UPDATE 1-Turkey finds wider evidence of shale gas - minister

Wed Feb 20, 2013 12:32pm EST

Related Topics

* Exploration so far focused on southeast, west

* Seismic data suggests reserves in three central provinces

* Shell findings will be closely watched

By Orhan Coskun

ANKARA, Feb 20 (Reuters) - Turkish seismic surveys have uncovered evidence of shale gas in three central provinces outside the southeastern and western Thrace regions where exploration has so far been concentrating, Energy Minister Taner Yildiz said on Wednesday.

Shale development is progressing slowly in Europe, where Poland and Britain also have plans, yet it has already transformed the U.S. energy market, halving U.S. gas prices in the last five years.

Yildiz told Turkey's maiden shale gas conference, attended by more than a dozen energy firms, that surveys had suggested there were shale gas deposits in the provinces of Konya, Ankara and Kirsehir.

"Turkey wants to discover its potential in east and southeast Anatolia as well as in Thrace (in the west). We have also come across some positive findings in central Anatolia," Yildiz told the conference.

Turkey is hoping to find shale reserves big enough to help reduce its dependency on energy imports.

It is in talks with foreign firms about widening exploration after encouraging early signs, industry officials told Reuters on Monday.

Royal Dutch Shell is already drilling for shale gas in the region around the southeastern city of Diyarbakir, while Canada's TransAtlantic Petroleum is active in the region and in Thrace.

"Turkey is one of the luckiest countries for shale gas in terms of its soil structure," TransAtlantic Petroleum's country manager Selami Uras told Reuters, adding Turkey's potential to produce energy from shale gas was high.

TransAtlantic said in October it had completed its first horizontal oil producing well in Turkey, an investment in the sort of production technology required to exploit shale reserves. It also plans to step up exploration.

"We have the first fracking equipment in Turkey, and we now have a stable output of 340 barrels per day from the Bahar-1 oil well in Diyarbakir," Uras said.

"We are highly optimistic about the Bahar-2 well. We dug around 70 wells in 2011, 69 in 2012 and we will dig another 60 this year, 20 percent of which will be exploration wells, most of them unconventional wells," he said.

Unconventional oil and gas resources such as shale are often located in the same sedimentary basins as conventional oil and gas fields, as appears to be the case in the vast Dadas Shale around Diyarbakir where TransAtlantic and fellow Canadian-listed firm Valeura Energy are drilling.

In many cases, the shale or tight rocks which are targeted by horizontal drilling and hydraulic fracturing were the original source for the oil and gas found in more conventional reservoirs.

ALL EYES ON SHELL

Turkey's low taxes, existing oil and gas infrastructure, high domestic energy demand and role as a hub for international shipping help make it attractive as a potential shale gas producer.

Estimates of how big Turkey's reserves might be vary wildly.

One senior energy official said data from some international bodies suggested Turkey could have 20 trillion cubic metres (cbm) of total reserves. Another industry expert said proven reserves so far stood at just 6-7 billion cbm.

By comparison, the U.S. Energy Information Administration estimates there are reserves of 1.2 trillion cbm (42 trillion cubic feet) in Ukraine, where Shell signed a landmark $10 billion shale gas deal last month.

"In shale gas, you have to dig lots of wells to determine the amount of reserves," Turkish energy analyst Necdet Pamir told Reuters. "It's still too early to make forecasts, but it's said that 1.8 trillion cubic metres of shale gas exists in southeast and northwest Turkey, which is a significant amount."

Delegates at the Ankara shale conference underlined the importance of Shell's work in Turkey and said its findings would be a major determinant for further foreign investment.

The company is expected to drill three more wells in Diyarbakir this year. Shell Upstream International Director Andy Brown told Reuters last week that the company would only be able to make an assessment of Turkey's shale gas potential after the first well was completed.

"Many other major companies will follow its example if it comes up with positive findings," oil and natural gas engineering professor Ender Okandan told Reuters. .

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