Oleska area

Oleska licensed area covers the territory of 6 324 square kilometers within Lviv-Lublin basin.

Chevron was granted the priority right to sign product sharing agreement for Oleska area based on the results of the first tender for the priority rights to conclude PSAs for shale gas extraction projects in Ukraine, which was held in 2012.

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Oleska area

Oleska area is located on the territories of Lviv (Buzkyi, Zhydachivskyi, Zhovkivskyi, Zolochivskyi, Kamyanka-Buzkyi, Mykolaivskyi, Peremyshlianskyi, Pustomytivskyi, Sokalskyi districts) and Ivano-Frankivsk (Tlumackyi, Galyckyi, Gorodenkivskyi, Rogatynskyi districts) regions. Detailed map of Oleska area is presented here.

The average population density in the administrative districts within Oleska area is about 67 person per square kilometer.

Ivano-Frankivsk regional council approved the draft of hydrocarbons sharing agreement between the state of Ukraine, Chevron Ukraine B.V. and LLC Nadra Oleska on 20 of September 2013 and Lviv regional council – on 3 of October 2013.

Products sharing agreement between the state of Ukraine, Chevron Ukraine B.V. and LLC Nadra Oleska was signed on 5 of November, 2013. The term of the agreement is 50 years.

At the stage of geological exploration 13 exploration wells are planned to be drilled (8 vertical wells and 5 horizontal wells) with further performance of multi-stage hydraulic fracturing operations. Besides, seismic and geotechnic surveys are planned to be executed. The exploration targets are Lower Silurians black shale layers.

The expected amount of investment at the geological exploration stage is USD 350 million, including:

  • USD 120 million for drilling of 8 vertical wells,
  • USD 75 million for drilling of 5 horizontal wells,
  • USD 30 million for seismic studies,
  • USD 75 million for engineering and geotechnic studies,
  • USD 50 million for construction works.

On 9 of April, 2014 State Service of Geology and Mineral Resources of Ukraine issued special permit for subsoil assets use on Oleska area for the 50 years period.

As for July 2014, the negotiations on signing the operational agreement to commence the project are still ongoing.

According to the estimates of the adviser of Minister of environment and natural resources Volodymyr Ignashchenko, in case of successful exploration and confirmation of commercial unconventional hydrocarbons reserves total number of wells at Oleska area will not exceed 800-1000 units during 50 years of production, and the area of well pads will not exceed 200-250 hectares.

Till 2030 the annual volume of shale gas production from Oleska area could reach 2.8 billion cubic meters under pessimistic scenario, 5.6 billion cubic meters under baseline scenario and 11.1 billion cubic meters under optimistic scenario. To reach such production volumes about 1000 wells should be drilled and around 200 well pads with the area from 1 to 3 hectares each should be constructed. According to the forecast water consumption for shale gas production at Oleska area will reach 2 million cubic meter per year (under the assumption of drilling 128 wells per year). Please refer the following links for the detailed information on the forecast of shale gas production at Oleska area and water consumption for shale gas production at Oleska area.

Read also:

Oleska area shale gas production forecast

Updated PSA draft with Chevron