Although the market generally ignores Western Europe when it comes to oil and gas development, the continent does have existing fields already producing, and several promising areas for future exploration and production of unconventional oil and gas resources.
IN PICTURES: Eight Ways To Survive A Market Downturn
One of the largest fields in Europe is the Groningen natural gas field in the Netherlands, which just celebrated the 50th anniversary of its discovery. Exxon Mobil (NYSE:XOM) and Royal Dutch Shell (NYSE:RDS.B) drilled the first well in the field jointly, and the entire field contains an estimated 100 Tcf of natural gas.
There are other formations both below and above the natural gas producing areas, according to geologists, including an oil sand, gas shale and a coal seam. Although the industry has known about these other areas for years, not enough is known about these formations to determine if they are commercial.
A little bit to the south, micro cap Toreador Resources (Nasdaq:TRGL) is exploring the Paris Oil Basin, where it plans to drill a well later in the year targeting conventional resources in the basin. Toreador Resources is also working on the unconventional resources in the area on its 649,000 acres under lease. The company believes that this shale oil shares characteristics similar to that of the Bakken Shale in North Dakota.
Also in France, Total SA (NYSE:TOT) and several other companies are seeking permits in Southern France to explore the natural gas shales that are present in the region.
Since the development of these resources is in the early stage, an organization called Gas Shales in Europe (GASH) was formed to perform a six-year study of the potential in Europe. GASH will create a database of European shale deposits, and examine the best methods of developing the shale. Although very little work has been performed on European Shale, there is much research that they can access across the pond in the U.S., which has spent the last ten years developing its gas shale areas.
This potential has not gone unnoticed by the more aggressive U.S. based exploration and production companies. Chesapeake Energy (NYSE:CHK) is in a joint venture with StatOil Hydro ASA (NYSE:STO) to develop the Marcellus Shale in the Northeastern United States. StatOil Hydro said, in May, 2009, that it and Chesapeake Energy were looking at 14 different shale plays outside the U.S. The areas in Europe under study are Hungary and Poland.
The Bottom Line
Western Europe is not as devoid of oil and gas resources as generally believed, as the same unconventional resources in the U.S. are present there. However, it will take years of study before it can be determined if these resources are both commercially viable, and large enough to satisfy the worlds hunger for Energy. (For a primer on the oil industry, refer to our Oil and Gas Industry Primer.)