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Mixed fortunes for Polish shale gas

PR dla Zagranicy
Jo Harper 09.07.2015 07:45
Poland’s shale gas project is suffering as oil prices plummet and multinationals exit. But it's not all bad news, Sławomir Brodziński, Poland’s Chief Geologist, told a Sejm economic committee sitting.
Photo: GlowimagesPhoto: Glowimages

“The main reason for the exit from shale gas concessions of the larger multi-national firms is the situation on the fuel market, above all the huge falls in prices of oil and gas. But added to that, the interests of the global concerns and Polish interests have not always been the same,” Brodziński said.

In June, ConocoPhillips – the last remaining US firm in Polish shale gas - announced its departure from three concessions in Poland. Earlier the same decision had been by ExxonMobil, Marathon Oil and Chevron, Talisman Energy, Total and Italy’s ENI.

ConocoPhillips said it had stopped its shale gas exploration in Poland due to unsatisfactory results. Its subsidiary Lane Energy Poland had invested around USD 220 million in Poland since 2009, drilling seven wells over its three Western Baltic concessions. Commercial volumes of natural gas were not encountered, the company said.

“The bigger firms will now go to the Third World, where there are higher levels of corruption and lower levels of administrative organisation, in other words a friendly investment environment,” Brodziński said.

“But Poland doesn’t suffer from a gas threat, with an LNG terminal opening soon and bigger storage capacity. Shale gas exploration is now in the hands mainly of domestic concerns, PGNiG, Lotos Petrobaltic and PKN Orlen. In total there are 11 entities belonging to 10 capital groups looking at 40 exploration concessions and another 13 being reviewd for exploration."

Brodziński said he was "moderately optimistic” about the prospects for Polish shale gas. “The moment oil prices start to rise, the competitiveness of exploration technology will follow suit and Poland will have its own shale gas industry, not a massive Europe-wide one, but a key element in the enrgy mix,” he added.

Tax incentives are in the pipeline and a new law will speed up permitting processes. But only 66 wells have been drilled to date – 12 involving horizontal fracking – and permits for a further 27 drills were put on hold in the southeastern Tomaszów Lubelski region earlier this year. Critics believe regulatory delays have pushed investors away.

Global oil firms were attracted to Poland a few years ago in the belief it could follow the shale gas boom in the US. In 2011 the then PM Donald Tusk said he expected the first commercial shale gas in 2014, significantly reducing Poland’s reliance on gas imports from Russia.

A big cut in estimated shale gas reserves in 2012 and the subsequent slump in oil prices have both hit the industry hard. (jh)

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