Unconventional in Bohemia

By bne IntelliNews September 12, 2011

bne -

The Czech Republic is attracting increasing interest from companies involved with exploring for unconventional gas.

On September 8, AIM-listed Wildhorse Energy revealed that it is working in central Europe on a series of underground coal gasification (UCG) projects - where coal fields are turned into gas fields by pumping in oxygen and steam to trigger a reaction that produces syngas - with that in the Czech Republic most advanced.

"We have already started putting teams in place in Poland, Germany and Czech Republic. Czech is the one that we are most advanced in - we have definitely made very concrete steps and we should have news soon," Chris Dinsdale, CFO of Wildhorse, told Stockopedia in an interview.

The Czech Ministry of Environment also confirmed in August that it plans to commission a survey to determine how much, if any, shale gas reserves the country has, and that UK firm Cuadrilla and Hutton Energy have submitted applications through their Czech subsidiaries to start exploring for such deposits. Local media report that other firms are also interested, including local oil and gas explorer Moravske Naftove doly.

These firms are hoping that the Czech Republic will to some extent hold unconventional gas deposits similar to those believed to exist in neighbouring Poland. In April, the US Energy Information Administration (EIA) issued a report that estimated Poland's technically recoverable shale gas resources at 187 trillion cubic feet (cf), making them the largest in Europe. No one believes the Czech Republic will boast anything like such amounts, however with the Central European region overwhelmingly dependent on Russian gas, there is a strong economic argument for exploiting any viable reserves.

Cuadrilla Morava said it has acquired a 365-square-mile tract near Olomouc in Moravia, basing its decision on data that "suggests the shale characteristics of the Czech Republic are analogous to those of other basins in Europe which are being actively explored, and has applied for an exploration license." The company said it hopes to hear from the Czech authorities about the applications in the autumn.

Meanwhile, Hutton Energy said that through its Czech subsidiary, Basgas Energia Czech, it has applied for two five-year concessions in the Czech Republic to develop unconventional gas resources: the Berounka concession, located approximately 30 km south-west of Prague, and the Trutnov concession, located in the northeastern part of the country. "The potential for the presence of the natural gas in shales in the Czech Republic has yet to be tested. However, the series under investigation are found within the Ordivican-Silurian succession, similar to shale-rich plays in North America," the company said in a statement.

The Czech environment ministry emphasised that these licenses were only for research and that drilling based on any discoveries would not begin for at least another five years.

Analysts say any such drilling would cause huge controversy for historical reasons. At a Washington forum on trans-Atlantic natural gas issues hosted by Johns Hopkins University's School of Advanced International Studies in May, Vaclav Bartuska, the Czech Republic's ambassador-at-large for energy security, told delegates that the fear of pollution from fracking, which involves the pressurised injection of water and chemicals into the earth to separate gas from rock layers, is too great to allow shale gas development in his country. "The reason we are so cold about shale gas is that we have had 30 years of mining for uranium, which involved pumping millions of litres of sulphuric acid into the ground. That has been an ecological disaster. We stopped it in the 1990s, and we've been trying to clean it up ever since," Bartuska was reported as saying at the forum.

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