MOSCOW (Dow Jones Newswires), June 29, 2011
U.S. oil major Chevron is optimistic about the geological potential at recently acquired shale acreage in Eastern Europe, but says lack of infrastructure and a poor regulatory environment will slow down the development.
Unconventional gas sources such as shale gas, which has shaken up the U.S. gas market in the past two years, have also caught the interest of major players in Eastern Europe.
"It's not easy to replicate the shale gas developments we saw in the U.S.," Jay Pryor, Chevron Vice President in charge of global business development, told Dow Jones Newswires in an interview.
The U.S. oil major has acquired shale gas acreage in Poland, Bulgaria and Romania.
"We certainly think the reservoir potential is there, but it will take a little longer to develop," Pryor said.
"The regulatory environment as well as the infrastructure, including pipelines and service work necessary to drill the wells, just isn't as developed (as in the U.S.)," he added.
Shale gas and oil are being produced using relatively new technologies such as hydraulic fracturing, which involves injecting a mixture of water, sand and chemicals underground at high pressures to release oil from hydrocarbon deposits.
In recent years, these technologies have unlocked shale oil and gas that weren't previously accessible, leading to a boom in new wells across the U.S. and flooding the market with natural gas. In 2009, the U.S. surpassed Russia as the world's biggest gas producer in 2009.
Most of the attention is in the U.S. around accomplished shale basins in North Dakota and Texas. Following a $3.2 billion acquisition of gas producer Atlas Energy in the beginning of the year, Chevron last month acquired the rights to 228,000 acres in the Marcellus Shale.
"We expect others are to be found around the world, and we are certainly looking for them," said Pryor.
However, there are significant hurdles to further development of shale deposits both in the U.S. and globally. After years of rapid growth, shale gas producers have begun to bump into cost constraints and particularly environmental concerns about water contamination during the drilling process.
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