The rapidly accelerating number of shale gas plays in the United States has been a boon both for the industry and the end users of the natural gas being produced.
Besides its positive impact on the drilling rig count, the shale gas action has resulted in burgeoning supplies of this relatively clean-burning “homegrown” fuel.
The operators’ positive view of the sizeable producing potential for shale gas plays was rather dramatically reinforced recently with the announcement that industry behemoth ExxonMobil intends to acquire XTO Energy, which is a leading developer of U.S. unconventional resources including shale gas and oil. The deal reportedly is valued at $41 billion.
This announcement was followed by another striking testament to the upside for shale gas plays, when French company Total SA inked a joint venture arrangement with shale gas veteran Chesapeake Energy. Included in the deal is a 25 percent stake in Chesapeake’s sizeable Barnett Shale holdings.
Given the continuing highly publicized activity in North American shale gas plays, it’s easy to overlook the fact that shales and other unconventional gas targets don’t stop at the U.S. borders.
Europe, for instance, is attracting considerable interest in its unconventional gas reserves overall – shale, coalbed methane and tight gas.
Some regions are particularly appealing for shale gas potential.
Think Poland, for instance.
“The Silurian shale that runs through Poland is very laterally extensive and reasonably thick – up to 200 meters potentially thick – and looks like it’s been in the gas window,” said Rhodri Thomas, European upstream research manager for Wood Mackenzie.
“It has a high organic content, and the silica content indicates it could be more suitable for fracing versus a ductile shale,” Thomas noted. “It looks like very interesting shale for shale gas potential.”
Provided the shale proves to be an economically viable resource, the possibility exists that 48 Tcfg could be recoverable in over a decades-long period, according to Thomas.
Any significant new gas discoveries and production in Poland could enhance energy security for the country – and also its neighbors.
Poland currently acquires about two-thirds of its natural gas via imports from Russia. It recently announced the possibility of supply cuts to some of its industrial customers, depending on temperatures and the possibility of lowered supply volumes from Russia.
Some domestic-based E&P companies already are setting up shop in Poland to take advantage of shale gas opportunities.
For example, ConocoPhillips and Marathon – both with shale gas expertise honed domestically – are acquiring some big stakes to get in at the beginning of what ultimately may become a shale development boom of sorts.
Marathon currently holds licenses in Poland that total about 545,000 acres, according to John Porretto, media relations spokesperson at Marathon. He noted they are pursuing additional licenses.
The present holdings include an onshore exploration license of 249,000 acres at the Orzechow Block in southern Poland, where Marathon is operator and has a 100 percent working interest.
At the Kwidzyn Block in the north central region, the company is operator and holds a 100 percent working interest in 296,000 acres.
During a Marathon presentation to analysts, it was noted that Poland’s lower Paleozoic shales host a range of TOCs ranging up to 7 percent. Shale thickness varies between 100 and 500 feet, with well depths between 8,000 and 13,000 feet.
ConocoPhillips also has been busy putting together a significant position to test this promising potential shale gas play.
“We had tremendous wealth of experience in shale gas, and we have diverted a lot of that to screening the best plays overseas,” noted ConocoPhillips Senior Vice President for Exploration and Development Larry Archibald, an AAPG member, during a presentation to Barclays Capital 2009 CEO Energy and Power Conference, which included a brief look at the company’s position in Poland.
“We have just signed an evaluation agreement with (Warsaw-based) Lane Energy, which gives us the option to earn 70 percent and six licenses, about a million acres,” Archibald said. “This is a very inexpensive option to target the Silurian-aged shales in the Baltic Depression.”
Archibald laid out a list of reasons to like this type of play:
“All the things we like in upside (are) in this type of play,” he said, “so taking that expertise out of North America to screen some international ventures is the right near-term move.”
The company’s efforts in progress in Poland include seismic activity, which was scheduled to finish in fourth quarter of 2009. The initial well is predicted to go down in first quarter 2010.
Developing a thriving shale gas industry in the EU likely will entail a game plan that differs significantly from the U.S. experience.
The large firms that initially shunned the shale in North America are leading the charge overseas, while it’s the small independent companies who are the backbone of the domestic unconventional shale gas plays. These flexible wildcatter-type companies are a rarity in most European countries as are the myriad service companies that drive down costs via competition.
Additionally, it’s speculated that the relative lack of open land for development due to population density has the potential to pose problems for European activity. This type play often requires the drilling of numerous wells.
Just don’t expect these type obstacles to temper the current enthusiasm.
“People are searching everywhere, looking for the Barnett of Europe,” Thomas said. “There’s a lot of licensing going on, and some wells have been drilled, but we’re really in the early licensing of plays.
“There’s large gas demand in Europe and declining indigenous gas supplies,” Thomas noted, “and we need to provide encouragement for development of unconventional gas.”