Central Asia is a hive of activity when it comes to oil exploration, boasting some of the largest oil and gas fields in the world. Dr David Robson, Executive Chairman and President of Tethys Petroleum, discusses what possibilities there are for shale gas in the region, how prices have changed since the Soviet era, and what the future looks like for the shale oil industry

The New Economy: David, firstly tell us about the possibilities for shale oil outside North America, specifically Georgia and the surrounding areas.

David Robson: Well America is right now the centre of the shale revolution, both in oil and gas. But if we look across into the former Soviet Union, or indeed China, there are large basins, sedimentary basins, with quite good thicknesses of shale with organic material in it. If you look at somewhere like the Soviet Union, there you have a tremendously rich black shale called the Maikop. Now the Maikop shale is the source of all of the oil which is produced in offshore Azerbaijan for example, onshore Azerbaijan, and in the north caucuses. An immensely rich source rock. In Georgia, that source is exposed at surface, and with the technology which is being used in North America to extract oil directly from the source rock, then it’s a perfect opportunity to really start moving forward with the development of that, what is a really quite significant potential resource.

The New Economy: Why has nothing been done about it thus far?

David Robson: The thing about Georgia is the geology is really quite complex, it sits in a zone which is created by the compression of what was the Tethian Ocean, by the two supercontinents which collided. And it’s unravelling that geology that’s proved to be a challenge. So it’s the application of more modern technology to an area which has abundant hydrocarbons, abundant oil and gas, which is really the key to unlocking the potential of that wonderful country.

So it’s the application of more modern technology…which is really the key to unlocking the potential of that wonderful country

The New Economy: Tell me more about the Maikop source rock, what is its potential?

David Robson: If you look at the size of the basin, it’s difficult to even estimate how much could be there within the whole of the basin, but you’ve got to find the areas where the rock is at the right depth, not too deep, not too shallow, and it’s not already had all of the oil taken out of it into conventional reservoirs, as in some parts for example of the South Caspian. Now, if you look at just our blocks in Georgia, we’ve had those assessed independently by an American based audit firm, and they’ve come up with a figure for the recoverable prospective resource of about three billion barrels of oil, within just our blocks, which is about the same size as the initial play in North America in the Bakken. So it’s very big. The Bakken today is producing about one million barrels a day, which is not far off the current production of Iran.

The New Economy: Moving on to the Kura basin, previous attempts to exploit that outcrop have been ineffective, can you tell me why?

David Robson: The Kura basin geology is a little bit more complicated, therefore it does require better techniques and technologies. In the past, many of the wells drove in Soviet times, they didn’t manage to get to their objectives, because the drilling was too difficult. Nowadays we have much more modern drilling techniques and technologies, the area has got access now to good export routes, pipelines directly in the world markets. So the prices you can realise are high. When they were working in the Kura basin in the past, in the Soviet era, they were getting a dollar a barrel. Now they can get $100 a barrel at the field. So things have changed a lot.

The New Economy: Some of the sites are quite close to population centres. What impact might a shale oil development have on people around the area?

David Robson: The most important thing about any oil project anywhere is the priority to ensure that you protect the environment as much as you possibly can, and that involves ensuring that the well is drilled in a safe manner, that the formations you go through, which might be for example aquifers or whatever, are suitably sealed off, and making sure that when you do for example carry out hydraulic fracturing, that you are once again doing it in a well which has been prepared for that purpose and isn’t going to leak anything into any of the other formations.

I think that shale oil is going to become an essential, globally

The New Economy: Lastly, what are your predictions for the shale oil industry?

David Robson: Generally, I think that shale oil is going to become an essential, globally. We are seeing the decline of conventional production, particularly on the big existing fields. In terms of the US, although I am not convinced the US will become self sufficient in oil, it certainly should in gas, but certainly will import much much less in the future, with the shale oil production from the States. Countries like China theoretically have very large shale oil potential. So it’s something which I think is extremely important for the future development of oil globally. I think we’ve got to remember, however, that the very nature of shale oil production, it tends to peak and then drop off quite quickly, more quickly that does conventional reservoirs, because effectively you’ve opened up these fractures, they produce, and then it drops off really relatively quickly. You can do things to try and extend it, but what you need to do is keep finding more, so therefore it’s an ongoing process to maintain production of shale oil, and as I say that’s going to be part of the whole energy mix. Now we can make a choice globally, do we want to have lots of hydrocarbon energy or do we not, the world today lives on hydrocarbons and there is no simple and easy alternative, so therefore it’s a choice. If we want the undeveloped world to have the same opportunities the developed world has, then we’re going to need more oil, and shale is going to be an important part of that gain.