* Environmental, pipeline & property laws needed
* Conventional resources could run out in 10 years
* Several North American companies interested in drilling
By Angela Bulgari
LONDON, Dec 2 (Reuters) - Romania needs laws to regulate the creation of a shale gas sector which the government aims to develop to offset dwindling conventional gas resources, the president of Romania’s Mineral Resources Agency (NAMR) said.
Romania could run out of conventional gas reserves as soon as 2022 and needs to come up with new resources, according to Romania’s national statistics office.
Its shale gas industry is still at an early stage, and legal obstacles around environmental and property rights could stall the industry’s development, NAMR President Alexandru Patruti said.
Shale gas has a much bigger environmental impact than conventional gas exploration because it requires the use of large amounts of chemicals and water to extract the gas from layers deep beneath the surface.
Romania currently has no specific legislation for shale gas exploration and uses the same laws that apply to its conventional gas sector.
“Shale gas exploration implies the use of enormous quantities of chemicals and water. These will have to be transported and stored, and I can see some legal issues that could occur because of this,” said Dorin Cojocaru, head of NAMR’s oil and gas resource estimation team.
Regulation is also needed to grant access to pipelines.
The vast majority of oil and gas pipelines in Europe are owned and operated by large integrated energy companies that control production, transport and sales.
A lack regulation that allows third parties access to pipelines owned by such integrated companies means that shale gas companies wanting to enter the market cannot ship their gas to customers.
Another problem lies in property rights.
The boom in U.S. shale gas exploration was aided by its land ownership laws which give private land owners the commercial rights to mineral resources found on their territory.
In Europe, these commercial rights are generally held by the state.
Patruti said that new laws regulating the sector should first be drafted at a European level and then adopted by national governments because the shale industry was becoming a pan-European industry.
Specific reserve estimations for Romania do not exist yet, and Cojocaru said “the figures circulating in the press are based more on the implication that if a basin has conventional sources, it must have some unconventional ones as well.”
The U.S. Energy Information Administration (EIA) said the joint reserves for Romanian, Bulgarian and Hungarian shale gas was around 538 billion cubic metres (bcm).
This would be around half of Ukraine’s estimated resources and a tenth of Poland’s, which has Europe’s biggest resources.
A Romanian government delegation recently visited Washington to discuss potential U.S. investment into Romania’s gas reserves.
Romania has granted an exploration licence to U.S. energy company Chevron, who expects drilling to begin in the second half of 2012, said Thomas Holst, country manager for Chevron.
Other companies that have signed drilling agreements with NAMR and are awaiting government approval are Hungary’s MOL and Canada’s East West Petroleum.
MOL, however, has said that due to the high costs of shale gas exploration it would initially prioritise conventional resources.
“The Romanian blocks have a very good oil and gas potential. According to our previous calculations some of these blocks contain an unconventional potential,” MOL said, but noted it was too early to estimate the size of the unconventional reserves.
Another Canadian company, Sterling Resources, has licences to explore conventional gas reserves and will use the same land to look for shale gas, the company said.