Exxon pulls out of Poland shale gas

Reuters has a report on Exxon's giving up on shale gas extraction in Poland - Europe shale push shaken by Exxon's Poland pullout. The FT also has a report - Poland shale: Exxon exit.

Europe's most ambitious shale gas plans were in disarray on Monday after U.S. major ExxonMobil announced it would pull out of exploration projects in Poland.

Poland's lucrative reserves had spurred hopes of transforming Europe the way a shale boom has left the United States brimming with supplies, potentially turning the Poles into net gas exporters.

That was until March, when a government report revealed the country's likely reserves were about one-tenth the size of previous estimates.

At the weekend, Exxon, which earlier this year cautioned that commercial production of Polish shale was at least five years away, said it would not go forward with exploration.

"The move is not surprising given that Poland's shale potential is still unclear," JBC Energy analysts said in a note on Monday.

A spokesman for Exxon in Poland said the company has not decided yet what it would do with its exploration licences. It controls four and jointly holds two with France's Total .

Poland has granted 112 shale exploration licences to ExxonMobil, Chevron and other firms, even as some countries, including France and Bulgaria, have banned shale exploration pending further environmental studies.

The Poles are keen to wean themselves off their heavy reliance on coal and imported Russian gas, partly due to environmental commitments they face as a European Union member nation.

"Exxon realised that commercial extraction was not possible with currently available technology. This is a general problem in Poland that shale rocks are too tight to allow extraction," an industry source said, asking not to be identified.

Abundant shale gas production in Poland poses a potential threat to Russia's supremacy in Europe, where it supplies a quarter of the gas used in the EU. ...

Poland had high hopes for shale after a study by the U.S. Energy Information Association in 2011 estimated Polish reserves at 5.3 trillion cubic metres, enough to cover domestic demand for some 300 years.

The government's study in March slashed estimates for recoverable shale gas reserves at 346 to 768 billion cubic metres.

Reuters also has a report on Exxon's disastrous experience with shale gas in the US - Exxon CEO says low U.S. natgas prices not sustainable.

U.S. natural gas prices are too low to allow the energy industry to cover the cost of finding and producing new supplies, the head of top producer Exxon Mobil (XOM.N) said on Wednesday.

Record production, thanks to new technologies that tap natural gas trapped in shale rock formations, pushed U.S. natural gas prices to 10-year lows below $2 per million British thermal units (mmBtu) in April, though prices have since rebounded.

"The cost of supply is not $2.50. We are all losing our shirts today," Rex Tillerson, chief executive officer of Exxon Mobil, said in a presentation at the Council on Foreign Relations.

Gas prices have risen over 50 percent since April's lows, and were up more than 5 percent on Wednesday to nearly $2.95 per mmBtu.

Still, prices remain well below the $4-$5 level that makes drilling in pure natural gas fields profitable. Most producers have moved over to more lucrative oil and liquids-based plays to fetch higher prices, which has begun to put a slight dent in U.S. gas production.

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Trouble in the algae lab for Craig Venter and Exxon

Steve LeVine has an article on Exxon and Craig Venter's efforts to commercialise biofuel production from algae - Trouble in the algae lab for Craig Venter and Exxon.

A much-trumpeted partnership of one of today's most celebrated scientists and the world's largest publicly traded oil company seems stalled in its aim of creating mass-market biofuel from algae, and may require a new agreement to go forward. The disappointment experienced thus far by scientist J. Craig Venter and ExxonMobil is notable not only because of their stature, but that many experts think that, at least in the medium term, algae is the sole realistically commercial source of biofuel that can significantly reduce U.S. and global oil demand.

Venter, the first mapper of the human genome and creator of the first synthetic cell, said his scientific team and ExxonMobil have failed to find naturally occurring algae strains that can be converted into a commercial-scale biofuel. ExxonMobil and Venter's San Diego-based Synthetic Genomics Inc., or SGI, continue to attempt to manipulate natural algae, but he said he already sees the answer elsewhere -- in the creation of a man-made strain. "I believe that a fully synthetic cell approach will be the best way to get to a truly disruptive change," Venter told me in an email exchange.

Venter made his remarks before a conference this week on the future of energy at the New America Foundation in Washington, D.C., and in subsequent emailed replies to questions.

A drive to reduce dependence on fossil fuels -- because of vulnerability to the volatile Middle East, concern about global warming, and the hundreds of billions of dollars spent on oil imports -- lies behind such efforts to create a scaled-up biofuel. Since up to half of algae is already oil in its natural state, many experts say it is a superior alternative to biofuels created from agricultural products such as corn, palm and switchgrass, which contain much smaller percentages of oil.

When announced in July 2009, the Venter-ExxonMobil alliance of colossals attracted wide publicity. It called for ExxonMobil to spend up to $600 million if publicly undisclosed milestones were reached in the lab. The Wall Street Journal said the partnership might signal "a coming of age" for algae biofuel. Greenbang fretted that the alliance might actually prove "unholy," but not Gigaom, which said it could be "algae's big break."

The terms of the alliance omit the fully synthetic approach that Venter is now advocating, so he is conducting "an ongoing dialog" with Exxon about a new agreement, he said. He appeared to suggest that such a new compact would require more Exxon investment.

ExxonMobil spokesman Alan Jeffers suggested that the company has a different assessment of the alliance's state of play. "The ExxonMobil-SGI algae project is ongoing and has reached no such conclusions as characterized in your note," Jeffers told me in an email. (I had asked whether it is true that the alliance had failed to find a suitable strain of natural algae, and that Venter was seeking to shift to a new stage of research.).

What we may be witnessing is simple friction between the well-known conservative ways of Exxon and the free-wheeling, iconoclastic Venter. In this case, Venter from the outset may have wanted to move directly to the test-tube and create his own algae, while Exxon -- holding the purse-strings -- advocated a less-expensive, step-by-step approach starting with existing strains. There is no sign of anything approaching a rupture. But if the alliance does eventually fail, it would be a serious blow for Venter, who has said that to succeed he needs access to the deep pockets of a Big Oil company, and to a significant but lesser degree for ExxonMobil, which has widely promoted the partnership as evidence that it is a forward-looking company

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