Chevron, Shale Gas and Romania: Interview with Tom Holst

Chevron Corp. has a clear idea how and when to start exploring the possible exploitation of Romanian shale gas. As elsewhere in Europe, there is a strong opposition against shale gas projects though Chevron's Romanian activities can become a trailblazer project. Important to the discussion is that the new (May 2012) government, headed by social democrat Victor Ponta (PSD), seems to have changed its vision, in favour of shale gas.

Natural Gas Europe was pleased to have the opportunity to interview Tom Holst, Chevron Country Manager for Romania. Mr. Holst discussed the status of Chevron's shale gas exploration and development activties in Romania and addressed concerns expressed by civil society.

When in opposition, the PSD opposed shale gas development. After the new government was established, it implemented a moratorium. Today however, the Ponta government indicates a cautious support. What did Chevron do to reach this changing in government policy?

"A moratorium? We did not receive any official information on a moratorium. It's my opinion that Prime Minister Ponta wants to keep open the economic future of his country. He is aware that it will take three to five years to complete the necessary geophysical and other research and to find out if the Romanian shale gas layers can be exploited on an economical base. If the exploration phase is slowed down, there may be too little time to start exploitation work when this becomes an economical necessity. Actual estimations say that conventional Romanian natural gas will run out in ten to fifteen years. At the moment, Romania is already importing 20 to 30% of its gas supply needs. The prices which Romanians are paying for their imported gas are the highest in this part of Europe. In Romania, gas is seven times more expensive than in the US. Since shale gas exploitation made gas much cheaper in the US, energy consuming industries such as steel and petrochemicals have returned. BASF even has opened a new office in Pennsylvania."

Anti-shale gas activists are complaining about the lack of transparency from shale gas explorers. What does Chevron do to address the concerns of groups such as Greenpeace Romania and the civil society initiative group Barlad-GISC, who are opposed to Chevron's shale gas activities?

"We have organized and organize local information sessions, mostly in town halls. They are concerned citizens and authorities can ask us whatever questions they might have. We answer every question and afterwards, we send e-mails with all our answers written down. The information sessions are not public relations events. In addition, to our own experts, we also invite independent academics to speak about for instance the geological aspects of shale gas development."

There also are complaints about the discretion concerning the chemicals used during hydraulic fractioning. At presentations, shale gas companies like to call those products 'common household chemicals'. A simple way to obtain a perception of commonplace habits?"

"There are no secrets about those chemicals. Chevron –and other US-shale gas companies– are releasing this information on a voluntary base. Everyone interested can find detailed information about the chemicals used on the Frackfocus website. And in other countries, we'll use the same methods as in the US. Roughly, we add four types of chemicals to the water: friction reducers, thickeners, anticorrosive and antibacterial chemicals."

Does, and if so, how does Chevron use its shale gas exploration experiences in Poland in Romania?

"We explore options on how to best make known to Romania the facts about exploration of NGS in Poland”… Furthermore, we are currently taking Romanian stakeholders to Texas and Pennsylvania, where they can see how shale gas exploitation is organised."

What is the actual situation of Chevron activities in Romania?

"Chevron has done some seismic studies and recently obtained licences for exploration activities in the Romanian part of Moldova and in the Black Sea region Dobrogea, near the Bulgarian border. We don't have exploitation licenses yet. For now, it is important to know if there is potential for exploitation. In the exploration phase, only vertical wells are drilled, without hydraulic fractioning. The Barlad concession, in the northeast of the country, covers 1.6 million acres. Drilling of an exploration well is planned for the second half of 2013. In the southeast concession, near the Black Sea, the Romanian government approved a license for approximately 670,000 acres. Acquisition of 2D seismic data in these concession is expected to commence also during the second half of 2013. Chevron holds a 100% interest and operates both concessions."

How about the transparency of these licenses? And what about neighbouring Bulgarian reservations about shale gas?

"The licenses were attributed during official bid rounds. All information about these procedures is publicly available, except for the pure financial information. That is normal. As for Bulgaria: every country takes its own position towards shale gas. The licensed blocks in the Dobrogea-region are near the border to Bulgaria, but Romania has full authority over the licensed area."

Concerns over shale gas development range from increased seismic activity to environmental pollution. Has Chevron identified any risks unique to Romania?

"Since 1995, Romania has been exploiting gas from tight formations, using hydraulic fracturing. Without any problems. As for Chevron, we are using the best practices available, developed during the longer tradition of shale gas exploitation in the US. In Romania, we strictly adhere to Romanian legislation and to related EU-guidelines."

Is there something as a fund to cover (eventual) seismic or environmental damage as the nuclear sector has?

"No, there isn't. We have the normal industrial insurances. But there is no reason to worry. Our three exploration wells in Moldova are made and managed the same way as the 23.000 other existing wells. During the last five decades, worldwide approximately 1.2 million wells have been drilled for hydraulic fracturing. It is a very experienced technique. Did you ever hear of problems?"

What is the actual profit for Romania?

"Even before there is exploitation, there is profit. Much of the geophysical survey work is executed by Romanian professionals and local workers. One such survey easily takes one to two years to be conducted and would involve 150 Romanians in a crew. And we estimate that for every crew member there is an indirect job creation for about four or five additional people."

Koen Mortelmans