Romania Shale Gas Revolution

Brian Hicks

Written By Brian Hicks

Posted March 6, 2013

It’s quite possible that Romania could, in the near future, become an energy leader in Central Europe. Of course, there is a long way to go, but as the Romanian government awaits results of environmental studies the EU is conducting, we should note it is estimated that Romania, Hungary, and Bulgaria are collectively estimated to have technically recoverable shale gas deposits of as much as 538 billion cubic meters.

Last year, Romania offered concessions for up to 870,000 hectares to Chevron (NYSE: CVX), but the company just recently suspended its shale development operations in Romania (more on that in a bit).

Meanwhile, other oil and gas companies—including Petrom, Romgaz, MOL, Sterling, and East-West—are all waiting in the wings. Should Romania begin to successfully exploit its reserves, then just the exploratory drilling phase could see an influx of some $80 million—and that’s just in the Dobruja region, according to the Romanian Mineral Resources Agency on Shale Gas Europe.

Currently, Romania requires imports to cover about 20 percent of all national energy needs. Romania is both the largest producer of and the largest market for natural gas in Central Europe. Of the nation’s energy consumption pattern, 30 percent is comprised of natural gas, of which nearly a quarter is imported from Russia.

Although the Romanian government stands for shale exploration and exploitation, operations have been put on hold while the EU completes its investigations into the possible environmental and ecological fallout from such operations in Romania. The suspension was put into effect in May last year.

Many localized protests emerged in reaction to Chevron’s early attempts to get exploratory drilling underway. The town of Barlad, for example, saw some 2,000 protesters united against shale drilling, the New York Times reports. It’s interesting, because Barlad’s depressed economy would undoubtedly bounce back up from the economic stimulus that shale operations could bring, yet the locals are far more concerned about the ecological impact.

And over in Bulgaria, a ban was set in place last January against fracking, in a government nod to public sentiment. The move caused Chevron to lose its exploration permit in that country, and Romania’s environmentally-conscious population is taking inspiration from that.

From the New York Times:

“We don’t want exploration for shale gas to go ahead, because of the method used, which is the only one available at the moment,” Miruna Ralea, executive director of the environmental group Alma-Ro in Bucharest, said in an interview.

However, Chevron isn’t really the focus so much as national policy on fracking. The EU, after all, does not have a cohesive policy on fracking. While France remains set against it (despite intra-governmental conflict over the issue), Poland continues to seek energy independence from Russia and therefore is opposed to any fracking ban.

The EU’s reports so far on fracking stress the need for expansive safety protocols and clearly admit that fracking has a higher ecological impact than more conventional oil and gas operations.

From the New York Times:

“Whenever exploration and production of unconventional fossil fuels has been done at relevant scale, it has had an effect on the environment,” said Uwe Albrecht, head of the energy and environmental consulting firm Ludwig-Bölkow-Systemtechnik in Germany, one of the authors of the report. “As it generally involves processing significantly larger amounts of material, as well as higher energy and water consumption, the overall impact will be higher than for conventional oil and gas wells.”

Meanwhile, Chevron needs two further permits before it can even begin any exploratory drilling in Romania. After the recent elections, Romanian Prime Minister Victor Ponta insisted that the government would allow companies to at least search for shale gas, if not outright begin exploiting found reserves. Chevron will need additional permits for construction before it can get around to any exploratory work, though it does have planning permits.

Yahoo! News quotes a Reuters report:

“This document does not confer the right to carry out works,” the environment ministry said in a statement to Reuters.

“We are talking about exploration, not exploitation, and we are in the first phase of assessing an environment permit”, for one of the three wells, the ministry said.

Should Romania, Hungary, and Bulgaria eventually modify their national positions on shale gas and actually begin serious exploration and development, Central Europe could well see a shale revolution on par with that of North America.

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