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Unconventional Gas - the "Shale Gale!"


Tuesday, April 27, 2010
The Geological Society

It is impossible to ignore the absolutely stunning transformation that’s believed to be happening in the USA and, potentially, whole North American gas market. It has been suggested, based on authoritative studies that the US has huge unconventional ‘shale gas’ resources – hundreds of millions of Tcf, that can be developed with today’s drilling and completions technologies.

In our Forum, we posed the question as to whether something similar is possible in western Europe? Where could significant quantities of such gas be found; what lessons can be learned from the North American experiences; how would such a source of gas fit into the global flow of gas? Or whether is this all a ‘Shale Gale’ that will blow itself out?

We think we reached four main conclusions:

1. Accessing ‘shale gas’ depends on drilling & completions technology that is available today, whereby large numbers of multi-lateral horizontal wells are drilled into the target horizons and then complex, multi-stage hydraulic ‘fraccing’ is undertaken. In ideal circumstances, the target shale is naturally fractured but is bounded by more competent rocks that resist ‘fraccing’ – to some extent, such targets can be defined by adroit use of 3D seismic data.

2. Costs are quite high – a typical well in the Haynesville play may cost $7.5-10m, with operating costs of around $2.25/Mcf , leading to a production cost of circa $7.5-8/Mcf. Henry Hub prices have been more like $4/Mcf over the last 18 months. In addition, the process consumes large amounts of water: Chesapeake Energy have stated that “drilling a typical Chesapeake deep well requires between 65,000 and 600,000 gallons of water…..Hydraulically fracturing a typical Chesapeake horizontal deep shale gas well requires an average of 4.5 million gallons of water per well.” This water must firstly be made available and then kept clear of aquifers after use as it may be contaminated by acids and propants.

3. The progress of gas-in-place volumes from ‘prospective resource’ to ‘contingent resource’ to ‘reserves’ is much harder to achieve for unconventionals such as ‘shale gas’ than for conventional hydrocarbons, with the first step requiring extensive geological and petroleum engineering data, including convincing flow tests and the second requiring proof of commerciality on a well-by-well basis.

4. For a number of reasons, it is not easy to see a rapid availability of ‘shale gas’ in, or close to, Europe. First of all, the accumulations seem to be much less prolific in terms of Mcf/sq km than their gas-rich counterparts in North America, requiring therefore more wells and more ‘fraccing’. Secondly, suitable rigs and equipment and, most probably, people are an order of magnitude less available in Europe than they are in North America. Thirdly, it is not clear that the environmental issues – density of population, availability of water (and its disposal) can be easily solved. Fourthly, European gas prices are not yet high enough to make ‘shale gas’ economic.

Thus, in terms of investment in active companies, ‘shale gas’ in and around Europe should be seen as a very long-term game, just as ExxonMobil have clearly taken a similarly long-term view with their purchase of the North American unconventional gas player XTO.


9:00 Arrivals and Registrations
9:30 David Bamford - Director
Finding Petroleum

Welcome and Introduction: The technologies behind the "Shale Gale"

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David Bamford is well known around the oil & gas industry both as an explorer and a geophysicist. He holds a Physics degree from the University of Bristol and a Ph.D in Geological Sciences from the University of Birmingham.

Since 2004, he has been a non-executive director at Tullow Oil plc, being recruited for this position especially for his exploration knowledge. He serves on the Nominations and Remuneration Committees, and was chairman of the latter, and Senior Independent Director, for 3 years prior to his retire from the board at the end of April 2014.

He was on the board of Premier Oil from May 2014 to May 2016.

He retired from BP plc in 2003, his last four positions being Chief Geophysicist (1990-1995), Business Unit Leader (General Manager) for first West Africa and then Norway (1995-1999), and finally Head of Exploration until 2003.

He has served on the boards of Paras Ltd, a small exploration and IS/IT consulting company in which he held 22% equity, until its sale to RPS Energy in 2008 and Welltec a/s, a Danish well engineering company, as the nominee of the private equity investor Riverside.

From 2012 to 201 he was on the board of ASX-quoted Australia Oriental Energy as a non-executive director.

He was a founder of Richmond Energy Partners, a small oil & gas research house, and several media companies that focus on the oil & gas sector, and has served as an advisor to Alliance Bernstein, Opus Executive, the Parkmead Group plc, and Kimmeridge Energy LLP. Since retiring from BP, he has undertaken asset and company valuation projects for investment banks, hedge funds and small oil companies.

Finding Petroleum
Finding Petroleum was established to help the oil and gas industry network, and stay up to date on t
9:50 Oswald Clint - Senior Analyst
Bernstein Research

How unconventional gas fits into the gas market

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Dr Clint joined Sanford C. Bernstein in 2004 and was part of the Energy Team with Neil McMahon covering the Global Integrated Oil sector.

Currently he is the Senior Research Analyst covering the European E&P and Russian Oil & Gas sectors. The Bernstein Energy franchise has become well known due to both the provocative commentary on the commodities and oil stocks, as well as the innovative research that forms the core of their frequent publications. Previously, he worked as an accountant and consultant for KPMG covering energy, gas, and chemical sectors. Dr Clint received his PhD in Geophysics from University College London where he specialised in sub-surface rock physics and is also a Chartered Accountant.

Bernstein Research
Sanford C. Bernstein is widely recognized as Wall Street's premier sell-side research firm. Their re
10:30 Coffee and Tea - Sponsored by Bernstein Research
11:00 Phil Clarke - Founder
Novas Consulting

US shale gas basins

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Phil Clarke founded Novas Consulting in 2005, after a career with BP spanning more than twenty years. Phil completed his undergarduate and doctoral studies in Earth Sciences at Cambridge University before joining BP in 1983 where he trained as a petroleum geologist. He subsequently worked in a wide variety of international technical and managerial roles, acquiring considerable global E&P experience. His final position in BP was Exploration Manager for the Brazil business unit, where he led a substantial deepwater exploration programme. Phil has extensive experience across cultures and has worked on a diverse and challenging range of assignments. He is a Chartered Geologist, Fellow of the Geological Society and a Member of PESGB.

Novas Consulting
Novas Consulting is a technical consultancy serving the energy industry, specialising in integrated
11:35 Jessica Hill & Stewart Whiteley -

The shale gas potential of selected countries in Europe, North Africa and the Near East

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PETRENEL (The Petroleum and Renewable Energy Company Limited) is a privately owned, independent cons
12:10 Paul Chernik - Business Development Manager and Senior Reservoir Engineer
ERC Equipoise

Estimating unconventional gas in place and reserves

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ERC Equipoise (ERCE) is the United Kingdom's leading employee-owned Oil and Gas Reservoir Evaluation
12:45 Prize draw and Lunch

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