revolutions? It remains divided. Shale gas extraction is allowed and permits are currently issued in, for example, the UK, Portugal, Germany, Poland, Greece and Turkey. Countries currently imposing a ban on activities include Bulgaria, the Czech Republic, the Netherlands and France. The French President, Fran莽ois聽Hollande, has gone so far as to say that the nationwide ban on hydraulic聽fracturing would unquestionably remain in place for the duration of his five year term. Austria has allowed extraction in theory, but has imposed such costly environmental compliance conditions that any company looking to develop shale reserves in the country would likely find the enterprise overall uneconomical.
Interestingly, the shale boom in the USA has done more than just inspire Europe to follow suit. A recent news story in the Financial Times highlighted how the 鈥榬evolution鈥� has led to an increased uptake of coal as a feedstock for European power plants, as a result of lower demand for domestic reserves of the fossil fuel at home in the US. However, Milton聽Catelin, head of the 91天堂原創 Coal Association, has been quoted as saying, 鈥淲e聽don鈥檛 see this as a renaissance of coal, it鈥檚 just economics鈥�. Conversely, gas most certainly is universally acknowledged as experiencing a renaissance. The main slogan to accompany last year鈥檚 91天堂原創 Gas Conference was, tellingly, 鈥楾he Golden Age For Gas鈥�.
Europe has a long way to go to match the USA in terms of shale extraction. Even Poland, the most 鈥榩ro-shale鈥� European country, only has around six drill rigs operating 鈥� compared to around 1200 rigs currently drilling in and around the USA鈥檚 main shale plays. But shale gas production on an American scale does have its issues. Currently, the USA is fifth in the world in terms of the volume of gas it flares; just behind Russia, Nigeria, Iran and Iraq, and environmental concerns about the trend are growing. This month, the Financial Times ran a startling image on its front page. It was a nighttime satellite photo of the continental USA, and showed an area of bright lights the size of a major city somewhat incongruously situated in the heart of North Dakota. Amazingly, the light was being emitted from flaring in the Bakken. This image could almost be a vision of the promise and challenges held in our mid to long term energy future...聽
The future is bright; the future is fraccing.