By Oil & Gas Financial Journal staff
European unconventional resources are on a par with North America, according to IHS CERA’s Jonathan Parry, but he expects the reserves will be developed much more slowly due to regulatory and environmental issues as well as commercial risk factors.
Speaking at an industry luncheon in Houston on Sept. 15, Parry noted that “obstacles” imposed by various regulatory groups in Europe will create delays in drilling and production, but that there are “significant” amounts of shale and coalbed methane reserves throughout Europe.
“What’s going to drive this is whether unconventional gas is determined to be in the public interest or not in Europe,” said Parry, director of global supply at IHS CERA, which has identified 34 potential shale plays in Europe and 19 potential coalbed methane plays to date.
Of those 34 plays, five high-potential shale plays comprise 55% of the potential gas, said Parry. Those are southern Sweden’s Cambrian, northern Poland’s Cambrian, northern and eastern Poland’s Ordovician-Silurian, Austria’s Mikulov, and Germany’s Posidonia.
Other countries with potential commercial shale plays include France, Austria, the Netherlands, the UK, Czechoslovakia, Turkey, Denmark, and Sweden, he said.
Areas with potential coalbed methane plays include northern France, the UK, the Netherlands, and Germany, he added.
IHS CERA is currently conducting a comprehensive study on European unconventional gas potential and expects to finish it by the end of November.
IHS CERA used data from North American unconventional gas plays to extrapolate potential resources and development costs of European unconventional plays, Parry said. Some parameters used in extrapolating European resources and costs were depth, pay thickness, maturity of the field, gas content, and brittleness.
It is unclear how much unconventional European gas plays will produce, and at what cost, until they actually come online. The projected cost of developing European unconventional plays would not be too different than the cost of developing North American plays, said Parry.
The main determinant of costs would be output from European plays. IHS CERA says most European shale plays to have output similar to US projects in the medium range, such as Woodford and Haynesville, which produce 250 cf of gas/mt of shale and 215 cf/mt, respectively. In contrast, the Barnett shale in the US produces 325 cf/mt.
A major obstacle in developing shale gas in Europe is that approximately 12 or more wells would need to be drilled in each of the five potential large plays to assess commercial viability, but E&P companies have little incentive to do that because of European regulations. Even after drilling so many wells, the companies wouldn’t be guaranteed access to reserves, so the companies had little reason to drill more than just a few wells, Parry said.
Another issue in Europe is water management. Shale projects require large quantities of water to fracture shale formations. In Europe, water would have to be trucked to drilling sites and the used water would have to be trucked back for treatment. One solution would be to treat the water on site or at a central hub, he concluded.
