19 September 2011  Unconventional                                                                                         ...
Unconventional OGM                                                       19 September 2011, Week 37                       ...
Unconventional OGM                                                       19 September 2011, Week 37                       ...
Unconventional OGM                                                       19 September 2011, Week 37                       ...
Unconventional OGM                                                       19 September 2011, Week 37                       ...
Unconventional OGM                                                       19 September 2011, Week 37                       ...
Unconventional OGM                                                       19 September 2011, Week 37                       ...
Unconventional OGM                                                       19 September 2011, Week 37                       ...
Unconventional OGM                                                       19 September 2011, Week 37                       ...
Unconventional OGM                                                       19 September 2011, Week 37                       ...
Unconventional OGM                                                       19 September 2011, Week 37                       ...
Unconventional OGM                                                       19 September 2011, Week 37                       ...
UOGM - Ed Stelmach interview
UOGM - Ed Stelmach interview
UOGM - Ed Stelmach interview
UOGM - Ed Stelmach interview
UOGM - Ed Stelmach interview
UOGM - Ed Stelmach interview
UOGM - Ed Stelmach interview
UOGM - Ed Stelmach interview
UOGM - Ed Stelmach interview
UOGM - Ed Stelmach interview
UOGM - Ed Stelmach interview
UOGM - Ed Stelmach interview
UOGM - Ed Stelmach interview
UOGM - Ed Stelmach interview
UOGM - Ed Stelmach interview
UOGM - Ed Stelmach interview
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UOGM - Ed Stelmach interview

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Interview with outgoing Albertan premier Ed Stelmach on progress, his legacy and the province\'s future

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UOGM - Ed Stelmach interview

  1. 1. 19 September 2011 Unconventional  Week 37 Issue 74 News OIL & GAS  Analysis Intelligence MONITOR  NewsBase Published byCOMMENTARY 2 NEWS THIS WEEK… Exiting Stelmach encouraged by progress seeks to explore French shale Total despite ban 3 2 One man’s legacyPOLICY 5 In office as Alberta’s premier since late-2006, Ed CAPP issues fracking guidelines 5 Stelmach has overseen major development of theSHALE GAS 6 province’s oil sands. Prior to his departure on ConocoPhillips launches campaign to improve opinion of fracking 6 October 1, UOGM speaks to Stelmach about about German authorities claim fracking is progress, his legacy and the future for Alberta. more dangerous than CCS 6 partners with UT for Shell  province is home to the world’s second The unconventional gas research 7 largest oil reserves – more than 173 billion barrelsSHALE OIL 8 of crude. (Page 2) increases estimate of US shale oil DoE potential 8OIL SANDS 8  Stelmach spoke optimistically about the Keystone Canada to focus on brownfield Shell XL project, which will add 591,000 barrels per day expansions 8 of capacity to the Keystone pipeline. (Page 2) Connacher hoping to complete financing to add to Algar output 9  said that transporting LNG to Asia would He CNRL preparing for second train at become important for Alberta in the future. (Page 2) Horizon plant 9 Totally behind shale searchHEAVY OIL 10 Madagascar Oil upgrades heavy oil estimates for Tsimiroro block 10OIL SHALE 10 A moratorium on fracking has put the brakes on Kivioli plant running out of oil shale, France’s bid to produce unconventional resources. says CEO 10 However, Total has announced it will explore forCOAL TO LIQUIDS 11 bets on India CTL KBR 11 shale gas in the south of the country.GAS TO LIQUIDS 11  Total has stressed it will not use the banned Sasol plans GTL debut in US 11NEWS IN BRIEF 12 fracking technique while prospecting in the area.(Page 3)STATISTICS 18  Torreador holds licences for shale oil in the ParisTENDERS & CONTRACTS 19 Basin, and has said it will not use fracking. (Page 4)CONFERENCES 23For analysis and commentary on these and other stories, plus the latest unconventional developments, see inside… Copyright © 2011 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  2. 2. Unconventional OGM 19 September 2011, Week 37 page 2 COMMENTARYExiting Stelmach encouragedby progressUOGM speaks to outgoing Albertan premier Ed Stelmach about progress, his legacy andthe province’s futureBy Ashok Dutta premier has been in office since late-2006, and his rule will come to an end next month The Alberta is home to the world’s second largest oil reserves – more than 173 billion barrels of crude Stelmach said he was confident that the US would give approval to the Keystone XL pipeline projectWith Alberta being home to more than involves adding 591,000 barrels per day appointment of Carlos Pascual as the173 billion barrels of crude oil reserves, of capacity to bring the Keystone special envoy and co-ordinator ofthe second largest worldwide after Saudi pipeline system capacity to around 1.1 international energy affairs by HillaryArabia, the job of its premier is probably million bpd. The project would originate Clinton [US Secretary of State], we feelone of the most challenging in the four in Hardisty, Alberta, and ultimately bring more hopeful. He is acting in betweenwestern Canadian provinces. crude supply to the Texas Gulf Coast the US regulators and the province to get Yet, Ed Stelmach – who will probably region. things sorted out,” Stelmach said.be known for his unpopular decision in “With so many years in public life and “We have not heard anything in thelate 2007 to review the existing royalty having seen several decision-making past few days, but we have hadregime that led to the flight of large processes, I am confident we will receive discussions recently with the developervolumes of capital to the neighbouring approval,” he said. [TransCanada] and our ambassador in theprovinces of British Columbia (BC) and His statement comes in the wake of the US [Gary Doer] and the feedback we areSaskatchewan – will be leaving behind recent environmental impact statement hearing is that Americans want thisan imprint. from the US government and the holding pipeline,” he said. He was elected the 13th premier of the of several public meetings.province in December 2006 by the “It may still be a bit stretched before Backup planProgressive Conservative party and will we get the final go-ahead, but in the past On what would be Alberta’s lifeline inleave his post on October 1. few months Washington has given case approval were rejected, Stelmach “From a legacy view point, it will be positive responses and their body said: “Asia is our big market and wefor Albertans to decide where I went language is encouraging. With the need to get there by adding new capacityright and wrong,” Premier Stelmach told to pipelines that would exit through theUOGM in an exit interview. “From an Port of Vancouver. At the end of the day,industry perspective, we had to look at whether Keystone gets through or not,the lack of infrastructure investment at we will still need a pipeline to the westFort McMurray [the main oil sands coast. The Asian market will also beproduction centre], which was emerging important for the province from anas the bread basket not just for Canada [liquefied natural gas (LNG)]but also North America. As a provincial perspective,” he said.government, we have invested C$2.2 According to Stelmach, hydraulicbillion [US$2.24 billion] and there is still fracturing (fracking) for shale gas willlots to do,” he said. bring trillions of cubic feet to the market that will need to find export destinations.Approval “Having returned from India, I see aThe verdict will be forthcoming, but in potential to ship LNG there from thethe meantime he is more confident now West coast. It may still take a whilethan before of receiving the approval of before natural gas prices in Norththe US government for the Keystone XL America improve, but Asian prices arepipeline. double compared to the US and we need The 1,700-mile (2,736-km) XL project to get there,” he said. Copyright © 2011 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  3. 3. Unconventional OGM 19 September 2011, Week 37 page 3 COMMENTARY Alberta has also placed its might pipelines, we are confident there will be Commenting on the energy policy hisbehind the Northern Gateway pipeline more investments. There are a few successor should pursue, he replied: “Wethat will transport 525,000 bpd of proposals and they are in their infancy, will need to continue along the samebitumen from Hardisty to Kitimat in BC but given the social unrest in the Middle path, keeping a hawk’s eye on [the]for export to the Asian market and import East and a slow-down in the US environment and guarding our interests193,000 bpd of condensate through a economy, [prospective] investors are zealously. One issue that I have not beenparallel pipeline to dilute bitumen for doing their due diligence now before able to figure out as yet is whether thepipeline transportation, Stelmach said. taking a final decision,” Stelmach said. province should put the brakes on the “At the national level, I have written to In March, the provincial government billions of dollars of planned investmentsthe Prime Minister [Stephen Harper] signed an agreement with North West into the oil sands sector by oilrequesting for streamlining of the various Upgrading and Canadian Natural companies.”regulators and avoiding duplications. We Resources Ltd. (CNRL) to supply 37,500 Around C$51 billion (US$52 billion) isare also working with the developer bpd of bitumen under its bitumen royalty earmarked for investment over the[Enbridge], the government of BC and in-kind (BRIK) programme for a 150,000 coming five years in Alberta by boththe First Nations to clear any roadblocks. bpd diesel refinery to be built in central Canadian and international majors.We need to work jointly and there has to Alberta. The refinery is due to start “Some in the province have advocatedbe clarity and certainty,” he said. production at 50,000 bpd by 2014 under we adopt a staggered approach to oil its first phase of development. sands development to ensure theUpgrading BRIK is the feedstock bitumen that the construction market is not overheated.Meanwhile, the Department of Energy is provincial government makes available But if oil companies come with proposalsin “initial” discussions with oil for investors in refineries and upgraders to invest billions of dollars, what can youcompanies to invest in new bitumen in Alberta. By 2020, the volume of say? Investment is liquid and will goupgraders in the province. bitumen to be available under BRIK will away somewhere else. It is a rare “Margins are improving and although be 400,000 bpd, compared with 75,000 opportunity ... how can we delay it?” hesome bitumen will be exported via bpd now. concluded.Total seeks to exploreFrench shale despite banA moratorium on fracking has put the breaks on France’s bid to produce unconventionalresources, however, Total has announced it will explore for shale gas in the south of thecountryBy Kevin Godier shale gas drilling has yet taken place in France, and a ban was introduced this year No Total has stressed it would not use the banned fracking technique while prospecting in the area Torreador holds licences for shale oil in the Paris Basin, and also has said it will not use frackingSeemingly undaunted by the controversy The company’s stance is that it has The move by Total was revealed via anthat has erupted in France over the use of purchased exploration rights for five application that was lodged for a projecthydraulic fracturing (fracking), French years on the site and therefore wants to restart drilling on its Montelimar site,energy giant Total is still planning to more information on the reserves that sit a zone covering 4,327 square km thatexplore the country southern region for below the ground. The energy ministry follows the Rhone from the north ofprospective shale gas deposits. has said that it will announce its decision Montelimar to Montpellier. Total Total stressed it would not use the on the plans on October 13, after taking believes the block could hold as much asbanned fracking technique while advice from officials. Left-wing senators 2.38 trillion cubic metres of shale gas,prospecting in an area for which it won a have already protested about the plans, although it has stressed that this is not a5-year exploration licence in 2010, questioning the government’s silence on recoverable reserves figure.Reuters reported on September 12. the project. Copyright © 2011 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  4. 4. Unconventional OGM 19 September 2011, Week 37 page 4 COMMENTARYTargeting shale gas “After that we have one month toFrance is a natural target for the decide the fate of the permits,” sheParis-headquartered oil super- was quoted by Bloomberg. “If amajor, which has turned to a company says it’s planning to usenumber of countries across the hydraulic fracturing, their permit willworld in an emerging strategy to be cancelled. It’s the law,” she added.tap unconventional energy France’s fracking ban took effect inresources, especially shale gas, to July and could lead to fines andcompensate for its depleting imprisonment if a company is foundconventional reserves. to be using the technique. The prospects in the pipeline for France opened its doors to shaleTotal include a proposed gas exploration in March 2010, whenpartnership with ExxonMobil to former Environment Minister Jean-explore Poland’s enormous shale that fracking demands millions of litres Louis Borloo granted three permits forreserves, two Danish exploration permits of scarce water and that the low-pressure periods between three and five years. Theand six licences in Argentina. gas requires drilling sites that would have move – which was seen to have been But it has proved impossible to ignore to be set very close to each other and heavily influenced by the positivethe lure of France’s sizeable shale gas nearby housing, scarring the landscape. publicity in the US about its so-calledreserves – estimated to comprise some of French Environment Minister Nathalie “shale gas revolution” – involved thethe biggest natural gas reserves in Europe Kosciusko-Morizet spoke publicly of the extension of permits for shale oil and gas– and its economic need for domestically “devastated countryside” and “sullied exploration to companies such as Total,produced gas. Having produced around water tables” in US regions where Vermillion Energy, Toreador Resources33% of its gas consumption in the 1970s, fracking had occurred. and Schuepbach Energy.France was importing 98% of the gas it Opponents had forecast during the run- Kosciusko-Morizet has already warnedconsumed in 2009, at an enormous cost up to the parliamentary vote on the lawmakers that companies holding theto the French treasury and French prospective ban in the second quarter that permits and planning shale probes mayconsumers. exploration companies would attempt to resort to legal challenges to help rescind No shale gas drilling has yet taken continue exploration without specifying the parliamentary ban.place in France, but hopes that shale gas the extraction method. Their fear is thatcould drastically cut back the import bill if vast reserves of gas were found then Toreador’s persistencewere dashed this summer, when the the companies would put pressure on the Paris-based Toreador has said it willFrench Parliament imposed an outright government to find a way to go back on continue to work to develop the shale oilmoratorium on fracking, the first country its fracking standpoint. resources of the Paris Basin, in which itto do so, in the wake of months of The bill – drafted by the country’s holds the most acreage of any explorer.protests by environmental activists ruling UMP party – did not ban shale gas The company’s CEO, Craigfollowing a temporary freeze on shale exploration itself, only fracking. An McKenzie, said in early July that thegas exploration in February. earlier version of the bill, which Socialist company’s initial evaluation activity at Total did not give any details of how it factions supported, would have banned its Paris Basin licences would notwould recover any gas found, but said any kind of development of the deposits. involve fracking. “We will not conductthat any exploration push would not hydraulic fracturing operations withininclude fracking, which is the only October deadline any of our permit areas. We will makeknown method to extract hydrocarbons The timetable for whether the full disclosures and representations to thefrom shale rock formations. government will need to revoke existing French regulatory authorities as may be exploration licences was specified on required.”Fracking furore September 1 by Kosciusko-Morizet. Toreador subsequently stated onGreen groups and politicians have led Oil and gas companies that were August 10 that its Liassic drillingactive protests across France, contending planning to explore for shale programme in the Paris Basinthat the method could cause major hydrocarbons under previously granted “comprising six wells (without the use ofenvironmental damage after having been licences had until September 13 to hydraulic fracturing) is expected toshown to be a water pollutant. inform the government whether they commence by year-end, pending final Apart from fears over the pollution of were planning to use fracking, the review of permits by the Frenchaquifers, the anti-gas lobby has argued minister said. Administration.” Copyright © 2011 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  5. 5. Unconventional OGM 19 September 2011, Week 37 page 5 COMMENTARY The small-cap E&P firm opted to watched with intensity by the shalefocus on its French portfolio in 2009, exploration industry elsewhere inoffloading its interests in other Europe. A UK House of Commons selectcountries and staking its future on the committee has called for an investigationsuccess of shale oil drilling near Paris, into the link between shale gas tests inwhere it says an estimated 65 billion northwest England and two minorbarrels of oil may be held within shale. earthquakes which occurred in the area It received an infusion of support in shortly after the start of operations.May 2010, when US independent Hess As a result, the Dutch Ministry offarmed into the acreage, bringing Economics, Agriculture and InnovationUS$120 million of financial firepower has said there can be no green light forto the venture. The firms were shale gas exploration in the Netherlandsintending to conduct exploration until results from the UK governmentdrilling of oil shale in the town of Doue In the light of the fracking ban, investigation can be assessed. Certain(Seine-et-Marne) under a data capture- Toreador’s medium-term strategy parts of Germany have also bannedoriented first phase of a two-phase work remains to be divulged. Some analysts fracking, which has only begun in earnestprogramme. have suggested that the company could in Europe in Poland. McKenzie has stressed that the participate in scientific research into French developments will occurgeology of the Paris Basin – in which shale gas exploration that France’s Prime against a background where the country’sthere is around 2,000 metres of Minister Francois Fillon has favoured, so strong nuclear energy industry gives itseparation between the shale and the as not to rule out forms of the technology far less incentive to explore newfreshwater strata – will avoid that would not harm the environment. approaches in comparison with a countrycontamination problems experienced in such as Poland, where shale gas hasthe US’ Marcellus shale, which is close Intense scrutiny become a national priority to winto freshwater aquifers. Developments in France will now be independence from Russian imports. POLICYCAPP issues fracking guidelinesA new set of guidelines issued on in British Columbia to produce feedstock a statement. “These principles articulateSeptember 8 by the Canadian for a grassroots liquefied natural gas our water management objectives andAssociation of Petroleum Producers (LNG) plant on the Canadian west coast. water protection practices, as well as our(CAPP) for hydraulic fracturing of shale The salient features of the new focus on improving our watergas developments in the country is guidelines include: safeguarding the performance over time.”probably going to be more stringent than quality and quantity of regional surface CAPP’s guiding principles forthose in the US, a Progress Energy and groundwater resources through hydraulic fracturing apply in allResources marketing analyst, Kurtis sound wellbore construction practices; jurisdictions in which the upstreamBarrett, said. sourcing fresh-water alternatives and industry operates and have been issued “In the US, there is no need to disclose recycling water for re-use as much as is with the understanding that somefracking fluids,” he said. “We will have practical; measuring and disclosing water provinces are working on regulations.to take a closer look at the new CAPP to reduce environmental impact; The expectation is for the new guidelinesguidelines, as this issue is already being supporting the development of fracturing to complement future regulatory needs,discussed between regulators and fluid additives with the fewest the CAPP announcement said.producers. Most companies have their environmental risks, and supporting the “The Canadian natural gas industryown mix of fracking fluids and that is disclosure of fracturing fluid additives. supports all regulations that governproprietary. Public disclosure of that “With the increase in natural gas hydraulic fracturing, water use and waterwould be [tantamount to] losing production from unconventional sources protection, as we recognise water is acompetitiveness in the market place.” such as shale, Canadians have told us valuable resource,” an executive vice- Progress Energy, in a joint venture they want more information as to how president at Encana, Michael McAllister,with Petronas, is aiming to develop shale industry uses and protects water,” said in a statement.gas deposits in the North Montney basin CAPP’s president, Dave Collyer, said in Copyright © 2011 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  6. 6. Unconventional OGM 19 September 2011, Week 37 page 6 POLICY “Strong regulations exist in regions of resources are being developed “The composition of fluids is vital, asactive unconventional gas development. responsibly.” there are several chemical cocktails thatSimilar regulations are being developed A Weatherford sales manager, Randal are not environment-friendly. Dependingin regions with an emerging Biedermann, while welcoming the on the formations, there are various toxicunconventional natural gas sector to decision to disclose fracturing fluids, fluids that could potentially affect aensure protection of water resources and expressed concern about the water-bearing area.”provide the public confidence that these environmental impact. SHALE GASConocoPhillips launches campaignto improve opinion of frackingConocoPhillips has launched a public equipment or well failures that could There have been some problems. Butrelations campaign to address the potentially contaminate water supplies,” they are rare. And they were caused notnegative public perception of hydraulic it added. by fracturing, but faulty drilling and wellfracturing (fracking), and the benefits of Fracking and horizontal drilling have completion work, or improper handlingnatural gas. been a “game-changer” and natural gas is of fluids on the surface. Fracturing is not The oil and gas super-major has kicked the fuel of the future, Mulva told the inherently risky to groundwater. It occursoff the campaign, which includes a Detroit Economic Club recently. “Since far below drinking-water aquifers.”website and speeches by CEO Jim shale gas has breathed new life into the Mulva concluded: “to address theMulva, to reach both the public and natural gas industry, it’s unfortunate to public’s concerns, our industry mustpolicymakers. ConocoPhillips is one of see a serious threat emerge to further follow good practices. These exist, andthe US’ largest natural gas producers. development: that is the perception that we must adopt them as standard The website specifically touts fracking hydraulic fracturing pollutes procedure. There is a role for governmentas “safe extraction” and natural gas as groundwater.” oversight in this. Also, we must de-clean, as a job-creator and as ‘made in He added: “The record is in our favour, mystify fracturing. ConocoPhillipsthe US.’ those million wells safely fractured since supports disclosure of the non- “At ConocoPhillips, we believe the the 1940s. The [Environmental proprietary substances contained inrisk associated with well operations, Protection Agency (EPA)] studied the fracturing fluids.”including those involving horizontal environmental record of fracturing in the In response, Susan Harley, Michigandrilling and hydraulic fracturing, is very past. It concluded that no additional policy director for Clean Water Action, alow, yet it is important for us to manage federal regulation was required. A new national watchdog group, told the Detroitthese risks effectively,” it said. “Proper study is now under way. We expect the Free Press: “Companies are doing deepsite selection, well design, construction results [in 2012].” fracking in Michigan, putting our naturaland operating procedures are critical to He continued, “That’s not to say that resources at risk, including 20% of theprotect against spills and surface there is no reason for public concern. world’s useable fresh water.”German authorities claim frackingis more dangerous than CCSHydraulic fracturing (fracking) is more Federal Environmental Office (UBA), water table cannot be ruled out. It’s adangerous than carbon capture and told German press agency DPA: “We very extensive use of chemicals that’sstorage (CCS), the head of Germany’s know that some of the substances [used required to make the gas in deep rockenvironmental authority has claimed. in hydraulic fracturing] can cause cancer. layers accessible.” Jochen Flasbarth, president of the In particular, the endangering of the Copyright © 2011 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  7. 7. Unconventional OGM 19 September 2011, Week 37 page 7 SHALE GAS He added: “Until now, fracking wasn’t public in detail which chemical opposed local campaign groups.especially in focus because its compounds and which processes will be Opponents of fracking claim that someapplication was not immediately used,” he added. companies conducting tests in Germanyimminent. As the UBA, we assume that Flasbarth backed federal environment have used techniques which are bannedthe dangers caused by chemical use alone minister Norbert Roettgen’s decision to in the US or no longer used there.during fracking are greater than in the commission a study of the risks Politicians in the two states believed tocase of CCS.” associated with fracking. He added that have Germany’s largest shale gas The UBA implements various he considered it necessary for reserves – Lower Saxony and Northenvironmental legislation in Germany, environmental assessments of projects Rhine-Westphalia (NRW) – have turnedand advises the federal government on using fracking to be enshrined in law. against fracking on environmentalthe environmental impact of policies. In recent months, fracking has come grounds, with some calling for a blanket “As the national environmental under intensifying public pressure in ban. The NRW state government, aauthority, we consider a transparent Germany as public knowledge of the coalition between the social-democraticapplication process essential – with process increases. SPD and The Greens, has been vocal inparticipation from the water authorities Companies wishing to carry out its opposition, while the more business-and the public,” Flasbarth continued. “In fracking or CCS in Germany face oriented government in Lower Saxonythis case, it must especially be made opposition from a patchwork of fiercely has tended to be more supportive.Shell partners with UT forunconventional gas researchEnergy giant Shell has signed a five-year research and develop innovative in recent years, leading to a drastic dropresearch deal worth US$7.5 million with technology continually that will help to in the cost of natural gas at a time ofthe University of Texas (UT) to study meet global demands by bringing more soaring oil prices. Shale gas, tight gasimproved methods of unconventional oil energy resources to market,” said Shell’s and CBM accounted for 50% of USand gas recovery. president, Marvin Odum, in a statement. natural gas production in 2009, a figure The programme will be overseen by “We chose to collaborate with the UT that the US Energy Informationthe university’s Bureau of Economic because it brings together an Administration (EIA) has said could riseGeology (BEG), and will focus on extraordinary amount of talent from both to 75% by 2035.increasing understanding of the organisations that will push the Despite this, environmental concernssubsurface characteristics of shale, coal- technological envelope in the field of over the extraction methods used – inbed methane (CBM) and other tight, developing even the most challenging particular hydraulic fracturing (fracking)complex formations. This will hopefully hydrocarbons safely and responsibly,” he – have led to moratoria on shale drillinglead to new techniques to extract the added. in countries such France, Germany andresources in a more efficient and The unconventional oil and gas sector the UK.environmentally sensitive way, said Scott has transformed the US energy industry “The pursuit of unconventional energyTinker, director of the BEG. resources is a complex, integrated The majority of the funding will be problem that requires uniting thesplit between the university’s “This agreement marks an scientific and engineering efforts belowgeosciences and petroleum geoscience important milestone in ground with above-ground efforts inengineering departments, but experts in water, regulation and public awareness,”economics, environmental policy, Shell’s commitment to said William Powers, president of UT.business and energy law are all expected research and develop “As a major research university andto participate in the research. leader in energy, we’ve got the integrated “This agreement marks an important innovative technology expertise to help solve it,” he added.milestone in Shell’s commitment to continually” Copyright © 2011 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  8. 8. Unconventional OGM 19 September 2011, Week 37 page 8 SHALE OILDoE increases estimateof US shale oil potentialAn advisory panel to the US Department assessment of North American oil and “the conventional wisdom that Northof Energy (DoE) has said the country’s gas resources. The National Petroleum American oil production is on anshale oil production has the potential to Council is led by Anadarko Petroleum’s inevitable decline.”top 2-3 million barrels per day by 2035. CEO, Jim Hackett, and also includes the He continued: “The potential is veryHowever, if hydraulic fracturing CEO of Shell’s North American unit, significant, and if choices are made toregulations stand in the way, production Marvin Odum, and the CEO of develop those resources, that decline thatcould be restricted to just 600,000 bpd. Chesapeake Energy, Aubrey McClendon. we’ve seen over the last 10-15 years According to state regulators and It said the growth in supplies could be could actually turn up, and turn intoindustry estimates, shale oil output in equivalent to about a 50% boost in growth.”July accounted for about 580,000 bpd of current domestic output. But even an The report noted that the public moodproduction in North Dakota and Texas increase to 2-3 million bpd of oil would had lost confidence since BP’s oil spill incombined. The report, compiled by the not be enough to replace imports, as the the Gulf of Mexico in April 2010. Itindustry-led National Petroleum Council US consumes about 20 million bpd of oil recommended that a new network offor US Secretary of Energy Steven Chu, and imports about half this amount. regional councils to promote besturged policies to aid expansion. A Shell official, Andrew Slaughter, practises for the oil and gas industry be It was drafted in response to a request who led the council’s study of resources, set up to work with communities on theirmade by Chu in 2009 for a fresh told Reuters that the report contradicted concerns. OIL SANDSShell Canada to focus onbrownfield expansionsShell Canada will focus more on Jackpine project. For our target of Conservation Board to get regulatorybrownfield expansions – rather than 770,000 bpd, we will need to take slow approval to expand the Jackpine andinvesting in new facilities at this time – steps to ensure [capital] costs of projects Pierre River mines.as part of efforts to nearly triple its remain in check and that we also reduce “The Pierre River expansion will helpbitumen production in northern Alberta our environmental footprint and improve us learn even better what we did in ourto 770,000 barrels per day, a senior both water and land usage.” earlier oil sands projects. In Canada ourcompany official said at the recently The Muskeg River and Jackpine aim will be to produce moreconcluded annual oil sands trade show facilities are part of Shell Canada’s bitumen/synthetic crude oil to replace theand conference in Fort McMurray. Athabasca Oil Sands Project (AOSP). conventional sources of crude oil and Christian Houle, general manager of Shell Canada is the 60% owner and also supply to our refineries in the US,”Shell Albian Sands project, told UOGM: operator of AOSP, with Chevron Canada Houle said.“Earlier, we were thinking of a cookie- and Marathon Oil Canada each holding Shell Canada is also pursuing a megacutter method of expanding our 20% interest in the joint venture. carbon capture and storage (CCS) projectproduction, but now that will be changed AOSP is an integrated oil sands project – Quest – in Alberta.and we are talking first of that consists of bitumen-mining facilities In late June, the provincial and federaldebottlenecking existing plants.” in the Fort McMurray area and a 255,000 governments signed final agreements He added: “We are currently producing bpd upgrader at Scotford near Edmonton, with Shell Energy that allotted C$865a total of 255,000 bpd, of which 155,000 around 450 km south. million (US$879 million) for thebpd is from the Muskeg River and the At present, Shell Canada is working proposed facility.remaining 100,000 bpd is from the with Alberta’s Energy Resources Copyright © 2011 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  9. 9. Unconventional OGM 19 September 2011, Week 37 page 9 OIL SANDS Estimated to cost C$1 billion (US$1.02 diameter pipeline to injection wells us to make that happen. A [finalbillion), the CCS project will have three located north of Thorhild county, and investment decision (FID)] on thecomponents: capture of 1.2 million permanent storage of CO2 in a 2.1-km proposed venture will be taken in 2012,tonnes per year of carbon dioxide (CO2) subsurface geological structure. with onsite construction due to befrom the Scotford bitumen upgrader; its “CCS is until now not an economical completed in 2015,” Houle said.transportation through a 90-km, 12-inch- project globally, but technology will helpConnacher hoping to completefinancing to add to Algar outputCalgary-based Connacher Oil and Gas is a third party to develop the asset. Also, in Amec-BDR is carrying out detailedaiming to complete a financing deal and May 2010 we filed an application with design work and will also help us inalso receive regulatory approval by the Alberta’s [Energy Resources firming up project costs. We aim to startend of 2011 to add 24,000 barrels per day Conservation Board (ERCB)], and hope production from the expanded facilitiesof additional production to its Algar to receive final regulatory approval by in late 2013/early 2014,” Sametz said.bitumen project in northern Alberta. the year-end. Our aim is to conclude both At present, Connacher is the owner and “Initial estimate of the capital cost is deals by the year end and move ahead operator of the Algar project – alsoC$800 million-1 billion [US$812 with procurement of long-lead items and known as Great Divide Pod 1 and Pod 2million-1.02 billion], but we are still construction work,” he added. – of nameplate capacity 20,000 bpd.fine-tuning that aspect,” company The Algar facility – located on the “The facilities were constructed in twopresident and CEO Peter Sametz, told Great Divide acreage – has a nameplate phases, each of equal capacity. Output isUOGM on the sidelines of the annual oil production capacity of 20,000 bpd, with now standing at 14,000 bpd and is beingsands trade show and conference in Fort the total bitumen resources being 500 ramped up. Capital expenditure requiredMcMurray. million barrels, he said. The plant utilises to construct facilities for Pods 1 and 2 “Rothschild [of the US] is acting as our the steam-assisted gravity drainage was C$270 million (US$274 million) andexclusive financial advisor and our aim (SAGD) technology. C$360 million (US$366 million)would be to establish a joint venture with “UK/Canadian engineering firm respectively,” he added.CNRL preparing for secondtrain at Horizon plantCanadian Natural Resources Ltd. a bid for the work. A decision on the bids crude oil again from its Horizon project,(CNRL) has invited firms to bid for work “will be made by October 15,” Platts eight months after the plant’s operationsto expand its Horizon oil sands project in quoted the official as saying on the were shut down by a fire.northern Alberta. The work is expected sidelines of the annual Oil Sands Trade Production began in the first week ofto double the project capacity to 270,000 Show and Conference in Calgary. September and has averaged aroundbarrels per day by adding a second train. Four companies were originally 75,000 bpd of crude oil. Full production A report from Platts on September 14 prequalified to participate in the tender, rates of 110,000 bpd will be reached bysaid that a tender issued by CNRL, seen the two others being Japan’s Toyo mid-September, the company said. Theby the news agency, was soliciting bids Engineering and UK-based AMEC. Horizon plant uses upgraders to processfor an estimated C$650 million (US$662 The tender is part of a capital heavy oil sands crude oil into a lightermillion) contract to build a second train expenditure programme announced in crude oil. A coker fire at the upgraderat the site near Fort McKay, Alberta. August by CNRL. This involves facility on January 6 shut down An official from Calgary-based SNC spending nearly C$2 billion (US2.04 operations. CNRL is Canada’s secondLavalin, one of the contractors bidding billion) on increasing production from largest oil and natural gas company, withfor part of the work, confirmed that Horizon in 2012. The news came one day operations in the west of the country, theSnamprogetti of Italy had also submitted after CNRL said it had begun producing North Sea and offshore West Africa. Copyright © 2011 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  10. 10. Unconventional OGM 19 September 2011, Week 37 page 10 HEAVY OILMadagascar Oil upgrades heavyoil estimates for Tsimiroro blockMadagascar Oil (MOIL) has announced a Block 3104 [Tsimiroro] and the these significant projects. The approvalsignificant upgrade of its oil-in-place government’s agreement to revise the by the government of our 2011-2012(OIP) estimates for the Tsimiroro block terms of our joint venture with Total work programme at Tsimiroro affirms its(Block 3104) in Madagascar. E&P on Block 3102 [Bemolanga], we are support of the company’s presence and Around 1.69 billion barrels of heavy pleased to be pressing forward on both contributions to the country.”oil are now said to be in place, according MOIL reached an important agreementto the best estimate provided by with the country’s government in Juneindependent reservoir engineers that has allowed it to press ahead with itsNetherland, Sewell & Associates. This Tsimiroro heavy oil project and to returnrepresents a 75% increase on previous to London’s junior AIM marketestimates of 965 million barrels that following a six-month suspension of itsensued after 18 of the 24 wells drilled on shares.Tsimiroro in 2010 discovered oil. “Tsimiroro remains our primary focus, “We are delighted to report these new so we do not believe that the curtailmentresource estimates, which further of activity on the exploration blocks willdemonstrate the enormous potential of adversely affect our near-term business.Tsimiroro. What we are seeing is the new However, we are hopeful that once the‘best estimate’ scenario exceeding the country’s political issues are resolved,previous high estimates, whilst the key government officials will move toupdated high estimate provides an address approval of our continuingindication of just how large a prospect exploration programme,” said Hunter.Tsimiroro could be,” said CEO Laurie MOIL said facilities construction wasHunter. under way for its Tsimiroro steam flood Speaking on September 14, after the pilot. Drilling of the 28 pilot wells isannouncement, he added: “Following the expected to proceed in the fourth quarterresolution of the dispute with the of 2011, with first production anticipatedgovernment of Madagascar regarding in the second half of 2012. OIL SHALEKivioli plant running outof oil shale, says CEOEstonia’s Kivioli Oil Shale Processing planned investments.” the country’s government to threaten himand Chemicals Plant is under pressure In 2008, the company warned that oil with expropriation if he did not agree tofrom declining oil shale reserves and a shale reserves in its acreage were close to the significantly lower price of 320,000lack of investor confidence, the being depleted. In order to keep the plant euros (US$437,000) – a move that wascompany’s CEO has said. – which employs almost 10% of later rejected by Estonia’s courts. On September 14, Estonian news Kivioli’s population of 7,000 – running, The company has been mining aagency ERR reported that Robert it attempted to purchase 330 hectares (3.3 second Kivioli oil shale quarry, but aKarpelin, head of the Kivioli facility, had square km) of mining land from local March injunction by landownerssaid that it was “running out of oil shale,” businessman Nikolai Reisman. concerned over the project’swhile a messy land dispute was “costing However, Reisman set the price at 50 environmental impact forced it to stop.it the trust of its creditors and stalling million euros (US$68 million), forcing Copyright © 2011 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  11. 11. Unconventional OGM 19 September 2011, Week 37 page 11 OIL SHALE As a result, Karpelin said, a number of costing 3.8 million euros [US$5.19 electricity output had been boosted by aprojects have had to be self-financed. million], a container park over 1 million hike in oil shale production. “We have just finished the construction euros [US$1.37 million] and the “As more than 90% of electricity is oilof a semi-coke dump, and next we are exchange of the turbine project will cost shale-based, the [growing] demand forplanning a thermal power plant (TPP) 1.8 million euros [US$2.46 million].” electric energy led to a 20% increase insteam turbine and change of generator,” Despite Kivioli’s struggles, the outlook oil shale production” it said. “Over a halfhe said. for Estonia’s shale sector is largely of produced shale oil was exported.” Karpelin added: “The investments are positive, with Statistics Estonia reportingquite large, with landfill construction earlier this month that the country’s COAL TO LIQUIDSKBR bets on India CTLKBR is seeking to cash in on India’s Jindal Steel and Power (JSPL), which Two coal blocks in Orissa’s Talcherproposed coal gasification and coal-to- is building a CTL plant in the coal-rich coalfields were allocated for the CTLliquid (CTL) projects. eastern state of Orissa, signed a projects in 2009, with the North of The company recently said that it technology deal with KBR in late Arkhapal-Srirampur block awarded tointended to compete for contracts for August. “KBR has received the contract SETL and the Ramchandi block going toCTL ventures in India, three of which for gasification project from JSPL for JSPL. State-owned monopoly Coal Indiahave already been announced. India is production of syngas for their direct Ltd (CIL), meanwhile, has also proposedpushing CTL businesses to produce reduced iron production,” Gualy said. a joint venture with NMDC and thediesel and naphtha from the large Two CTL projects with production government of West Bengal for a CTLavailable deposits of inferior coal, as it is capacity of 80,000 barrels per day are scheme.a major importer of crude oil. being implemented in Orissa. The While India has achieved success in KBR’s vice president, Ron Gualy, said investors are JSPL and Strategic Energy coal-bed methane (CBM) output and thethat with the “continuous rise [in the Technology Systems (SETL), a Tata- government is due to announce a shaleprice] of crude oil, CTL seems to be one Sasol joint venture. Output is likely to gas policy this year, there is pressure toof the viable options in India. Crude oil is begin by 2018. make progress on CTL projects as well.projected to remain around US$100 per JSPL and Tata have opted for the Apart from procuring the latestbarrel. If a low-cost feedstock like low- cheaper indirect liquefaction process, technology and capital, co-ordinationrank coal is used, owners can take which condenses syngas produced from between federal and state governments,advantage of the spread in prices, which coal gasification. The two CTL plants are land acquisition, environment issues andmakes it possible for CTL to be expected to cost 900 billion rupees violent Leftist threats are matters thatcompetitive.” (US$18.8 billion). also need to be addressed. GAS TO LIQUIDSSasol plans GTL debut in USThe US is on its way to having its first week, said the company’s proprietary The company is to carry out itsgas-to-liquids (GTL) facility, as South GTL technology could “help unlock the feasibility study on the project, plannedAfrican energy firm Sasol has announced potential of Louisiana’s clean and for Calcasieu Parish in southwesta feasibility study for a plant in abundant natural gas resources and Louisiana, over the next 18 months.Louisiana. contribute to an affordable, reliable and The study will look at two capacity Sasol’s managing director of new high-quality fuel supply for the US.” The options, one for 2 million tonnes per yearbusiness development, Ernst Oberholster, planned project would be the country’s and the second for 4 million tonnes perspeaking at a press conference with first to produce GTL transportation fuels year.Louisiana Governor Bobby Jindal last and other products. Copyright © 2011 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents
  12. 12. Unconventional OGM 19 September 2011, Week 37 page 12 GAS TO LIQUIDS Officials anticipate 850 permanent jobs that, unlike other proposed alternatives to procurement, and constructionwill be created by the plant, and as many conventional petroleum-based fuels, management (EPCM) contract wasas 5,500 positions during peak GTL fuel could be used in existing awarded to Texas’ S&B Engineers andconstruction. vehicles and fuel delivery infrastructure Constructors in May. “GTL fuels are an important part of the without modifications. In March of this year, the Southenergy mix because they can advance Sasol announced plans for the world’s African company set out plans for a jointenergy independence in a way that is first ethylene tetramerisation unit in venture with Talisman Energy inboth cost-efficient and environmentally December 2010, also for Louisiana’s Canada’s Montney basin, which includedfriendly,” Oberholster said. He added Calcasieu Parish. The engineering, a GTL study. NEWS IN BRIEF water underground and fracturing rocksPOLICY with chemicals to release shale gas, is Encana holds talks setting up outside the Lancashire village with PKN OrlenDespite probe, SEC of Banks. It is close to a drilling rig that Encana, Canada’s biggest natural-gasnot regulating Cuadrilla Resources is using to drill up to producer, is holding talks with PKNfracking 3.5km deep. The company, which is Orlen SA on developing shale gas in backed by the former BP chief Lord Poland, Alan Boras, an EncanaThe US Securities and Exchange Browne and money from Australia, has a spokesman, said in an e-mail. EncanaCommission wants to ensure drilling licence to explore 437 square miles of doesn’t have an agreement with thecompanies are not misleading investors Lancashire, but suspended operations this largest Polish oil refiner, Boras said,about their natural gas reserves but is not summer after two earthquakes struck denying a report in Poland’scracking down on a practice of hydraulic Blackpool. It has so far sunk two Rzeczpospolita newspaper yesterday.fracturing, its chairman said on exploratory wells and says a further three “The company’s focus” is on “operationsThursday. may be needed. and opportunities” in North America, heThe SEC issued subpoenas to ExCo Britain has around 150bn cubic metres of said. Exxon Mobil Corp., Chevron andResources Inc and Quicksilver Resources recoverable shale resources, according to Talisman Energy Inc. are amongInc last month in a probe into whether the British Geological Survey, which companies that bought about 100 licensescompanies are overstating the could meet the nation’s gas requirements from the Polish government to exploreproductivity of their natural-gas wells. for 18 months. Cuadrilla is expected to the possibility of extracting the estimatedThat has led to complaints from some disclose its first estimate for the amount 5.2 trillion cubic metres (of gas in shalelawmakers, including Bill Posey, a of shale gas found inside its Lancashire rock formation that the country mayRepublican of Florida, that the SEC was licence area next week. According to the hold, according to the Energystraying from its traditional area of chief executive, Mark Miller, the signs Information Administration. Orlen issecurities abuse into regulating are “encouraging”. working to find a partner to help itenvironmental issues. “Acre for acre, I think the gas in place develop shale gas licenses, Beata REUTERS, September 15, 2011 here is very comparable to – and in some Karpinska, a spokeswoman, said in an e- cases exceeds – some of the goodSHALE GAS [resources] in the US,” he said last mail today, declining to give other details. month. BLOOMBERG, September 13,Camp Frack But local people and green activists have 2011mobilises against UK argued that the “fracking” process isshale gas well inherently risky due to the effect of the Poland’s Siekierki tight gas appraisal chemicals used, explosions, links with seismic activity and allegations of illness. well falls shortThe first of an expected 150 climateactivists and local residents began to Environmentalists are calling for a delayconverge on a field near Southport on in fracking until a major review of the Aurelian Oil & Gas is suspending plansFriday to protest against the practice has been published by the US for a sidetrack at the Trzek-2 well andenvironmental impacts of one of the Environmental Protection Agency. But reviewing the possibility of gas salesUK’s first shale gas wells. the UK government says it is confident from the existing three wells at its“Camp Frack”, named after “fracking”, its own safety regulations are strict Siekierki tight gas project near Poznan inthe process of pumping vast quantities of enough. west-central Poland. GUARDIAN, September 16, 2011 Copyright © 2011 NewsBase Ltd. www.newsbase.com Edited by Ryan Stevenson All rights reserved. No part of this publication may be reproduced, redistributed, or otherwise copied without the written permission of the authors. This includes internal distribution. All reasonable endeavours have been used to ensure the accuracy of the information contained in this publication. However, no warranty is given to the accuracy of its contents

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