Turkey's shale gas hopes draw growing interestThomson Reuters* Several firms eye exploration licences, official say* Southeastern region around Diyarbakir main prospect* Major reserves could reduce reliance on imported energyBy Orhan Coskun and Evrim ErginANKARA/ISTANBUL, Feb 18 (Reuters) - Turkey is hoping to findshale gas reserves big enough to help reduce its energy importdependency and is in talks with foreign firms about wideningexploration after encouraging early signs, industry officialssaid on Monday.The government is hoping that major shale gas reserves liein basins in its southeast, east and western Thrace regions andofficials say several firms, including smaller players alreadylooking for conventional oil and gas, are keen to explore.With domestic gas consumption rising and its geographiclocation meaning it is also well-placed to supply internationalmarkets, major exploitable reserves could be a game changer forTurkey's economy and highly lucrative for whoever finds them."We are keen to exploit this method and we must makeeconomic use of shale gas," Energy Minister Taner Yildiz toldReuters, saying it would be a priority for the near future.Shell is drilling for shale gas in the regionaround the southeastern city of Diyarbakir, while Canadian firmTransAtlantic Petroleum is also active in the region."Companies from the UK, U.S. and Canada are keen on shalegas production in Turkey," said one senior energy ministryofficial, declining to be named because talks with potentialpartners were ongoing."These firms are in close contact with Turkish companies toobtain licences and to collaborate with them. They are alsotalking to state firms and are drawing up projections onpossible sites and what can be done in the near future."At least one foreign company was expected to sign anagreement for shale gas exploration this year, officials said.Estimates of how big Turkey's shale gas reserves might bevary wildly.One senior energy official said data from some internationalbodies suggested Turkey could have a massive 20 trillion cubicmetres (cbm) of total reserves. Another industry expert saidproven reserves so far stood at just 6-7 billion cbm.That compares to an estimated 1.2 trillion cbm (42 trillioncubic feet), according to the U.S. Energy InformationAdministration, in Ukraine, where Shell signed a landmark $10billion shale gas deal last month."At present it is not possible to predict (Turkey's) shalegas reserves," Shell's Upstream International Director AndyBrown told Reuters in Ankara last Thursday, adding Shell wouldcomplete its exploration in Diyarbakir by the end of the year."We will be able to make an assessment only after wecomplete the first well, and then we'll be able to see the fullpicture," he said.EARLY DAYSTurkey is keen to cut down on an energy bill which last yearstood at $60 billion and is pursuing a strategy to developdomestic resources including nuclear, coal, solar and windenergy. For now, shale gas is seen as a potential boon."It is not only a matter of locating reserves. Establishinghow economic this gas will be is just as important," said asenior official from state-owned energy company TPAO."Turkey's annual gas consumption of 47 billion cbm as wellas the amenities of shipment and proximity to internationalmarkets will certainly make production attractive," he said.Unconventional oil and gas resources such as shale are oftenlocated in the same sedimentary basins as conventional oil andgas fields, as appears to be the case in Turkey.In many cases, the shale or tight rocks which are targetedby horizontal drilling and hydraulic fracturing were theoriginal source for the oil and gas found in more conventionalreservoirs.Experts say the vast Dadas Shale basin in southeasternTurkey, a region around Diyarbakir where TransAtlantic andfellow Canadian-listed firm Valeura Energy aredrilling, is one such example.TransAtlantic said in October it had completed its firsthorizontal oil producing well in Turkey, an investment in thesort of production technology that would be required for Turkeyto exploit its shale reserves.Shell is expected to drill three more wells in Diyarbakirthis year as it prospects for shale gas, although officials sayif commercially viable reserves are found, any production wouldbe unlikely before at least 2016.Turkey's government, struggling to diversify energy suppliesto an increasingly demanding population, is likely to want anyviable reserves exploited as quickly as possible."It is early days in terms of determining the size of theshale gas (or oil) resource and shale developments, but Iunderstand early results are encouraging," said Yvonne Telford,analyst for Wood Mackenzie's upstream research service."Turkey's existing onshore oil and gas production andtransport infrastructure provides a 'good fit' for shale gas oroil developments," she said.Turkish environmental groups have lobbied against greateruse of coal and nuclear energy but there has so far been littlesign of the sort of opposition to fracking, the controversialdrilling method used to extract shale gas, that has been seen insome other countries.France banned fracking in 2011 after concerns were raisedthat fracking could pollute groundwater or trigger earthquakes.----------------------------------------------------Thank you for choosing TD Waterhouse. 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