In this chapter, we assess the skill sets required across the industry and its stakeholders to be able to successfully deliver an industrials and professional services base for a EU based UH industry.
A high level synthesis of the required skills base is described in Figure 65 this has been derived from the observations and conclusions drawn from the previous chapters of value chain and its gaps, economics and the supply chain constraints.
Predictably, except for the last two: HSE and Monitoring and Integration with the Gas Chain the top 4 relate to the upstream part of the industry value chain.
Figure 65. Key Upstream skills analysis for EU member States
As can be seen from the Figure 65, the assessment is on the basis of the supply chain constraints and the gap analysis. The comments on the right hand side in the figure are a summary of observed evidence in Europe. This synthesis is borne out from our previous studies on the subject and has also been reflected in our recent interviews with participants in the UH programme in Poland and the UK. The first activities in Poland UH programme started in 2011, soon after a similar initiative was announced in the UK.
The first reserves mapping efforts were started in 2010 and activities in Poland and the UK meant that a number of US players started to focus in the European markets and a healthy domestic skill base from the UK based companies began to emerge.
It has already been mentioned that the UK had some experience of hydraulic fracturing to begin with from its North sea activities in the late 60s and the well-established oil field services infrastructure and skill base in Aberdeen ensured that some of the required skills were ramped up quickly.
The establishment of well-developed regulation and best practices in sectors such as water and waste water management, and the long standing industry verticals of produced water services for the oil and gas industry also meant that a base of UK/European players existed that could learn from the US shale gas experience quite quickly.
As a result, we find that there are a number of international UH players that already operate in Europe and secondly the skills that EU players have in the conventional space have to some extent already been applied in the US context e.g. in Water Management, Veolia Water Management has developed a bespoke solution of the overall water services including data management and real time monitoring that has already been appreciated in the US. The Veolia - Anterro Resources partnership for the Dodderidge County project in West Virginia for comprehensive water services for UH development is one such case in point.
We will consider later on in the report additional such examples that help us to draw some observations of the possibility of developing a UH industrial base in the EU.
Let us now consider some of the skill analyses findings in detail:
Petroleum Engineering and GeoSciences: This is a high end skill set that helps in the planning and coordination stage of a UH project. This involves reservoir modelling, understanding of the sub-surface, interpretation of 3D seismic surveys and well planning issues. The educational and research base is well established in this area with a number of reputed technological universities imparting education and training in this area.
Mobility of professionals is also well developed. We assess this to be a positive development for EU in its aspirations for a UH industrial base.
Environmental Engineering and Sciences: Similar to Petroleum Engg this area is well developed in the EU and a steady supply of professionals is possible to meet the requirements for the UH industrial base creation.
Drilling and Well Completions: This is an area of rapid technological advances and is a function of an existing critical mass of projects in development. The challenge even in advanced markets such as the US is the ability to keep up with advancing good practices.
This can pose a challenge in the EU and some expertise sharing on an ongoing basis would be a useful step.
Planning and Permitting: This is an area that is least well understood in the EU and an area where US good practices do not help much. This is due to the fact that mineral development rights are privately owned whereas elsewhere in the world the mineral rights remain with the State. Planning and permitting processes vary from country to country. It would help to explore if a common framework for UH projects planning and permitting can be evolved in the EU.
HSE and Monitoring: these flow from the planning and permitting rules and hence would vary from country to country, region to region.
Integration with the Gas Chain: This has already been attempted successfully in the case of CBM in Australia and now Shale-to-LNG gas deliveries to markets in Japan and UK are already a reality. The EU LNG industry is well-developed globally connected and there are already a number of transactions where Shale to LNG activity is picking up in the EU. Additionally, integration with the EU gas pipeline system is also not considered to be serious challenge as the treated gas can flow into the EU pipeline systems as long as standard gas quality harmonisation has been done.
Beyond the UH related upstream skills, other example of cross sector skills that could be exploited is in the area of water treatment, conservation and management. This has been possible due to the high levels of sophistication already existent in the European water, waste water management industry and the technological advancements at play in Europe, driven in large part by the highly developed regulation and performance standards in the water industry.
Water management is a highly sensitive subject for the industry as has been evidenced in the active UH industry in North America- European players have managed to capture a significant share of this market in North America. One example cited here is that of the Veolia Water Management in West Virginia and there are possibly others too. These will require more considered study, consultation with the EU players who already have a foot print in the UH industry in North America.
In the remainder of this chapter we focus on the “high value added” components of the UH project spend. Having established that the activities relating to Hydraulic Fracturing/Well Stimulation, Well Completions, Water management inclusive waste water management and waste disposal constitute not only top share of the project spend but are also critical elements of the projects that “need to be got right” if the projects are to succeed.
Figure 66 highlights the strategic importance of these activities for building a UH industrial base in the EU and the column on the far right provides evidence seen so far within the EU member states.
Figure 66. Analysing the capital, skills and standards requirements
Source: EnerStrat Consulting Analysis
In addition, we provide the following three examples of EU companies participating successfully in the US shale gas programme. This is still only indicative evidence, a more detailed study of successful case studies may be helpful in building a more comprehensive picture of the full extent of the advantage it might provide to EU players if a UH industrial base is established as an aim going forward:
StatOil is already one of the major players in the US shale gas industry, what is now significant is that StatOil has successfully delivered a new pilot in its Bakken asset in North Dakota where it has successfully managed to re-inject 100% of the flow back water for hydraulic fracturing in its Williams County project. This innovation will dramatically reduce overall water usage whilst ensuring that all flow back water is safely handled throughout the lifecycle of the project.
As already mentioned, Veolia Water Technologies in partnership with Anterro Resources in West Virginia has developed a bespoke total water management solution which is now seen as best practice
Vallourec of France, a specialist provider of seamless tubular solutions for industrial processes has developed seamless tubular solutions for high integrity casings and tubings that are seen to be advancing the state of play in shale formations in the US.
These three examples- though not a fully comprehensive list- give an indication of the potential contribution that might be possible in the EU were the EU to start considering building an industrial base for UH.
In summary, our view on the skills assessment is that this is an important area for the EU to address if an industrial base for UH is sought to be developed. The right set of ingredients appear to be in place though this area needs to be monitored further.