European gas firms turn to shale to drill for gas  

The WSJ (via The Australian) has a report on interest in unconventional gas in Europe - European gas firms turn to shale to drill for gas.

ENERY companies operating in Europe are turning to more unorthodox sources of natural gas to get around maturing gasfields and the European Union's worries about its dependence on Russian fuel.

Unconventional gas, as it is known, is trapped in different types of rock formations - much of it in shale - and can be freed through drilling horizontally, fracturing the rocks or injecting water into spaces.

While unconventional sources usually have a longer lifespan than normal gas reservoirs, getting at the gas inside them is more expensive.

In recent years Europe has made up for its maturing natural gas fields by tapping pipelines from Russia and Norway, and is also now looking to the Middle East and North Africa. But a series of spats between Russia and Ukraine that curtailed gas-flow to Europe has reinvigorated the search for more secure sources of the fuel.

"All the European utilities are interested in indigenous gas supplies," said Christopher Wheaton, manager of Allianz RCM Energy Fund. "With technology, the application of cash, brute force and the best ingenuity, we've the potential to unlock a previously unusable resource."

Recent technological advances have made it more cost-effective to get at the gas, so much so that in the US, production of unconventional gases in 2008 helped drive the highest-ever annual increase in gas output. It rose 7.5 per cent over the last year, 10 times the 10-year average growth rate, according to BP’s 2009 statistical review.

Exxon Mobil is now exporting expertise and technology it developed in North America to gas markets in Europe. In Germany, for example, drilling and testing activity on licences covering 1.3 million acres of the Lower Saxony Basin started in 2008.

The company also has a joint exploration program with MOL Hungarian Oil & Gas, in the Mako Trough of southeast Hungary. It will evaluate its findings for two to three years before deciding whether production would be commercially viable, the company said.