Shale Success: Keeping Operations In House and Stay Transparent

His talk at the Global Shale Gas Plays Forum in Krakow, Poland was entitled The Service Industry in Europe – Cause for Concern?

But what proved more interesting was what Thomas Teyssen, Head of New Ventures at RAG Rohol-Aufschungs had to say about his company’s exploration success in Hungary.

“We’re active as partners in shale gas,” Teyssen explained. “We believe the experience is very important. We’re in Poland, Hungary, have applications in Spain and we are studying Ukraine as well. It’s quite a spread of activities already.”

He told delegates that he wanted to share some of the information about RAG’s activities in Hungary and Poland.

But first, Mr. Teyssen spoke about the “Three E’s” - three powerful drivers for shale gas development: evaluation, exploration and execution.

Of RAG’s operations in Hungary he recounted: “A few weeks ago we did our first shale gas frack in southern Hungary. It’s near the Mako trough and there are other similar bases and troughs. It was fracked two years ago unsuccessfully.

“Vary rarely does something go right the first try,” he said.

He explained that the license for the concession was owned by “Delcuadra,” a consortium involving RAG and Cuadrilla Resources.

“Cuadrilla provided the frack operation fairly successfully. It’s challenging because of the high temperature and high pressure conditions. Not everything works under such conditions.”

Teyssen showed a sequence which was all hydrocarbon filled. “It has been fracked in three consecutive fracks. We got flowback of 1 million cubic feet per day. It also produces condensate sold to the Hungarian market,” he said.

Because the shale gas was near an existing pipeline, separators were there and condensate was being fed into it. “The gas meets the specifications, meets all requirements and is being sold,” he explained. “We’re fortunate to have this old pipeline 200 meters away.”

He said the job involved 7 cubic meters of additives, including HCl and stimlube polymer. “It’s a very small amount,” he added.

“We’ll see what it means commercially over the next couple of months,” said Teyssen, who showed that an evaluation of Hungary’s shale gas success factors were all checked off on a chart.

“Hungarian basins have been traded below their value,” he opined. “The leaving of Exxon cast them in a bad light. There’s more to come in the Hungarian basins and we’ve started long term production testing.”

“They came in with their own equipment and we are very pleased,” he said of Cuadrilla. “The decision was made to do this earlier, but we didn’t want to do it in winter when water is frozen in freezing temperatures. We needed Cuadrilla’s equipment, and there was some delay at our request.”

Then, Mr. Teyssen moved on to speak about RAG’s shale gas operations in Poland.

“In Poland we see the map with the various blocks; ours are with Saponis in the central part of the Baltic basin. What we did here with Saponis, we found Ordovician and Silurian shales; Cambrian was absent.”

He said that there were findings from a preliminary view of the Baltic basin: “The more you go in this direction,” he showed on a map, “the deeper it gets and more expensive it gets to drill them; getting in the wet gas/oil window poses additional risk.”

Teyssen showed a map of grid cells to determine which areas are very accessible and which not. He explained, “Green areas are areas which you can reach.”

Near the city of Slupsk in Poland, he said 62% of the area was developable from a surface point of view. “This area is developable. We have hardly any nature protection areas in our license,” he added.

It was important to have local relations in Hungary, according to Teyssen. “We are also doing fair, fast and effective claim settlements: quickly assessed and easily paid.”

He also spoke of a public outreach effort in which the consortium was sponsoring urgent medical treatment for members of communities near drilling operations in Hungary.

“In terms of fracking we had no appeals or objections against operations,” he reported. “We also used microseismic during the fracks to make sure there were no earthquakes, so we have to do baseline monitoring. Social acceptability is something that goes further: reduce the well site size, use gravel instead of asphalt/concrete well sites. We are using electrically driven rigs or gas engines instead of diesel.”

He also pointed out efforts to reduce waste.

Mr. Teyssen said he believed buying one’s own rigs, and staffing them was the key to commercial success for shale gas.

Infrastructure, he commented, was not so bad in Poland.

He showed a photograph of a drilling operation in tourist area in Austria, in the alps, explaining that social acceptability in production involved minimizing the visual impact of the site.

Responding to a question relating to the drilling operations’ relations with local farmers, Mr. Teyssen said:

“It is compatible with farming because most land use is temporary. You need a reasonable size of land, but it’s temporary. It’s a very small location in the end. I’m pretty sure the farmers get more money for use and claims than they get from farming.”

He added: “These things never remain a secret in pubs, so we try to stay transparent.”