>remember the one when we spoke of the equipment issue and how exxon has buildings with rigs sitting in them.

According to Michael Lynch, there are only 50 land rigs in Europe. I have no idea how many of them would be capable of going to 4500 meters or so. In the long term though, they can just build more :)

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Recent drilling campaigns in the natural gas shales of the U.S. have profoundly affected the domestic industry this last decade. Momentum is still building. Now that Exxon Mobil (XOM) has begun a similar campaign in southeastern Hungary, it is possible that it could spread throughout the EU. Certainly the natural gas shales exist. Will they prove to be as prolific as in the U.S? In the Exxon Mobil, announcement of April 14 regarding the joint venture with Hungary’s MOL for exploration in the Mako Trough, the company stated that they plan to continue the search elsewhere in Europe. This can only be good news for the beleaguered consumers. If XOM does it, Shell, BP, Eni, BASF, Total and GDF/Suez will not be far behind. So a significant discovery or multiple discoveries in Hungary could be the start of an extended boom. Inhibiting such fervor today is a severe shortage of drilling equipment. Today, fewer than 50 land rigs are running in Europe. Rig manufacturers however are always alert to new business opportunities. KCA Deutag with its manufacturing subsidiary, Bentec, would be in excellent geographic position to capitalize on a sustained campaign which could build to 500 rigs over the course of a decade. In the meanwhile, consumers will have to accept the higher prices and threats to security posed by the limited delivery capacity of both Algeria and Russia. The recently published BP Statistical Review of World Energy June 2008 reveals that natural gas production in the Netherlands, Russia and Algeria declined slightly in 2007. Norway’s production was up only marginally. Thus, far the immediate present, natural gas prices will go higher. But a major development of unconventional European resources could be a game changer. And liquefied natural gas (LNG) is gaining ground as well. The European natural gas situation is bleak, but it could be a lot worse.