Skip to main content

Eastern Europe leading Europe in shale gas race

Oilfield Technology,


Poland and Ukraine aim to free themselves from reliance on Russian gas imports, and are making plans for domestic shale gas production, according to a new report by energy experts GlobalData.

The new report argues that shale development is challenged by Eastern Europe’s difficult land access, inadequate infrastructure, increasing protests against hydraulic fracturing and limited availability of drilling equipment, but acknowledges that positive government attitudes are putting these aspirations in reach.

Russia holds enormous natural gas reserves, and their export business has resulted in a near monopoly held by major Russian natural gas producer, Gazprom, throughout the East European region.

Poland is currently at the forefront of shale gas development in Europe, and is believed to have significant recoverable shale gas reserves in the region. The country currently contains recoverable shale gas reserves of between 12.4 trillion ft3 and 27.4 trillion ft3, with maximum recoverable shale gas reserves at 68.6 trillion ft3, which if exploited can provide for at least 24 years of the country’s natural gas needs at current consumption rate. Representing around 30% of the total European shale gas market, Poland is aiming to maintain this dominance through numerous exploration projects and concessions.

Poland’s initiatives are backed up by suitable fiscal regimes, as the country strives to break its dependence on Russian shale gas imports and benefit from the huge fiscal stimulus in tax revenue and employment that domestic production could provide. Poland’s major energy company PGNiG has already achieved technical shale gas production and aims to start commercial-scale shale gas production in the next two to three years. Positive results from exploratory activities are needed to drive further investments in Poland, however, negative results from ExxonMobil’s two exploratory wells and their subsequent exit from Poland’s shale market raised doubts about the prospects of shale development in the country. However, other major international companies such as Chevron and ConocoPhillips are continuing their operations in Polish shale gas basins.

Practical issues are proving problematic, however. Large parts of license areas are located near major cities, agricultural land and tourist destinations, and will require comprehensive environmental impact assessments before development can take place. Poland also lacks a competitive market for drilling contractors and equipment suppliers, which means a limited supply of equipment and professionals to support shale development efforts in Poland. Transportation infrastructure is also lacking, hindering the access of heavy equipment to shale developments.

Many roads are in poor condition and the railroad infrastructure is inefficient and unable to provide last-mile connectivity. Shale development also requires construction of new gas pipelines. Poland currently has gas transmission interconnectors with countries such as Germany, Ukraine and Belarus, but a large part of the existing pipeline infrastructure is aging and needs refurbishment. As shale development efforts in Eastern Europe become bigger, and graduate from exploration projects to production projects, these practical problems will only worsen if not addressed.

Competition is rising for Poland too, as a new force emerges in the European shale gas market. Ukraine’s government is showing increasing interest in the industry, similarly aiming to reduce Russian imports by producing its own shale gas. A positive inclination for shale development is apparent in the addition of shale gas to the country’s list of strategic minerals, which is expected to improve investments in the sector, garnering fiscal and policy support from the government. The Ukraine holds around 7% of Europe’s total shale gas reserves, representing a potential goldmine.

Adapted from press release by Peter Farrell.

Read the article online at: https://www.oilfieldtechnology.com/exploration/24072012/eastern-europe-to-end-dependence-on-oil-and-gas-from-russia/

You might also like

 
 

Embed article link: (copy the HTML code below):


 

This article has been tagged under the following:

Oil & gas news