Gripen Gas: Treading Lightly in Sweden

Stephen Crabtree, a geophysicist who has worked in the oil and gas industry for over 30 years (notably working for Phillips Petroleum and Enterprise Oil), said the story of how his company Gripen Gas AB came about was an odd one.

He explained,  “Almost by accident, I met Torgny Berglund from Svenska Petroleum and we started talking about petroleum potential in Sweden. We trawled through a surprising amount of data at the Swedish Geological Survey and identified a few key areas.”

Thus, Gripen Gas was born: formed in 2010, when the company applied for acreage in Sweden’s Alum shale, an organic rich shale gas play. Today, Mr. Berglund is the company’s Chairman, while Crabtree its Managing Director.

He said that the company originally applied for five licenses in Ostergötland and were awarded those September 2010. “We developed our technical ideas and acquired additional funding for proof of concept, which is the phase were in now. That includes drilling four exploration wells, which we’ve just completed in March of this year.

“In about a year and a half we formed the company, raised finance and drilled four exploration wells,” recalled Crabtree. “We’ve also expanded our acreage position, so that we now have about 400 square kilometers of acreage in Sweden; we acquired five licenses on Öland, an island off the east coast of Sweden.”

He reported that all four wells drilled by Gripen Gas had discovered gas, but the company would concentrate on one of them, the GH-2, because it had good flows and pressure. “So we’re going back to appraise that discovery,” he commented.

“We are going back to core the reservoir in a well near the GH-2 discovery and redesign the well so we can accurately take pressures and flow rates. And we’ll also be looking to drill an appraisal well of this discovery. We hope to do that this year as we have already made good progress in discussions with landowners and the authorities,” he said.

“In addition we’re going to do some technical work to figure out why some wells are flowing and why some wells appear not to flow so well. We are hoping to use shallow seismic to image the reservoir. We will also conduct some remedial work on the poor flowing wells as we think there is slight formation damage,” said Crabtree.

Gripen Gas is pursuing “biogenic gas” in Sweden.

“In Östergötland the Alum shale is both the reservoir and source rock so in that respect it is a shale gas play. However, it’s pretty unconventional in two ways: 1) it’s biogenic gas, and 2) it’s very shallow, at around 100 meters. The nearest analogy I can think of is the Antrim shale in the US, although it’s a bit deeper but also biogenic gas.

“We have a geological model of what we’re doing and believe it’s transferable to other places in Europe, where we think similar types of biogenic gas could occur,” he said.

While unconventional gas explorers in Europe often tout the “smaller fooprint” they make compared to operations in North America, Gripen Gas’ footprint is truly small, as Mr. Crabtree explained.

“It’s not conventional oil and gas drilling. We’re using percussion rigs normally used for water well drilling, to drill our exploration wells. For testing we use mineral coring rigs with a special piece of kit designed in Sweden. That means that the drilling rig footprint is about 20 square meters and we hardly do any damage to the environment, which sits well with the concerns in the areas where we’re working. There is great concern in our exploration areas that any drilling activity might damage the environment.

“So we can go in on almost a surgical or keyhole basis, drill a well, see whether there’s gas there or not with very low levels of damage,” he said. “We don’t need big areas being prepared and where possible we drill off farm tracks or forest roads. Drilling doesn’t take very long. We can drill a well down to 100 meters in a day; if we’re testing it might be two days on site. This means that damage is kept to a minimum and importantly there is little disruption to the general public.”

Indeed, Gripen Gas’ approach to unconventional gas exploration in Sweden, even forgoing hydraulic fracturing, has assuaged public concerns.

“Because it’s shallow, we’re not using any fraccing techniques and again that helps in dealing with the landowners and other stakeholders involved in reviewing our activities,” added Mr. Crabtree.

He explained how that care was resonating with the Swedish populace and press.

“The main area where we’re working is Östergötland and we’ve had comments and some of the concerns expressed show that there is confusion amongst the public about our activities. Some people have suggested that we were going to fracture the shale and suggested that landowners watch Gasland to see some of the damage that might be caused. So we have had to deal with some of those issues. However, in general the landowners have been supportive and have shown a lot of interest in what we are doing.”

According to him, challenges remained.

He said: “The issue in the area that we’re working in, is that the shale sits between two aquifers and so we have to be very careful that we don’t do anything that would disturb the upper or the lower aquifer, and that is a concern of all the landowners and the community is that we don’t cause any pollution.”

Crabtree said that Gripen was only using water for drilling wells, not adding any mud or any similar substance.

When the company wanted to use dilute hydrochloric acid to wash a reservoir, he recalled, it had caused some concerns in the community. “We decided not to use dilute hydrochloric acid in this phase of drilling,” he added.

He continued, “The press have been positive and we’ve invited them to come out and see the drilling operation. We invited the environmental officers to come out and see what we were doing and I think in general they were happy with the processes and the way that we approach the drilling.

“The common comment was ‘We were surprised…’ because of the low level of damage to the land.”

Mr. Crabtree admitted that there had been environmental backlash in Öland where the company has five exploration licenses. “There was a lot of concern that it was going to be ‘big oil and gas’ coming to drill wells  and causing damage to a sensitive environment, particularly the unique plant life and aquifers.

He said he believed the company’s light exploration approach would convince naysayers, or at least allay some of their fears.

“We now have real evidence of our drilling campaign in Östergötland to show the community in Öland the minimal damage our activities cause.”

There was also concern, he said, about disturbing migrating bird paths among other concerns.

“I can understand that individuals may be concerned, but they are probably not thinking about this in the right way,” he said.

Crabtree added: “We just need to have a discussion with the authorities and public and take everyone along with us as Öland has a unique environment and is a very popular summer holiday destination.”

Speaking of unconventional gas exploration in Sweden, readers probably recall that Shell had withdrawn from its license.

Mr. Crabtree commented: “As far as I have read, the problem was the gas potential of the Alum shale. In that area the shale has been deeply buried and it appears as if most of the gas has been expelled from instead of being trapped within the shale. I guess that the remaining amounts of gas still trapped in the shale are uneconomic.

“Our play in Östergötland and Öland is completely different from Shell’s unconventional play in Skåne. The shale in our exploration blocks has never been deeply buried so the gas potential is still high due to the organic content. The gas is being generated by bacterial action on the organic content of the shale. The reactions are very similar to the bacterial degradation of organic waste in a biogas generator.”

He said he was unsure at this stage about what kinds of volumes of gas might be available from Gripen Gas’ concessions, but Mr. Crabtree reported that one of the wells exhibited good pressure and flow rates. “It’s encouraging in that aspect.”

Crabtree explained that Sweden was different than a lot of countries in that the country has a limited gas network, so any gas discovered would have to be used at the point of production.

“At the moment the gas distribution network is limited to the west coast of Sweden. Some LNG is brought into the Stockholm area and used in that region. CNG is transported locally from biogas producing plants. Our plans for a commercial discovery are to either compress the gas and add it to the CNG distribution network or use the gas for on site power generation using micro-turbines.

“What’s attractive about our GH-2 discovery is the very high methane content of 97.5%. This makes this gas suitable for compression and use in vehicles,” he continued.

“There is a growing market for CNG in Sweden.” he added.

“Alternatively, Sweden has an open power network and you can access power network at any point from local all the way up to the national grid. Our original economic modeling was based on power generation as this appeared the most flexible way of dealing with the volumes of gas that we might find.”

 Mr. Crabtree listed Gripen Gas’ keys to success going forward.

“We have two key issues. Firstly, engaging with the landowners, communities and authorities to explain how a discovery might be developed and how that development might impact on the environment. At the moment quite a lot of methane is leaking into the atmosphere from these shallow reservoirs through water wells and general seepage. By us capturing methane we are reducing the greenhouse effect of the methane. Counter intuitively our exploration has an important environmental value!

“The second key driver is understanding the distribution of the gas and productivity of the reservoir. Gas flow from the reservoir appears good in one area and less so in another – we need to understand what is controlling the flow rate.

“We’re delighted with what we’ve done so far and although the environmental regulations are very tough, it is a good place to work,” he said of Sweden. “There’s a lot of can-do mentality in the engineering sense, so you can present problems to a local workshop, for example, and they’ll come out and fix it the next day. It’s just a great place to work.”

The terms for E&P, he said, were attractive. “Commercial production commands a low royalty rate of just 0.002%. The only other tax is corporation tax at 26.3%.”

He added that there was a lot of drilling equipment in Sweden. “It’s very easy to hire professional teams to drill the wells.”

Mr. Crabtree offered his views on the unconventional gas scene as it was unfolding in Europe.

“The important thing is to engage with the public and try and explain that it’s possible to carry out all of the drilling and fracking operations in a way that isn’t going to cause a problem, damage the aquifers or the environment. Sometimes, it’s very difficult to create the right level of trust, because it can often appear to the public as if we are hiding something as an industry, particularly when we give a blizzard of statistics supporting our case.”

He continued, “Progress can be slow but the reward, particularly when set against the wider issue of increased gas use reducing the carbon footprint, is high.

“Europe as a whole needs to exploit its resources properly and in a structured way and I hope that the lead being taken in the UK where they’ve been positive about shale gas extraction will help other European countries see the possibilities,” he said.