The UK has seen a sea change in its attitude to shale gas exploration in the space of nine months. In early December 2012, the country still had a fracking ban in place. This ban was lifted in mid-December and more recently, the government announced large tax breaks for shale gas production to encourage investment in the nascent sector.
Now, amid protests against planned fracking activities in the UK, the country's Prime Minister has thrown his weight behind those who want to develop a shale gas industry there.
Rigzone has kept a close eye on recent developments with regards to UK shale gas but in this article we are looking at the state of the industry on mainland Europe, where the advancement of the industry seems to depend less on geological resources and more on political will.
Poland holds "some of Europe's most favorable infrastructure and public support for shale development," as described by a May report prepared by Advanced Resources International for the U.S. Energy Information Administration (EIA), titled World Shale Gas and Shale Oil Resource Assessment.
The report highlighted the Baltic Basin in northern Poland as "the most prospective region" with a relatively-simple structural setting for shale gas and oil exploration. It noted that the Podlasie and Lublin basins in the east and south of the country also have potential but are structurally complex, with closely-spaced faults that may limit horizontal shale drilling.
In terms of shale resources in Poland, estimates vary significantly. The Polish Geological Institute (PGI) and the U.S. Geological Survey (USGS) collaborated on a preliminary shale gas and shale oil assessment of the country in 2012. The PGI estimated technically-recoverable shale gas resources in the onshore Baltic-Podlasie region to be between 8 and 22 Tcf, while shale oil resources were estimated at between 1.6 and 1.9 billion barrels. But the corresponding USGS estimate was for around 1.35 Tcf of gas and 0.17 billion barrels of oil.
Both of these estimates, however, were considerably less than the EIA report's estimate of 146 Tcf and 1.8 billion barrels for Paleozoic shale gas and oil in Poland.
The EIA believes that the difference has arisen because the PGI excluded the Lublin Basin, while both the PGI and USGS excluded the Fore-Sudetic Monocline - two large shale regions where shale gas drilling and gas production are underway. Another reason could be that the PGI and USGS studies were based on conventional oil and gas logs, core and seismic data that was collected during the 1970s and 1980s, with neither study citing recent data measured from shale industry exploration programs in Poland.
Although Poland has made the most progress in Europe in bringing about a shale industry, the country is still at an early exploratory, pre-commercial phase. The EIA estimates that around 30 vertical exploration shale wells, as well as half-a-dozen vertical and two horizontal production test wells, had been drilled in the country as of May 17.
However, early results have not met the industry's high initial expectations.
In 2012, ExxonMobil abandoned the fault-prone Lublin and Podlasie basins after drilling two vertical test wells. Meanwhile, ConocoPhillips and Chevron Corp. are moving cautiously towards drilling their initial test wells in the Baltic and Lublin basins. And, as the EIA report points out, even in the geologically-favorable Baltic Basin, independent energy firms Marathon Oil and Talisman Energy Inc. have recently exited projects after expressing disappointment with reservoir quality.
But the EIA believes it is too soon to dismiss Poland's shale potential.
"De-risking shale plays in North America typically requires drilling about 100 wells, while achieving economies of scale requires many hundreds more," its May report stated.
Successes in the Baltic Basin to date include two vertical wells drilled by Polish Oil & Gas Company (PGNiG) that produced gas from the Cambrian at depths of approximately 9,850 feet. The firm has also drilled its first horizontal well and is targeting commercial production in the Baltic Basin in 2016.
ConocoPhillips farmed into, and became operator of, three of Lane Energy's shale blocks in the western Baltic Basin, where Lane had tested low gas rates from two stimulated horizontal shale wells. One of these produced at an initial 2.2 million cubic feet of gas per day before stabilizing at 500,000 cubic feet per day - making it the highest-production shale well in Poland to date.
Bulgaria, Romania and Ukraine
Eastern Europe, excluding Poland, has significant prospective shale gas and oil resources, according to the EIA. These exist in three sedimentary basins: the Dniepr-Donets Basin, the Carpathian Foreland Basin and the Moesian Platform.
Dniepr-Donets Basin is a well-defined Late Paleozoic basin in eastern Ukraine and southern Belarus, containing prospective organic-rich Carboniferous black shale. The Carpathian Foreland Basin is a deep Paleozoic belt that stretches from southwestern Ukraine through northern Romania to the Black Sea. The Moesian Platform stretches across Romania and Bulgaria and contains Silurian and Jurassic black shale, although the EIA says these are less well defined than the other two basins.
The EIA estimates the total risked, technically-recoverable shale resource for these three basins at 195 Tcf of shale gas and 1.6 billion barrels of shale oil and condensate.
While shale exploration is underway in both Ukraine and Romania, Bulgaria currently has a moratorium on shale gas drilling - although the country's environment minister claimed in early June that this is just a temporary measure.
Public opposition to shale gas development in Bulgaria is significant, being led by environmental organizers and with no effective counter-balancing information campaign from the petroleum industry, according to the EIA. In January, the Bulgarian government banned all shale gas exploration and production, whether or not it involves hydraulic fracturing.
Bulgaria's Economy and Energy Minister has suggested that the country's shale gas resources could be in the range of 11 to 35 Tcf.
Romania had an informal shale gas ban in place from May 2012 but the country's government has since become a supporter of the industry, recognizing the potential economic benefit that could arise from a shale gas industry. In July of this year, U.S. oil major Chevron won the right to drill shale gas exploration wells in three areas in eastern Romania.
In the Ukraine, which welcomes investment to develop its shale resources, the Ukraine State Service of Geology and Mineral Resources estimates the country has shale gas resources of 247 Tcf. However, the EIA has noted that the basis for this estimate has not been released and that the figure actually includes some tight gas resources.
In January, Ukraine awarded its first shale gas production sharing agreement, signing a deal with Royal Dutch Shell plc at the World Economic Forum gathering at Davos, Switzerland.
Shell's 50-year PSA permit at Yuzovska in the eastern Dniepr-Donets Basin covers an area of approximately 3,000 square miles, according to the EIA.
The EIA notes that numerous shale gas basins and formations exist in northwestern Europe. But while the UK government has opted to go ahead with developing a shale gas industry despite a vocal anti-fracking movement, the governments of other densely-populated countries such as France and the Netherlands have given into pressure and currently have fracking bans in place.
French President François Hollande ruled out shale gas exploration under his administration in July. In what was presumably an attempt at humor Hollande said "What is shale gas? It is an Eldorado that just needs to be drilled?" before adding that he felt there was a risk to groundwater due to the techniques used in hydraulic fracturing.
Meanwhile, the Netherlands is still undecided about whether to proceed with a shale gas industry. The Dutch government scrapped a proposal to allow fracking in early June.
Germany has also not yet approved shale gas fracking amid widespread public opposition, although the country's government is looking at allowing the existence of a strictly-regulated industry.
But should the oil and gas industry manage to overcome this political opposition, northwestern Europe has several basins that offer promising potential for shale gas exploration. The Paris Basin, with two distinct shale gas and oil formations, holds some 129 Tcf in risked, technically-recoverable shale gas resources, according to the EIA, while the West Netherlands Basin holds approximately 26 Tcf in risked, technically-recoverable shale gas. In Germany, the Lower Saxony Basin, which covers an area of around 3,800 square miles in the northwest of the country, is estimated to hold some 17 Tcf of risked, technically-recoverable shale gas.
Meanwhile, in Denmark (as well as Norway and Sweden to the north) potential extractable shale gas resources exist in the Alum Shale. Much of the Alum Shale is judged to be shallow, thin and immature, according to the EIA, but in Denmark the organization estimates that there are 32 Tcf of risked, technically-recoverable shale gas resources.
Although Total was awarded two shale gas exploration licenses as operator in 2010 by the Danish Ministry of Climate and Energy, an exploration well scheduled for this summer has been delayed for around a year after a decision by the Frederikshavn city council.
There have been two basins in Spain that have been identified as having potential for shale gas and oil. The Basque-Cantabrian Basin, located in northern Spain, contains a series of organic-rich Jurassic-age shale with potential for wet gas and condensate, although the Ebro Basin to the southeast was not quantitatively assessed by the EIA for its May 2013 study.
Risked, technically-recoverable shale gas resources within the Basque-Cantabrian Basin are estimated at 8 Tcf, while there is also an estimated 100 million barrels of risked, technical-recoverable shale oil resource there.
However, even in Spain - a far more sparsely-populated country than its northern neighbors - there is political opposition to fracking. In early July, Repsol was forced to delay its first shale gas project in the country (its Luena project in the Cantabria region) after the local Cantabrian government outlawed fracking in the area.