Shale gas reserves and major fields of Ukraine

According to the Energy Information Administration’s estimates published in June, 2013 technically recoverable Ukrainian shale gas reserves constitute 3.6 trillion cubic meters (1,75% of world shale gas reserves). Earlier in 2011 Energy Information Administration has estimated technically recoverable shale gas reserves of Ukraine as 1.2 trillion cubic meters (0.6% of estimated world reserves), and total reserves as approximately 5.6 trillion cubic meters. According to the report of Dixi Group, estimates of shale gas reserves in Ukraine vary and range from 5 to 8 trillion cubic meters, 1-1.5 trillion cubic meters of which are technically extractive.

Scientific Research Institute “Naukanaftogas” of Naftogas of Ukraine estimated total technically recoverable shale gas reserves in Ukraine equal to 22 trillion cubic meters, including 4.3 trillion cubic meters in eastern region, 3.4 trillion cubic meters in western region and 4.3 trillion cubic meters in southern region. According to the Head of Oil and Gas Geological Studies Center of Naukanaftogas Sergiy Vakarchuk the volumes of shale gas available for commercial extraction could be 3-4 times lower than estimated geological reserves.

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There are two major deposits of shale rocks in Ukraine, from which an extraction of natural gas is possible, namely Lvov-Lublin basin on the west (extractive shale gas reserves are estimated at the level of 1,47 trillion cubic meters) and the Dnieper-Donets basin on the east (extractive shale gas reserves are estimated at the level of 2.15 trillion cubic meters).

Map of the wells and areas

Within the first tender on the right for signing the production sharing agreement for shale gas extraction, which was held in 2012, Shell and Chevron were announced as the winners. Shell won the right for signing the production sharing agreement on the development of Yuzivska area (the area of 7886 km2) on the territory of the Dnieper-Donets basin, and Chevron won the right for signing the production sharing agreement on the development of Oleska area (the area of 6324 km2) on the territory of Lvov-Lublin basin.

On January 24, 2013, the Government of Ukraine has signed a production-sharing agreement (PSA) with Shell Exploration and Production Ukraine Investments (IV) BV and LLC Nadra Yuzovsky. The agreement was signed for the period of 50 years.

Розташування Юзівської ділянки. Джерело: shell.ua

Yuzivska area location. Source: shell.ua

Yuzivska area is located in two regions: Donetsk (Krasnolymansky, Slovyansky, Olexandrivsky, Constantynivsky, Artemovsky, Dobropilsky and Yasinovatsky districts) and Kharkiv (Balakleysky, Izyumsky and Barvinkovsky districts).

As of March 2013 Chevron is at the stage of approval of production sharing agreement by local authorities.

Орієнтовне розташування Олеської ділянки. Джерело: uk.wikipedia.org

Oleska area location. Source: uk.wikipedia.org

Oleska area is located in Lviv (Busky, Zhidachivsky, Zhovkivsky, Zolochevsky, Kamenka-Buzky, Mykolaivsky, Peremyshlyansky, Pustomytivsky, Sokalsky districts) and Ivano-Frankivsk regions (Tlumatsky, Galytsky, Horodenkibsky, Rohatynsky districts).

Besides, Italian oil and gas company ENI has announced its plans to extract shale gas at the territory Lvov-Lublin basin. In 2012 Eni signed a Share Purchase Agreement with Ukrainian state-owned National Joint Stock Company Nak Nadra Ukrayny and Cadogan Petroleum Plc to acquire a 50,01% interest and operatorship of the Ukrainian company LLC WESTGASINVEST. LLC WESTGASINVEST currently holds subsoil rights to nine unconventional (shale) gas license areas in the Lviv Basin of Ukraine, totalling approximately 3,800 square kilometres of acreage. The company and its partners, including UK-based Cadogan Petroleum, plan to spend about $55 million exploring for shale gas in the Lviv basin from 2012 through 2015.

According to a study of KPMG, the start of shale gas extraction is expected in 6-7 years, and annual extraction volumes will constitute 2-3 billion cubic meters for Oleska area and 8-10 billion cubic meters for Yuzivska area.  The study of the international company INS CERA that was executed for Ministry of Energy and Coal Industry of Ukraine assumes the start of shale gas extraction in 2015. The Ministry estimates the forecasted volume of shale gas extraction at the level of 6-11 billion cubic meters in 2030.

Thus, the volume of shale gas extraction will depend on the investments in drilling activities, the development of the regulatory framework and confirmation of existing reserves. Under favorable conditions, the volume of shale gas extraction could reach 10 billion cubic meters over the next decade.

Read also:

UEF 2014: 7 Key Messages On The Development Of Gas Sector In Ukraine

UEF 2014: Unconventional Gas Production Perspectives In Ukraine

Yuzivska area location. Source: shell.ua Yuzivska area location. Source: shell.ua Oleska area location Oleska area location