Turkey’s booming economy faces one major constraint – a lack of hydrocarbon resources.
At least up to now.
The U.S. government’s Energy Information Administration notes in its report on Turkey, “Over the last two years, Turkey has seen the fastest growth in energy demand in the OECD, and unlike a number of other OECD countries in Europe, its economy has avoided the prolonged stagnation that has characterized much of the continent for the past few years. The country's energy use is still relatively low, although it is increasing at a very fast pace. According to the International Energy Agency (IEA), energy use in Turkey is expected to double over the next decade, while electricity demand growth is expected to increase at an even faster pace. Meeting this level of growth will require significant investment in the energy sector, much of which will come from the private sector. Large investments in natural gas and electricity infrastructure will be essential.”
Furthermore, in addition to being a major market for energy supplies, Turkey is becoming increasingly important as an energy transit hub is, serving as it does as a land and maritime bridge between oil and natural gas supplies from Russia, the Caspian region, and the Middle East.
But being useful in transit is not the same as being a producer, and Turkish economic growth is constrained by the massive cost of its energy imports.
But that might be about to change.
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Speaking on 18 June Turkish Energy Minister Taner Y?ld?z told his audience, “Many have said there is huge potential of shale gas reserves in Turkey, specifically in the Central Anatolian cities of Ankara, Konya and Nev?ehir, although it is not feasible to give accurate figures about the reserves before the completion of our exploration activities. We have already undertaken a series of shale gas exploration activities around Turkey, for example we have been drilling below 3,000 meters with Shell in the eastern city of Diyarbak?r, and planning such activities in the Thrace Basin.”
While all politicians are born optimists, Y?ld?z may well be on target about his country’s shale gas potential, as the EIA estimates that the Dada? Shale in the Southeast Anatolian Basin and the Hamitabat Shale in the Thrace Basin contains up to 163 trillion cubic feet (tcf) of shale gas in-place, of which 24 tcf is technically recoverable shale gas resource, while the two shale basins also contain up to 94 billion barrels of shale oil in-place, of which 4.7 billion barrels are currently technically recoverable.
Quite a windfall if the estimates prove correct.
Turkey has accordingly accelerated its local energy exploration and production activities, specifically in local shale gas, with the state-owned Turkish Petroleum Corporation (TPAO) partnering with Shell, with the pair having begun exploring for shale gas in eastern Diyarbak?r province’s Sar?bu?day-1 natural gas field last September. Leaving no shale rock unturned, TPAO in partnership with several international companies have also begun exploring southern Turkey’s Southeast Anatolia Basin and the Thrace Basin in western Turkey. As if that is not enough positive news, the EIA reports that there may also be shale gas resources in the Sivas and Salt Lake basins, which are as yet only lightly explored.
In February Turkey held its first shale gas conference, attended by more than a dozen energy firms. Turkey's low taxes, already developed oil and gas infrastructure, rising domestic energy demand and role as a hub for international shipping all increase its attractiveness as a potential shale gas producer, and Ankara is confident that it will begin its first shale gas production next year.
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Turkey’s estimated shale gas reserve is 1.8 trillion cubic meters and could satisfy 40 years of natural gas consumption with an annual production of 45 billion cubic meters, according to the Turkish Association of Petroleum Geologists (TPJD).
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But if that’s the good news, the damper is – the cost. Traditional drilling of natural gas wells cost $2-$3 million, but shale gas production is a higher-cost process.
The upfront substantive costs for developing an indigenous shale natural gas industry must be weighed against the fact that in 2012 Turkey paid $60.1 billion for imported energy, an 11 percent increase over 2011, according to data from the state statistics body TÜ?K. Accordingly, in 2012, energy accounted for a quarter of Turkey’s $237 billion spent on imports last year consisted of energy imports, while the International Monetary fund forecasts that by 2017 Turkey’s annual energy import costs will surpass $70 billion.
While the energy field is littered with the corpses of those rash enough to make predictions, it nevertheless seems likely that Turkey will strive to develop a shale gas industry as soon as possible.
By. John C.K. Daly of Oilprice.com
