Chevron gets Bulgaria shale gas exploration permit

Wed Jun 15, 2011 10:27am EDT

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SOFIA, June 15 (Reuters) - The Bulgarian government granted a five-year permit to U.S. energy firm Chevron (CVX.N) on Wednesday to carry out shale gas exploration work at a potentially huge field in northeastern Bulgaria.

Last month, the Balkan country said Chevron had won a tender for the work at the 4,400-square-kilometre Novi Pazar field over Canada's BNK Petroleum (BKX.TO). [ID:nLDE74R050]

Economy and Energy Minister Traicho Traikov told reporters that Chevron will prepare a five-year working programme worth 50 million euros ($71.87 million).

The company will pay 30 million euros to the state to start exploring for shale gas in a field for which initial estimates, based on similar rock formations, showed potential reserves of between 300 billion and 1 trillion cubic metres of shale gas.

Traikov has said shale gas and hydraulic fracturing have the potential to reduce harmful emissions, boost energy security and cut Bulgaria's almost full reliance on imported gas from Russia.

But the drilling for the unconventional gas has raised concerns throughout Europe that fracking, a process that involves injecting water, sand and chemicals to extract trapped gas, can contaminate water and harm the environment. [ID:nN18229665]

Last week opposition Socialists called for a moratorium on shale gas exploration in Bulgaria until reliable studies prove the work will not harm environment and not trigger earthquakes.

The government said in a statement Chevron would invest 4 million euros over five years on environment protection.

(Reporting by Tsvetelia Tsolova; editing by Jason Neely)

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