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The 10th issue of the Shale Gas Investment Guide brings you in-depth analysis and reporting on the European, North African and global shale gas markets, together with key market data and indicators.
Shale Gas Investment Guide | by Wojciech Kość
UNCONVENTIONAL GAS

Small Resources are Big Game in Sweden

Sweden has next to none confirmed resources of natural gas and its annual demand is only 1 billion cubic meter (BCM). But a relatively low cost of drilling owing to low reservoir depths is making even this small potential worth going after.

While far from being gripped by gas fever, Sweden has not been backward in seeking to capitalise on its gas resources, small as they are. Swedish geology also affords certain key advantages, in particular, that most of the time companies exploring for gas do not need to drill deeper than 1,000 meters, with some areas offering gas potential at a mere 70-120 meters.

With virtually no domestic production and demand of about 1 BCM annually, Sweden does not seem like a prospective gas market able to attract major international players. It may have enough gas, however, for local operators - like Igrene or Gripen Oil and Gas - to establish a profitable E&P business in the Nordic country. Both exploration companies want to establish themselves as suppliers of fuel for Sweden’s growing compressed natural gas (CNG) transport sector and local municipal heating networks.

Igrene is a Stockholm-listed oil and gas company formed in 1994. It came out of an older company, Falun Paper. The company sits on 25 concessions, ranging from 0.4 to 170 square kilometers in the vicinity of Lake Siljan, and has been trying for some time to determine the area’s gas potential.

The company is now working on its first production well at the Mora field in western Siljansringen, looking to finish it by early November. Siljansringen is the location of a meteorite impact from 377 million years ago, one of the Earth’s 18 largest known impact craters and home to Lake Siljan. Oil and gas exploration has been ongoing in the lake’s vicinity.

According to analysis of the well’s early results carried out by the French Petroleum Institute, the gas from the well is high quality, with a methane level of 96 percent and negligible levels of undesirable gases. Typically for Swedish exploration the well has been drilled to a depth of only 700 meters, as compared to typical depth in Poland of at least 1,500 meters, thus reducing the cost. “If we are successful on that first well, we are going to drill nine more in the area,” Mats Budh, CEO of Igrene, told the Shale Gas Investment Guide during a phone interview from the Mora field. The company is financing its exploration program from the equity it raised via a share issue in April, which added about €890,000 to the company’s financial resources.

Further south, in the region known as Östergötland, another exploration firm, Gripen Oil and Gas, is working on 21 concessions, ranging from 3 square kilometers to 614 square kilometers. The company is looking there to develop a high quality methane gas shallow project - with wells drilled to a mere 70-120 meters - where allocated contingent resources were estimated at as much as 1.4 BCM, or 40% more than the country’s recent demand. Although shallow, the target is known as Alum shale, making Gripen’s exploration essentially a shale gas operation, says company CEO Stephen Crabtree.

The company has drilled 17 wells on its key concession Ekeby, and Mr Crabtree says he is excited about what he describes as a “substantial flow rate” on one of the wells and “constant, albeit small” flows on other two. While he is concerned by the low price of oil, which has weakened the business case for gas exploration in Europe, Mr Crabtree believes once Gripen produces gas from Ekeby, Gripen will find a market for it. “We have an agreement with a company named AGA Gas to sell and market our gas once we produce it,” Mr. Crabtree said.

“Subject to permitting, we are hoping to get production under way next year. The gas is very high quality, too, at a 98 percent methane level,” Mr Crabtree added. Production would certainly put Gripen on a much more solid financial footing, with income from sales supporting further exploration, which has been funded from equity raised by the company before the crisis hit the oil market.




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