Europe 'holds brownfield pay potential'

Rates of return: Europe could gain resources by going back to brownfields with new techniques: analysis

The emerging trend of tapping additional pay with unconventional techniques at US brownfields could offer significant potential in several European plays as well as further afield, according to a new analysis.

The boom in horizontal drilling and hydraulic fracturing at brownfields onshore the Lower 48 states of the US is forecast to further accelerate to generate daily production potential of as much as 1 million barrels of oil equivalent by the end of 2020.

Wood Mackenzie’s head of unconventional upstream research Robert Clarke said that independent producers were leading US shale into its third phase of evolution after highly-productive shale gas plays and high-margin shale oil plays.

The new exploration efforts look to re-evaluate once marginal assets that were previously considered to be insufficiently permeable for commercial drilling.

“In this current phase the most modern aspects of the two techniques that define unconventional projects – long lateral horizontal drilling and isolated multi-stage hydraulic fracturing – are being used to exploit all types of rock volumes in mature basins,” Clarke said.

 “The shift towards using unconventional field techniques on virtually any type of stratigraphy is presenting a wider unconventional opportunity set than early shale explorers ever anticipated,” he said. 

Clarke said the third phase could be applied to all countries which “hold mature fields with redevelopment potential, are receptive to hydraulic fracturing, and have proven their ability to let operators deploy the right equipment”.

“European assets in particular have tremendous potential for niche developments to accelerate,” Clarke said.

An analysis of where in Europe depleted, low-permeability shallower onshore fields lay in states that permit hydraulic fracturing suggested that Hungary, Poland, Romania and Turkey all held opportunities for unconventional brownfield exploration, Wood Mackenzie said, while the UK, Russia and Mexico may also hold such potential.

Wood Mackenzie highlighted the case of the long-producing region of Ukraine’s Dnieper Donets basin, where explorers such as Australia’s Hawkley Oil & Gas are using shale drilling techniques to tap new shallow horizons.

Clarke said that brownfield unconventional exploration could offer the solution to European shale plays struggling to achieve commerciality as they “do not need to follow the same sequence of phases as has been successful in the US” and could instead start with the third phase.

The analysts pointed out that shallower vertical wells would be “easier to permit and source equipment for” in Europe as well as lead to small-scale developments that might generate less public opposition.

“Regulators could more easily adapt to smaller-scale projects and when the opportunity set of potential assets is expanded beyond blanket shale beds, typical in the first two phases of activity, the chance of commercial success should naturally increase,” Clarke said.


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