Exxon tempers European shale gas enthusiasm

LONDON Mon Feb 20, 2012 6:03pm GMT

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LONDON Feb 20 (Reuters) - U.S. oil group Exxon Mobil sought to cool predictions of a European shale gas revolution, saying commercial production was at least five years away and dismissed forecasts offered by other industry players as "highly speculative".

Kevin Biddle, Exxon's exploration director for Europe, also downplayed the prospects for Poland -- believed by many to have the continent's largest reserves -- leading the shale gas charge, saying on Monday that Germany was more likely to be the first shale gas producer.

"Five years is possible for some areas -- we have to be working at a pretty good clip to get any significant production online in that time," he told the International Petroleum Week conference in London.

Exxon, the largest oil company in the world by market capitalisation, is one of the most active drillers for shale gas on the continent, and is exploring in Poland and Germany.

Yet it has tended to make less noise about its operations than some smaller groups, which have boosted talk that Europe could experience the "shale gale" that rocked the United States.

"The high resource numbers that some people quote are highly speculative," Biddle said.

Within half a decade, an explosion of shale gas production has sent the U.S. market from shortage to glut and led to plans to export gas as liquefied natural gas.

In the past year, some companies have spurred talk of a European shale gale.

In September, Cuadrilla Resources said it had found 200 trillion cubic feet (tcf) of gas in Northern England -- enough to feed UK needs for many years -- despite only drilling three wells on its acreage.

Experts questioned how such a large find was ascertained on such limited drilling.

Last month, Canada's Tamboran Resources said it had found 4.4 tcf of shale gas in Northern Ireland, without drilling a single exploration well.

Also speaking at the IP Week conference, John Manzoni, Chief Executive of Talisman Energy, which is also exploring for shale gas in Poland, echoed Biddle's caution.

He said his company had completed two wells in the country and planned to commence drilling on another soon.

The most recent had discovered gas and liquids -- which are even more valuable than gas -- but said two wells were not enough to determine whether the finds were commercial.

"People get very excited about it but this is early days, it's going to take a while," Manzoni said.

The risks to the viability of shale gas are not only geological.

Poland needs to develop a fiscal structure which will encourage shale gas production, Manzoni said, while Biddle said his prediction about Germany hinged on the country not banning the controversial production process known as "fracking".

Germany's parliament has been holding hearings on hydraulic fracturing, or fracking, which involves shooting water and chemicals into rock to allow the gas inside to escape.

Environmentalists say the process risks contaminating ground water, leaks methane into the atmosphere and can cause tremors.

Exxon last month said its two shale wells in Poland had not found commercial quantities of gas, prompting Gazprom Europe's largest gas supplier, to say European shale was an "illusion". (Editing by David Hulmes)

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