More on European Gas: Shale, Supply, Pipelines and of course, Gazprom
Writing for BusinessNewEurope, Derek Brower provides his thoughts on European energy supply, cheap and (with the potential commercialization of unconventional sources), plentiful supply of natural gas and its impact on Gazprom and planned European gas pipelines.
Brower writes that for the first time in years, emerging Europe can rest easy: another winter gas war between Russia and Ukraine appears unlikely at the moment, the outlook for energy supplies looks stable and drilling for unconventional gas could end Russian domination over the region's energy supplies.
The combination of the development of unconventional reserves in the US and the lingering hold of the recession has created a global glut of gas; leaving an abundance of cheap LNG on the market, and says Brower, impacting Europe and demolishing notions that Russia's pipelines would forever dominate the energy supplies.
Across Central and Eastern Europe (CEE), oil and gas firms plan to apply the same technological advances that triggered the US shale-gas bonanza to exploit promising gas-rich deposits. Hungary, Austria and Bulgaria have already attracted prospectors, but the most promising country is Poland.
In mid-August, Halliburton the US oil services firm, carried out a hydraulic fracture on behalf of Poland's state company PGNiG at the Markowola-1 exploratory well, located near Kozienice in Lublin province. The results haven't been released, but Brower concludes that the involvement of PGNiG, long Gazprom's partner as an importer of Russian gas, is telling.
Meanwhile, a host of smaller firms (such as BNK Petroleum) testing Polish shale have been joined by heavyweights such as ConocoPhillips (which has commenced drilling with partner Lane Energy Poland) and Chevron, two of the largest gas producers in the US.
Another shale-gas expert from North America, Canada's Talisman Energy (in partnership with San Leon Energy) says its drilling programme in Poland, which begins next year, could bring production on stream by 2013.
The reserves in its Gdansk W, Braniewo and Szczawno licences could amount to 1.5 trillion cubic feet, more even than the company holds in the Marcellus shale in the US northeast, now the world's second largest gasfield. Polish shale is expensive now, and analysts say major production is unlikely within a decade. But if drilling results arriving in coming months are positive, this will change quickly, as it did in the US.
Most analysts say Poland's unconventional reserves could be around 3 trillion cm. Grzegorz Pytel from Poland's Sobieski Institute reckons they could be far larger – at around 10 trillion cm, 10 times greater than the estimate in BP's statistical annual – and sufficient to meet not only Polish domestic demand (13.7bn cm in 2009), but support an export industry too.
Pytel speculates that the endgame for ExxonMobil, Chevron, ConocoPhillips, Marathon and other large firms drilling shale in CEE isn't the domestic Polish market, but the European one. Though there are challenges, Polish gas, he believes, could eventually be exported to the lucrative markets of Western Europe.
Brower says that is highly speculative, but that such ideas are now gaining currency shows just how much flux has been introduced into the European gas-supply picture, thanks to the shale gas revolution and the fall-off in demand.
As a result, the author writes that new infrastructure to import gas from Russia, such as the proposed second tranche of the Nord Stream pipeline through the Baltic Sea and the South Stream link into Central Europe, has become much less pressing.
The article continues with a discussion of recent and projected demand, the impact on Gazprom and the outlook for the development of the EU backed Nabucco pipeline.
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