Companies prospect for Czech shale gas bonanza

Hopes of a Czech shale gas bonanza, as underway in Poland, have sparked research applications from foreign and local companies alike

HOT TOP|Energy & Green Biz
Chris Johnstone | 02.08.2011
Shale gas extraction is a massive business in the US and looks like being the same in Poland , but Czech prospects are unclear

Foreign and domestic companies are starting to eye the possibility of extracting shale gas in the Czech Republic with two applications lodged with the Ministry of Environment to carry out exploratory research. Other companies are waiting in the sidelines to see how things go before lodging their own applications, according to the ministry.

The applications so far have been lodged by Basgas Energia Czech, a unit of the Australian-based exploration company Basgas and Cuadrilla Morava. Domestic oil and gas company Moravské Naftové doly (MND) is also reported by Hospodářské noviny to be considering shale gas exploration but on the basis of existing permits.

Thanks to shale deposits — natural gas trapped in rock rather than porous reservoirs — in 2009 the United States became the world’s largest gas producer, overtaking Russia and driving down prices. While a bonanza on the scale of the US dash for shale gas or investigations of the 3 trillion-5 trillion m3 reserves thought to exist in Poland are not thought to be on the cards, the Czech possibilities are clearly sufficient to attract exploration companies. Indirectly, the share gas boom globally is already blamed by dominant Czech gas importer RWE Transgas for its plummeting profits in 2010.

Shale gas exploitation in the US has fueled a huge controversy with environmentalists fiercely opposed to the practice, largely because of the pollution to groundwater with large concentrations of methane sometimes found. The French Parliament has taken steps to stop exploration for shale gas in the country.

Basgas, already active in neighboring Poland and seeking exploration permission in Ukraine, has asked for exploration permits for an 93 km2 area around Beroun in the center of the Czech Republic  and a 777.5 km2 area around Trutnov in the north-east of the country.

‘We are prepared to work with local authorities and hold meetings to explain the extraction process’

The Czech unit of British company Cuadrilla Resources is seeking permission to explore in a 946 km2 area in Moravia between Hranice, Příbor, and Valašské Meziříčí, the Environment Ministry says. Local Cuadrilla representative Stanislav Benada told Czech Position that he expects to hear from Czech authorities with a verdict on the applications in the autumn.

Talks with environmental officials regarding other possible exploration areas near Prague had shown they do not have a very favorable standpoint, Benada said, adding, “We are prepared to work with local authorities and hold meetings to explain the extraction process.” Benada said that no one currently had an idea what shale gas reserves might be exploitable in the Czech Republic.

The Ministry of Environment says it has started administrative proceedings regarding the Beroun and Meziříčí applications. “In the Czech Republic until now there has been no consideration of extracting natural gas from shale stone, and reserves of this type have not been found (or systematically searched for) or technically and economically evaluated,” the Environment Ministry said in an email.

The ministry pointed out that research is likely to take at least five years, with a separate permit any exploratory drilling required from the Mining Office. Shale gas exploitation is currently taking place in the US and Australia, both in lightly populated areas, it added.

Cuadrilla Resources is a UK-based company which describes itself as a specialist in unconventional exploration with its team having experience of drilling more than 1,500 “unconventional” gas wells in the US, Canada and Europe. Unconventional gas is usually an industry shorthand for shale gas although those in the business say the technology is commonly used for other types of exploitation.

Some of its drilling was halted in May and June following seismic tremors in the area.

Cuadrilla is currently drilling for shale gas near Blackpool in the northwest of England. Some of its drilling was halted in May and June following seismic tremors in the area. The company says its decision to stop drilling was precautionary and that no links have been found between tremors and drilling and hydraulic fracturing, sometimes described as fracking or fracing.

Fracturing, the use of water, sometimes mixed with other substances, under high pressure to extend natural fractures in the shale formation to help extract the gas, is a regular extraction process. Backers say it causes little environmental disturbance and is akin to “keyhole surgery” but some environmental groups say that there is a significant risk of pollution to groundwater reserves.

Cuadrilla’s drilling sites have come under close scrutiny from the British government which, however, at the end of July gave the go ahead for continued drilling for shale gas without more stringent regulations. It said that a moratorium on drilling and fracturing was not justified and that fears about groundwater pollution were not normally founded if the drilling was carried out correctly. The use of large amounts of water in the fracturing process could pose problems, though, the government report said, even if attempts to recyle used water were adopted.

Polish lead

More broadly, the British government is worried that Poland, with its enormous reserves of shale gas and enthusiasm to develop them to reduce its energy dependence on Russia, could set the ground rules for European shale gas extraction.

The Polish concern is founded on the possibility that “their energy policy is driven by energy security, in spite of the environmental concerns associated with hydraulic fracturing, owing to their reliance on imported gas,” the British government report said. 

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