Turkey hopes shale gas will plug its energy deficit
Promising shale deposits could help lessen the country's dependence on gas imports
The Republic of Turkey, formed from the remains of the Ottoman Empire, will be 100 years old in 2023, and the government wants to celebrate the centenary by putting the country's economy among the world's 10 largest. Years of strong growth have already brought it to 17th.
Keeping a steady flow of affordable energy will be a priority. Already heavily reliant on imported oil and gas, Turkish consumption is expected to double over the next 10 years.
Unless the government can spur domestic production the import bill will be a drag on growth. Shale deposits scattered around the country, already luring some investors, will be part of the strategy.
Taner Yildiz, Turkey's energy minister, said recently that shale gas would be "something both for us and for the world". State-run Turkish Petroleum Corporation (TPAO) and local private firms would make investments alongside foreign partners 'in the near future', he added.
For now, the fundamentals already look ominous. Domestic gas output last year amounted to just 630 million cubic metres (cm), compared with consumption of 44.75 billion cm. Oil production was less than 60,000 barrels a day (b/d) - not even a tenth of demand, which hit 685,000 b/d. Thanks to strong prices for foreign oil and gas, it left Turkey paying $60bn to bring the energy in.
Construction of two nuclear power plants is expected to begin shortly. Increasingly, though, the onus is on TPAO and foreign partners as they scour the country for conventional and nonconventional hydrocarbons. Beyond the quest to meet strong local demand, there is another incentive.
Producing more of its own energy will protect a lucrative transit business for the country, which is an emerging nexus for pipelines connecting European consumers with producers in Azerbaijan, Iran and Iraq.
Enter shale gas. According to the Energy Information Agency (EIA), the statistical arm of the US department of energy, the Dadas Shale in southeast Anatolia and the Hamitabat Shale in Thrace, in Turkey's north, contain 163 trillion cf of shale gas in-place, of which 24 trillion cf is deemed technically recoverable.
There is plenty of liquid, too: the plays hold 4.6bn barrels of recoverable shale oil, believes the EIA. While those areas have attracted most of the interest so far, geologists also think there is shale gas in several areas in central Anatolia, although drilling hasn't tested this yet.
Investors see Turkey as a good place to operate. The state has left its take low - oil companies pay 12.5% royalty tax and a 20% corporation tax - and planning and licensing are relatively fast and efficient. The domestic and international gas network is well established.
Antsy protesters aren't flocking to drilling sites with placards, either - even when exploration has involved hydraulic fracking.
Turkey gets a lot of rain, so it has enough water to make the process viable. Both the Tigris and Euphrates rivers rise in southern Anatolia.
Despite tension with a host of neighbouring countries, political risk isn't particularly high. Turkey remains a member of Nato and is talking with the EU about joining the bloc. Occasional disputes with Cyprus and Greece and borders with Syria, Iran and Iraq make Turkey a key regional player, but are not likely to compromise its stability. The thorny issue of Turkey's large Kurdish minority remains the biggest worry.
Relations between Ankara and the Kurds have been in a peaceful phase lately, but internal Kurdish splits, exacerbated by events in Syria and Iraq - where Kurds have set up semi-autonomous states - could yet disrupt things again.
That would be a problem in Diyarbakir, which has often been a focus for battles between Turkish and Kurdish forces, and where Shell is exploring the Dadas Shale. The company has started one well and plans to drill two more next year.
Exploration is in an early stage, but Shell says the play is rich in liquids. It will take several years, says the company, to find out if the resource is commercial.
Several smaller firms are also now active in the country, including Canadian independents Valeura Energy and Transatlantic Petroleum, which are both exploring in Anatolia and Thrace, and Anatolia Energy Corporation, a Canadian driller acquired by Texas-based Cub Energy in 2013. Cub is also exploring in Ukraine.
Despite the country's geological potential, it remains too early to make any predictions about production. Yvonne Telford, an analyst at Wood Mackenzie, an energy consultancy, believes Turkey has resources that can flow at commercial levels, but the cost of recovery is unclear. She estimated a break-even price of between $7.5-10 per million cubic feet.
That would compare favourably with what Turkey is already paying for natural gas. Turkey pays $13.40 per 1,000 cf for gas from Azerbaijan, $15 from Russia and $20 from Iran.
But Turkey already has many of the basics in place to support development, including regulation and planning permission. Its oil industry is also used to making economical use of small fields.
Already, 32 rigs are operating in the country and offshore - more than in any other European country excluding Russia - although onshore rigs may be more suited for shallow drilling rather than the deep drilling required to reach shale formations.
Turkey's most promising shale gas is thought to lie at about 9,500 feet beneath the surface. Nonetheless, Turkey's unconventional-gas sector looks attractive, said Telford. Only further drilling will tell if it is economic.