For all the talk of shale gas development in Europe and thus a thriving market for proppant demand, so far there has been little for potential proppant developers and investors to grasp onto.

It would seem likely, however, given the potential of shale gas resources across Europe and the drive for cheaper, and where possible, cleaner and efficient exploitation of fossil fuels (ie. natural gas, especially as LNG), that until alternative renewable energy sources can be economically and technically harnessed to meet our growing energy demands, European development of unconventional oil and gas is a question of when, rather than if.

The European Commission appears to concur, and earlier this year issued recommendations to ensure that clear environmental safeguards are in place when using hydraulic fracturing to exploit shale gas reserves.

So it makes complete sense for budding proppant players to start planning ahead. Although at present it appears to be a bit of a waiting game, recent events in Ukraine may spark refocused efforts in European shale gas development.

What is clear from limited exploration work conducted so far, mainly led by Poland and the UK, is that more evaluation is required to ascertain accurate potential reserve data and thus compile appropriate extractive solutions.

Critically for would-be proppant suppliers, this would include calculating the optimum number of fracturing stages, selection, volume consumption, and application of proppants.

The runaway success of the US market is unlikely to be replicated in Europe, at least across the board and on such a grand scale.

Challenges include: the geology of the shale gas and shale oil resources is different, often more complex; unlike Europe, many North American shale gas plays are located in areas of wilderness and low density population, facilitating ease of access, minimal disruption, and limited protests; fiscal, legislative and regulatory environments are very different and not as conducive as in the USA; and crucially, the US has a well-established and well-equipped service industry to administer hydraulic fracturing.

This is not to say that any of the above challenges cannot be overcome, and already steps are being taken, but it is perhaps more likely to come to fruition in patches around Europe, rather than uniformly across the continent.

Game changing geopolitics
As a final general point, it would be naive to ignore the fact that shale gas development is to a large extent governed by geopolitical issues, none more so that in Europe.

So despite where shale gas and oil resources are thought to be concentrated in technically recoverable volumes, the political factor needs to be appreciated, and in all likelihood will make or break shale gas development.

Europe imports about 30% of its natural gas from Russia, of which more than 50% flows through Ukraine. Although always simmering beneath the surface in shale gas exploration on continental Europe, the issue of reliance by some states on gas supplied by Russia has come into the spotlight with this year’s conflict escalation in Ukraine.

Poland and Ukraine, among others, for some time have used the issue of natural gas import reliance on Russia as a driver for developing their own shale gas resources. This trend has now been given added impetus by events in Ukraine, which have already led to reduced Russian gas supply to Poland, and a complete supply halt to Ukraine.

It has got to the point that the EU member states are now stockpiling gas in record quantities as they prepare for the possibility that Russia may turn off gas exports to Europe, as has been threatened.

Potential proppant hot spots
So where are such shale gas development hot spots likely to be in Europe?

A number of EU countries are in the process of granting or have granted concessions and/or prospection/exploration licences for shale gas plays over the past three years, these are: Denmark, Germany, Hungary, Netherlands, Poland, Portugal, Romania, Spain, Sweden and the UK.

However, only Denmark, Germany, Poland, Romania, Sweden and the UK have seen any actual activity, albeit limited (initial prospecting/exploration), and Germany now has a moratorium on fracking in place.

Poland, the UK, and Romania appear to be leading the pack with shale gas development and government support. However, they maybe followed by others in the near future.

If one follows the threat of a potential cut-off from Russian gas, the countries most affected, and thus requiring an alternative gas supply will be Finland (100% reliant), the Baltic states (Estonia, Latvia, Lithuania, all 100%), Poland (79.8%), Czech Republic (99.5%), Slovakia (100%), Romania (86.1%), Ukraine (100%), Austria (71%), Bulgaria (100%), and Turkey (58%).

Of these countries, Bulgaria and the Czech Republic have unconventional resources but still have bans on hydraulic fracturing in place, although the Czech ban was to be reviewed in 2014. How the situation with Russian gas supply may influence this remains to be seen.

In Austria, there is identified potential for large shale gas reserves in Lower Austria which could meet Austria’s energy demand for 30 years. Austria is home to energy giant OMV AG, which in 2012 abandoned its plans to drill shale gas resources in the country. This decision may now be revisited.

Ukraine was looking to be a clear hot spot with both Chevron and Shell signing deals with Kiev in 2013 to develop unconventional gas in the country. The most prospective areas for coal bed methane production are in eastern Ukraine, while shale gas is being explored in the Lubin basin, which extends from western Ukraine into Poland, as well as in the east of the country.

Shell has since postponed its activities in Ukraine for two years owing to the country’s future uncertainty. For now, any activity here is surely on hold until calm prevails – but it should not be ruled out for the future.

Romania’s shale gas reserves are the third highest in the EU according to the US Energy Information Administration’s (EIA) estimates, although these were recently re-estimated down. In early 2013, Romania reversed its earlier freeze on fracking, and the government supports the development of shale gas and has signed a deal with Chevron. In mid-2014, the company completed shale gas exploration in the Silistea-Pungesti perimeter in eastern Romania.

However, although Chevron has yet to complete its assessment of Romania’s shale gas potential, early November saw Prime Minister Victor Ponta announce “it looks like we don’t have shale gas” – somewhat placing a dampener on proppant market prospects in the country.

Turkey is looking to be quite attractive, with Royal Dutch Shell Plc, TransAtlantic Petroleum Ltd, and Valeura Energy Inc. among explorers initiating plans to drill shale resources hosting 4.6 tcm of gas and 94 bn bbl of oil, according to the EIA.

The country has two main benefits attractive to development: much of the land with potential unconventional deposits is sparsely populated, thereby incurring little opposition to drilling operations; and Turkey’s new petroleum law, passed in 2013, removed territorial restrictions on exploration and opened the country for international companies, further enhanced by a more attractive fiscal system.

Poland, long considered Europe’s leading beacon for shale gas development, has suffered a recent setback in confidence from the energy majors. Eni, Exxon Mobil, Marathon Oil and Talisman Energy have withdrawn from Poland after an initial burst of interest, citing a range of reasons, including the regulatory environment and complex geology. Chevron and ConocoPhillips, however, have remained in Poland.

Nevertheless, the Polish government is supporting shale gas development and plans to invest $17bn by 2020 in the shale gas sector and has reviewed its fiscal framework to attract investors.

The total number of shale gas wells drilled in 2014 was expected to increase to about 80, compared with 13 in 2013, and 64 had been drilled by mid-2014.

According to Maciej Grabowski, Poland’s environment minister, in a statement earlier this year, the country needs at least 200 wells to test its shale gas potential. Indeed, Grabowski was expecting Poland’s first commercial shale gas well to come on stream later this year. This might be a little optimistic, while 2015 at the earliest could be more realistic.

In August 2014, 3 Legs Resources, partnered by ConocoPhillips, successfully completed a 25-stage hydraulic fracture stimulation at its Lublewo LEP-1ST1H well, the final operation of its 2013/14 drilling programme.

The stimulation was across a 1,469 metre lateral section using cross-linked gel fluid and consuming in total 7.7m lbs of proppant (310,000 lbs/stage). For this well 3 Legs selected a “high quality white sand” at 30/50 mesh size.

However, on 17 September, 3 Legs reported that oil and gas flow rates were of sub-commercial levels and a decision was made to withdraw from its Baltic Basin concessions, and the company exited Poland altogether in November.

In contrast, Dublin-based San Leon Energy is forging ahead with drilling activity in Poland. The company’s Lewino-1G2 test well in northern Poland has sustained gas production rates of 45,000-60,000 standard cubic feet per day. Based upon these results San Leon plans to spud its first horizontal well and multi-stage frac at Lewino in the near future.

Lewino-1G2 underwent a vertical fracturing programme comprising three fracture stages, the last of which was refined to provide higher proppant concentrations, of 4lbs/gal, using a 30/50 mesh ceramic proppant. This was the first fracture treatment in Poland to use ceramic proppants. The next phase will be a 1,500 metre horizontal multi-stage fracture.

Elsewhere, San Leon has concessions in central Poland. During Q4 2014, new drilling is to commence at the Rawicz field development and fracking operations at the Siekierki Project’s Poznan East and North wells. Earlier this year San Leon signed a letter of intent with Baker Hughes to conduct fracturing in these wells.

San Leon’s Rogity-1 well (Braniewo concession) has recovered oil from shales as well as tight Cambrian sands, and a horizontal multi-stage fracking operation is scheduled for Q2 2015.
San Leon also has plans for fracturing operations during 2015 at its Torzym and Karpaty Area projects in central Poland.

Finally, the UK can also be considered a potential hot spot for proppant demand. Unconventional resources targets include the Bowland-Hodder unit across north England, the Midland Valley, Scotland, and the Weald in southern England.

There has been much activity surrounding political moves and legislation encouraging shale gas development, but little operational activity to date.

This may be set to change with a number of key players jostling for position to exploit auctioned UK oilfield licences. These include IGas, GDF Suez, Total, Cuadrilla Resources, Ineos, Dart Energy, Egdon, Celtique Energie, Eden Energy, and Centrica.

IGas, the UK’s largest shale gas explorer, is planning to drill its third exploratory well in north-west England in November as well as bidding for more exploration licences.

The group has an ambitious exploration plan for the Liverpool-Manchester area of north-west England which envisages the development of 30 shale gas production sites, each site comprising 10 vertical production wells each with 4 horizontal laterals (ie. 40 laterals per production site).

On 4 November 2014, IGas announced an increase in its UK shale gas project estimates to now range between 34 tcf and 263 tcf, with 147 tcf deemed the “most likely”.

In June 2014, Cuadrilla started the planning application process for up to four shale gas exploration wells at each of its proposed sites at Roseacre Wood and Preston New Road, both in Lancashire, north-west England.

Although early days, the likelihood of significant proppant demand in Europe for drilling programmes to exploit unconventional oil and gas resources is edging closer.

Poland and the UK are clearly leading the pack, with Romania, Turkey, and the Baltic states following behind. Next year will be a crucial one in order to assess the feedback from the planned drilling programmes in Poland and the UK, and could possibly herald the start of Europe’s proppant market.