January 15, 2013 / 9:26 AM / 5 years ago

REFILE-UK shale gas firm plans Dutch exploration work

* Dutch shale formations similar to UK's Bowland

* Cuadrilla to drill three sites

By Oleg Vukmanovic

LONDON, Jan 15 (Reuters) - The Dutch arm of UK shale gas explorer Cuadrilla Resources plans to apply for three exploration drilling licences in July, when the results of a government study into the risks of hydraulic fracturing will be released, Cuadrilla's country chief said.

"We expect to start drilling no earlier than the start of 2014," Frank de Boer, Cuadrilla's country manager for the Netherlands said in an interview this week.

"Test results and resource estimates will become available in 2014," he said, adding that Cuadrilla's in-house geologists see parallels between Dutch and UK shale formations.

Cuadrilla estimates that the UK's Bowland shale basin in Lancashire, northwest England, which it is preparing to drill, holds around 200 trillion cubic feet of gas, although only a fraction of that will be recoverable.

"The potential for shale gas in the Netherlands is very big and significant - and the government is pushing for industry to develop this resource, a key difference when compared with some other countries in Europe," de Boer said.

The Dutch government depends on gas production as a key source of revenue to fund spending and reduce public debt, according to its statistics agency, but with reserves set to diminish over the next decade companies are being encouraged to exploit more challenging reservoirs.

State-led gas firm EBN says it wants to boost unconventional gas production, including from shale, to maintain output and prevent the Netherlands becoming a net gas importer some time in the period 2020 to 2025, as predicted by the International Energy Agency.

At stake are state earnings of more than 12 billion euros ($16 billion) from gas production in 2011, equivalent to 4.5 percent of total government revenue for that year, figures show.

Currently the Netherlands, the European Union's biggest gas producer, exports supplies across Europe.

To start with Cuadrilla is targeting two sites in the central Dutch province of Brabant, Boxtel and Haaren.

Drilling will target the Posidonia shale, which is believed to be the source of actively producing oil fields operated by Northern Petroleum, Cuadrilla said.

The third site in Noordoostpolder, Flevoland province, bears a close geological resemblance to the UK's Bowland shale, according to data provided by Cuadrilla.

"They are both carboniferous in age and have extremely thick shale sequences ... the shale is believed to be well within the dry gas window and previous drilled wells show gas through the shale section," Cuadrilla said.

CHALLENGES

Public fears over hydraulic fracturing led the Dutch government to suspend the practice last year as it studies the environmental risks of allowing companies including Cuadrilla to start exploratory work.

Fracking involves blasting water laced with chemicals at high pressure into the shale to generate pathways for the release of the gas held in these tight geological formations but there are concerns that the process could contaminate drinking water supplies and cause earth tremors.

France and Bulgaria have banned the practice despite the boost it has given to gas and also oil production in the United States and anxieties in the Netherlands are compounded by the country's population density, the highest of any country in Europe, meaning that drilling work will take place close to residential areas.

The government's report recommending policies with regard to shale gas drilling is due in July.

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