TimesLeader.com

U.S. drilling methods hot item

Tired of depending on Russia, European countries look for guidance in finding gas.

MARK WILLIAMS AP Energy Writer

COLUMBUS, Ohio — With one eye cast toward home, giant European energy companies are investing billions in U.S. natural gas and oil fields where huge, hard-to-get reserves have been unlocked with new drilling technology.

Read more Natural Gas Leases - Marcellus Shale articles

click image to enlarge

Techniques from gas drilling sites like this one in Houston, Pa., could be on the way to Europe as nations there look to become less dependent upon outside sources.

AP PHOTO

Related headlines

• The danger down below

Select images available for purchase in the
Times Leader Photo Store

That technology is the prize in Europe, where gas production has declined and where an international utility dispute recently left people in more than a dozen European countries shivering in unheated homes.

Europe’s natural gas supply is routed through Ukraine from Russia. Russia supplies about one-quarter of the EU’s natural gas, with 80 percent of it shipped through Ukraine. A rift between the two nations left more than a dozen European countries with little or no gas for two weeks last month.

Declines in European gas production have potentially made the new techniques used in the U.S. even more pivotal.

At least three European oil and gas giants are developing or have bought interests in oil and gas shale projects in the U.S. — Norwegian oil company StatoilHydro, the U.S. unit of British oil company BP Plc and French company Total.

StatoilHydro and BP have agreed in recent months to pay billions of dollars for stakes in shale gas projects from the top U.S. producer of gas, Chesapeake Energy. Total has bought a 50 percent stake in a U.S. company exploring for oil shale in the Rocky Mountains.

“Given the magnitude of oil shale resources we believe that this project has an important long-term potential for global energy markets,” Yves-Louis Darricarrere, Total’s exploration and production president, said in announcing Total’s deal with American Shale Oil.

Shale is a kind of layered, sedimentary rock that exists in formations throughout the world. In the U.S., gas production from shale dates back to the 1800s.

But the gas, tightly locked in rock formations, had been extraordinarily expensive to extract. That began to change about 15 years ago as producers developed new techniques such as horizontal drilling, where the drill is turned in a right angle to bore into a gas reservoir horizontally.

Gas from shale now amounts to about 5 percent of total U.S. production, according to the Gas Technology Institute.

If the same technology works in Europe it could free up an enormous amount of energy, and potentially provide a buffer against cross-border disputes to the east.

StatoilHydro bought into Chesapeake Energy’s massive Appalachian Marcellus shale project for $3.37 billion in November. Executive Vice President Rune Bjornson said at an energy conference this month in Houston that StatoilHydro wants to bring new drilling technology to other regions of the world.

If the race to duplicate drilling success in the U.S. is on, few companies are talking about it.

Even Aubrey McClendon, co-founder and chief executive of Chesapeake, the largest natural gas producer in the U.S., said, “I doubt we will trumpet it as I think the combination of their international stature and presence and our knowledge of gas shale would do nothing but attract competition.”

But it has become abundantly clear since a chilly two weeks in January that Europe’s energy security has been diminished since the break up of the Soviet Union.

Buying into the technology in the U.S. makes sense and could spare European companies years of development, said Don Hertzmark, an international energy expert.

“The Europeans never bothered to develop this stuff,” he said.

U.S. companies stand to expand through new markets in Europe if the new techniques work, and many experts believe that they will.

Energy companies are now funding a six-year study to locate gas deposits in Europe and to determine if they can be exploited.

“The companies that are involved here — they’re not beginners,” said Brian Horsfield of the GFZ German Research Center, which is heading the study. “It could come online within three years if it turns out these gas shales really are as prolific as we’re led to believe.”

Horsfield, a professor of organic geochemistry, said companies already have acquired land rights throughout Europe.

European Commission President Jose Manuel Barroso said after the dispute between Russia and Ukraine was settled (the second dispute in recent years) that Europe must diversify its energy sources and supply route.