Unconventionals: The Fashionable and the Unfashionable
The hottest topic at the Global Unconventional Shale Gas Plays Forum in Vienna, Austria was, of course, shale gas.
But panel discussion, led by John Logel, Lead Geophysicist at Talisman, and Jeremy Boak, Ph.D., Non-Executive Director at San Leon Energy Plc., touched on the puzzling fact that, while coal bed methane was apparently taking off in Australia, CBM activity is quiet in Europe.
In response to that initial quandry, John Logel said: “The only issue I’ve always had is the success is unknown. If you could work CBM in tandem with shale gas, it could be a source of water for you.”
One of the delegates in the room asked about CBM investments in Australia. Jeremy Boak replied.
“When I was trying to develop answers to these questions,” he said, “I found it difficult to find any record of the production of unconventionals.
“I commented that it was out of fashion in the US, because it was so passé but maybe the Australians are going to carry the ball,” Boak opined.
Another audience participant suggested that the O&G majors were at an early stage in looking at CBM in general, and that maybe they could shed a bit of light on that.
A representative of Shell offered his thoughts. “In terms of all projects of course we’re ranking them on a world wide basis, limited amount of funds with the highest rate of returns.”
He mentioned projects in Australia, and also a CBM project in China. The advantages, he explained, was that they were relatively shallow plays, thick, and had high methane content.
“On top of that there are the environmental issues,” he cited. “They’re more difficult in Europe. Seams are highly apart, and you have to frack through a large interval – so there are lots of issues to make CBM work in Europe.”
He added that CBM had the availability to hold a lot of gas, but when close to the surface one didn’t have a lot of gas. “You can’t get it out until you get the pressure down very very low.”
One participant raised public opinion issues regarding unconventionals, a query to which Jeremy Boak offered his insights from North America, specifically in Colorado.
“It might not be so bad if it were a mile away from their house,” he said. “I think you can express some legitimate concerns over fracking. Parliaments are fond of making regulations but enforcement requires budget, they must have the staff on board to enforce regulations that already exist.”
Boak said the possible dangers included spills, failures of casings, wells. “The regulations are already in place,” he said, adding what he thought of hydraulic fracturing fluids travelling a great distance back up to an aquifer. “The Miraculous ascension of fracturing fluids is astonishingly unlikely.”
John Logel added: “The only thing that has less permeability in this well bore is the steel casing. Fracking has been going on for a very long time. I’m a geophysicist and I started my career fracking wells in the 1980s, and it’s only recently become alarming for some.”
Dr. Gyorgy Szabo of Falcon Oil and Gas Ltd. pointed out the necessity of having a long term connection to a municipality’s landowners. He said that in Hungary the company provided a monitoring system for substances on the surface as well as monitoring for frack jobs.
“We are always on the defense,” he said. “We need to get closer to the hearts and minds of the people. The European gas industry needs to convince people that we need gas because it’s the cleanest of the fossil fuels. The industry is not taking that challenge seriously.”
In connection with that, someone in the room pointed out that for lay people “electricity comes out of the wall” but that it was different when drilling was going on under someone’s home.
Jeremy Boak mentioned the deep geologic disposal of nuclear waste and the resistance to that. “Most people are not members of then extreme environmental movement – it’s not about the presentation,” he explained, “but presenting the technical image: ‘here are the things we do worry about, and this is why we’re not worried about this aspect.’
“It takes concerted work to support that kind of effort. There are problems that the petroleum industry has – the pictures in the media are how the public believes the industry works,” he added.
Participants recalled a CO2 storage project in the Netherlands that Shell decided to scrap following negative public opinion.
“I’m actually surprised at how little resistance we’ve seen,” remarked one delegate. “If you would be open about how many wells you’ll need, you’d never do the exploration work.”
Another participant pointed out that in Poland shale gas exploration was happening in the poorer part of the country. “So one of the ways to approach this by industry is that, these kinds of developments if managed properly provide an unbelievable way for them to develop - if local communities are involved and it is sold to them properly, as a way of increasing living standards.”
According to Talisman’s John Logel, the community in Canada loved oil sands projects. “They love the jobs and are behind the development that’s going on up there. You see the Encana Ice Arena. They’re building their support with those communities, and that’s why you see the activity there continue.”
Jeremy Boak pointed out that royalties from unconventionals drilling come to the government only after the drilling had happened, which was a delay. “The roads have suffered, some portion comes to individual states and to the regions. The communities affected see a small proportion of the revenue, so there can be some resentment. In Colorado the community goes and takes care of the roads themselves,” he reported.