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Oilfield Technology,

Poland extracting record shale gas in test well

A previously unseen amount of shale gas in Europe has been extracted by Lane Energy Poland, an exploration company controlled by ConocoPhillips. According to reports, its test well in northern Poland is extracting some 8000 m3/d of shale gas.

“Lane Energy Poland confirms the Lebien 2H well is currently flowing some natural gas, however at non-commercial rates,” Laurie St. Aubin, President of Lane Energy said in a statement. Production testing at the well started in July.

Although the daily amount of gas being produced at the Lebien 2H well does not qualify as commercial production, it is currently the largest obtained in any shale gas well so far in Europe.

“It is too early in the exploration phase to determine if there is opportunity for commercial success,” St. Aubin said, adding that more wells will need to be drilled to confirm commercial rates of flow. Lane Energy Poland is planning two or more wells next year.

“This is very good news for Poland and European oil geology,” Deputy Environment Minister and Poland's Chief Geologist Piotr Wozniak said.

Poland has estimated its recoverable shale gas reserves at up to 768 billion m3, and has issued more than 100 shale gas exploration licences to local and international firms that have drilled 48 wells to date.

However, some companies operating in Poland have complained that red tape and difficult geology is delaying the commercial output of shale gas. This year, Marathon Oil and Talisman Energy followed ExxonMobil in pulling out of Poland.

The Netherlands delays shale gas drilling decision

The Netherlands’ Economic Affairs Minister Henk Kamp has announced that the Dutch cabinet have postponed a decision to let Britain's Cuadrilla Resources to drill test wells in the central province of Flevoland. Mr Kamp said 1½ more years were needed to study the potential effects of hydraulic fracturing on the environment before allowing any commercial ventures.

The Dutch Minister said the cabinet would study how local governments can exert more influence in establishing conditions under which licenses for the exploration and possible drilling would be issued.

Cuadrilla Resources said it “regretted” the government decision, but Company Director Frank de Boer noted the company would take advantage of the delay, giving it more time to present its case to sceptical lawmakers and local communities.

Kuwait conducting studies into shale gas viability

Reports from Kuwait suggest the country is conducting studies into the possibility of extracting shale gas from recently identified reserves, although it is still years away from any commercial operation.

Earlier this year, Sami Al Rushaid, Chairman and Managing Director of the state-owned Kuwait Oil Company (KOC), announced that a commercially viable shale gas deposit had been discovered and would be developed.

Independent Energy Analyst Kamil Al Harami expects that Kuwait, which does not have the experience or the technology to go it alone, would have to partner with foreign operators to develop any shale gas fields.

“If the Kuwaitis don’t specify a deadline for the project and don’t seek help from international companies, then their plans to develop the shale and sour gas deposits are just daydreams,” he said earlier this year.

Analysts have noted that Kuwait has time to consider partnering companies and can wait until shale gas extraction and processing technology becomes cheaper, as economies of scale bring down the price. In the meantime, many of its conventional gas fields have yet to be fully developed.

Drilling in Uruguay oil shales

Drilling is set to commence to test the oil potential of a 3.5 million acre shale play in Uruguay, according to Petrel Energy who will be drilling two coreholes targeting the organic rich shales in the Norte Basin before the end of the year.

Ministerial approvals for the drilling have been received and two local drilling companies have been mobilised to drill the wells simultaneously to estimated depths of 750 and 1250 m.

Operator Schuepbach Energy International is counting on the data from the coreholes to determine the distribution of organic-rich shales and other potential reservoirs, and drilling will be followed by seismic acquisition to guide resource assessment.

The same age as the Marcellus play, Uruguay’s shale play is considered similar to the successful Bakken shale play, where oil from 6097 wells in in North Dakota produced a record high total of 811 000 bpd of oil in July 2013.

Oil and gas companies receive green light to go after Monterey Shale in California, USA

Recently, California Governor Jerry Brown signed a bill requiring more disclosures on fracturing, which producers have been reporting to the state on a voluntary basis. The law takes effect at the start of 2014. Tupper Hull, spokesman for the Western States Petroleum Association said this decision has paved the way drilling and fracturing in the state’s prolific Monterey Shale.

Although the regulations require extensive permitting, testing and notification, Hull noted, there was a concern the state would impose a moratorium on fracturing.

“We are certainly encouraged that we now have a platform with which to go forward and develop the state’s resources, including the Monterey Shale, using all the available technology, including hydraulic fracturing,” Hull said.

The Monterey Shale holds an estimated 15.4 billion bbls of recoverable shale oil, or as much as five times the amount in North Dakota's prosperous Bakken field, according to 2011 estimates by the Department of Energy. However, the field is different from other shale plays in that it is buckled rather than horizontal due to the ample seismic activity in California. The geologic make-up of the shale also means that, in addition to fracturing, companies are using hydrofluoric and hydrochloric acids to open channels in the rock and release the oil, a method called acidising.

The big players in California currently consist of Occidental Petroleum Co., Plains Exploration & Production Co. and National Fuel and Gas Co.

Japan and Canada close to shale gas export deal

According to Japanese officials, Prime Minister Shinzo Abe and Canadian Prime Minister Stephen Harper are expected to agree to increase Canadian shale gas exports to Japan from around 2020.

The envisioned shale gas exports are expected to total 40 million tpy, and the gas will be transported after being processed into LNG.

Canada is following its North American neighbour into Japan. The US plans to start shipping 6.7 million tpy of shale gas to Japan from around 2017.

Australia’s energy industry climate outweighs China’s shale resources

Although China boasts the world’s largest potential reserves of shale gas, analysts are looking to Australia to win the race to be second behind the US in developing its unconventional reserves.

Currently, both countries face substantial challenges that have principally been overcome already in the US. According to the Energy Information Administration, Australia’s shale gas reserves are around 437 trillion ft3, about 40% of China’s 1115 trillion ft3.

Australia has a few advantages over China to begin developing these reserves. The primary advantage cited is location: its fields are located in remote basins, away from population centres and close to existing oil and gas infrastructure. Australia’s second-largest energy company Santos has recently commenced shale output on a commercial scale and plans to feed the gas into an LNG plant it is building in partnership with Malaysia’s Petronas.

Australia’s industry climate means that it is an easy place for global majors to do business; there is legal certainty for long-term investments and a tradition of foreign investment in the oil and gas sector. Earlier this year, Chevron invested US$ 349 million to buy into acreage. On its end, China has conventionally seemed reluctant to promote foreign business in its shale reserves, although this might be changing.

In the past, Chinese state-owned firms PetroChina and Sinopec have drilled a few shale oil wells, but interest seems to have dwindled, possibly due to high costs. This decline prompted China to award exploration licences to 16 companies in 2012.

Out of these, Hess Corp., which has experience with shale oil in North Dakota, entered an agreement to develop the 800 km2 Malang block of Santanghu basin in China's northwest region of Xinjiang with PetroChina this summer.

“Shale oil is a tough nut to crack as there are very limited data on it,” an official with a global energy company said. “There aren't that many opportunities for foreign firms as China has only offered a few blocks (for joint study).”

Analysts have called China’s target of 6.5 billion m3 of shale production by 2015 optimistic, and even if achieved, this would equal less than 3% the United States’ shale gas output in 2011.

Edited from various sources by Cecilia Rehn

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