Ukraine's Two Big Gas Deals Are Now Both Dry - Washington's Blog

Eric Zuesse

In June, Shell Oil halted its newly dug shale-gas wells at the Yuzivska gas field in southeastern Ukraine, and gave as the reason the civil war there, though only after Ukrainian Government troops had ousted the local residents (who had opposed fracking) was Shell even enabled to dig the wells, so Shell’s departure was puzzling. Then, on 19 June 2014, Igor Alexeev at the oilprce blog presented the reasonable hypothesis of “The Real Reason Shell Halted Its Ukrainian Shale Operations”: “In reality, the truth may be closer to the fact that company is disappointed with the economic viability of what it once thought was a large shale deposit and is looking for a way out.”

The other big gas deal in Ukraine was with Chevron, and it was in the western part of the country, where there was and is no civil war. On Monday night 15 December 2014, Reuters headlined, “Ukraine says Chevron plans to pull out of $10 bln shale gas deal,” and reported that, “Chevron had told the government it was pulling out of the deal,” and that Chevron “declined to give further details.”

All of a sudden, the idea that Obama had taken over Ukraine in a bloody February coup in order to win Ukraine’s gas potential are beginning to sound a bit overblown, or else the White House, where Joe Biden’s son Hunter Biden and John Kerry’s friend and family-wealth-fund advisor Devon Archer were hired by a multibillionaire Ukrainian thug and gas-speculator Ihor Kolomoysky for the board of his Ukrainian gas-exploration company, must be very disappointed to have slaughtered so many people who live on the Yuzivska field, all for nothing.

Such are the risks of ‘entrepreneurship.’

Perhaps Obama and Kerry and other promoters of the coup and ethnic cleansing such as John McCain will now send a few flowers to funerals of at least a token number of the soldiers who are dying there so needlessly, and maybe even of some of the thousands of civilians in Ukraine’s southeast who have been killed by them — just to pay their respects, of course, not as any sort of commentary upon those U.S. officials’ sponsorship of the slaughters there. After all, Obama and Kerry and McCain aren’t Ukrainian officials. They’re just observers, and concerned American citizens regarding the misfortunes of America’s newest colony.

Complete story at - Ukraine's Two Big Gas Deals Are Now Both Dry Washington's Blog

Olga Chetverikova - Donbass: Russians Subject to Unparalleled Ethnic Cleansing - Strategic Culture Foundation

Olga CHETVERIKOVA | 06.07.2014 | 00:00

The Ukrainian army continues a large-scale offensive against the Donetsk and Luhansk People’s Republics. Indiscriminate shelling results in more civilian deaths. Grad, Uragan and Smerch multiple launch rocket systems were used in Nikolaevka to practically wipe this populated area out from the earth. There is no connection with the town so it’s impossible to know exactly what the death toll is. Semionovka and Slavyansk living quarters are regularly subject to regular bombing. Life support systems in Slavyansk are out of order; the city is encircled and blocked. Cars trying to get out are shot at.

The details of the bloodshed are to be studied before they become known to public. In late January 2013 when former President Yanukovych still was in power, the Ukrainian government and Royal Dutch Shell inked the country's first major shale gas 50 year profit sharing agreement. Shell plans to develop the Yuzov field in the Donetsk and Kharkiv regions. In June 2014 the company confirmed its intention to go on with the agreement as soon as the conflict gets de-escalated and the situation stabilizes. The information about the deal is classified. The Ukrainian government allegedly cannot refuse the extension of its term. The territory to be explored is 7886 square kilometers, including Slavyansk (situated right in the heart of deposit), Izium, a major part of Kramatorsk and a large number of smaller populated areas like, for instance, Krasny Liman, Seversk, Yasnogorsk, Kamyshevka etc.

In accordance with article 37.2 of the agreement, the local residents have to sell their land and property. In case of refusal they are to be coerced to do it to serve the Shell’s interests. The company’s expenditure is to be compensated by Ukraine at the expense of produced gas.



The government takes on responsibility for finding a solution to all the problems with local authorities.

There are other actors involved in shale gas projects in Ukraine:

- Eurogas Ukraine, some of its shares are owned by British Macallan Oil & Gas (UK) Ltd, which belongs to US Euro Gas;

- Burisma Holdings, with Hunter Biden, the son of US Vice President being a member of board of directors.

Complete story at - Olga Chetverikova - Donbass: Russians Subject to Unparalleled Ethnic Cleansing - Strategic Culture Foundation

Washington‘s Shale Boom Going Bust | New Eastern Outlook

To read the headlines, it seems that the USA has emerged out of the blue to the point of becoming the world’s oil and gas production giant. All thanks to the Shale Revolution. Recently President Obama made various noises that the US could solve the Ukraine gas dependency on Russian gas because of the spectacular growth of extracting natural gas, and more recently, oil, from shale rock formations across the US. There’s only one thing wrong with this picture—“It ain’t gonna happen…”

The surface numbers are indeed impressive to a layman or politician. According to US Government Energy Information Administration data, between 2005 and 2010 the contribution from shale gas to total US marketed gas production rose from less than 2% to more than 20%. And 2011 set an all-time record for US production as the result of shale gas growth.

However the shale gas comes from a small number of areas with significant and viable shale rock formations that have trapped gas and oil in the interstices of the sedimentary shale rocks. The main shale gas areas are the Barnett shale in Texas’

Fort Worth basin; the Fayetteville and Woodford shales of the Arkoma basin in Arkansas and Oklahoma; the Haynesville shale on the Texas Louisiana boarder; the Marcellus shale in the Appalachian basin, and the most recently exploited, the Eagle Ford shale in southwest Texas.

Two metrics widely used in describing shale well performance are the initial production (IP) rate and the production decline rate which together determine the ultimate recovery (UR) from a well, an essential number in determining economic viability. A group at MIT university in Massachusetts carried out an analysis of production data from the major US shale regions. What they found is sobering. While initial production from most shale gas plays was unusually high, an essential component of the Wall Street shale gas bubble hype, the same gas regions declined dramatically within a year. They found “in general, shale well output tends to drop by 60% or more from the Initial Production rate level over the first 12 months. The second is that the available longer-term production data suggests that levels of production decline in later years are moderate, often less than 20% per year.”

Translated, that means on average after only four years, you have only 20% of your initial gas volume available from a given horizontal drilling investment with fracking. After seven years, only 10%. The real volume shale gas boom appeared in 2009. That means in the fields where significant drilling was present by 2009 are already dramatically depleted by 80% and soon by 90%. The only way oil or gas drillers have managed to maintain production volume has been to drill ever more wells, spending ever more money, taking on ever more debt in hopes of a sharp rise in the depressed US domestic gas price. As a whole shale energy companies spend more than they are making in net profit, creating a bubble of “junk” bond debt to keep the Ponzi game going. That bubble will pop the second the Fed hints interest rates will rise, or even sooner.

Complete story at - Washington‘s Shale Boom Going Bust | New Eastern Outlook