Wednesday, 19 September 2012

An Energy Story

Calgary people who work in the energy industry like to keep tabs on energy stories elsewhere.  With oil companies of every sort in the city, Calgarians are connected in some small way to some of the world's biggest energy producers, including Shell and Chevron - Europe's biggest.  So it is interesting that Ukraine has been seeking alternatives to its dependence on Russian gas imports.   Recently Shell won a tender to start commercial production (shale gas extraction) at the Yuzivka field in eastern Ukraine. 

You may wonder where this opportunity is located.  Way back in 1869, a Welsh businessman called John Hughes established a steel mill and several coal mines in the area at the heart of the Donetsk Basin, south east of Kyiv, on the Kalmius River.  They called it Yuzivka in his honor, but the industrial opportunity caused a "wild-west" experience that grew into a city of 50 thousand.  In the early twenties the Soviets renamed the place Stalino, and modern water supply and sewage systems improved life there.  The energy hungry World War II years increased employment and population there.  During Krushchev's time the place was renamed Donetsk in honor of the Donetsk Siverskiy river.  Since then, this regional heart of Donbas has diversified into engineering and food production. Today the population is just over a million, similar in size to Calgary.  Donetsk city is blessed with a skilled workforce, economic, industrial and scientific assets, and initiative driven companies. It has recently received recognition from UNESCO as one of the most clean industrial cities, high praise in a time of eco-sensitivity. Today it has the most fabulous and modern sport stadium.

So the investment opportunity lies there, in the Donetsk basin, waiting on a variety of test results.  The potential is there for Ukraine to look optimistically at its energy future. Possible doubling or even tripling of its natural-gas production over a ten year cycle implementing shale gas extraction technologies is good news for Ukraine and its democracy. Freeing Ukraine from import obligations, it could make a huge difference to Ukraine's energy story and turn Ukraine into an influential player on the European gas market. It may also encourage closer identification with nation, culture and language - of Ukraine.

Perhaps long time Alberta residents see some common themes from Alberta's energy story here. 
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