Poland claims first shale gas flow

By bne IntelliNews March 21, 2013

bne -

Polish state-controlled gas monopoly PGNiG - the designated leader of Poland's unconventional gas push since international investors' interest has waned - claims to have obtained the country's first shale gas flow at its Lubocino-2H borehole.

PGNiG added testing is still in progress and that it is still uncertain how much gas the area holds. This should be specified within the next few weeks, press officer Joanna Zakrzewska said, according to the Warsaw Business Journal.

"This is good news that should encourage investors to look for shale gas in Poland," Treasury Minister Mikolaj Budzanowski commented. He also added that the company now needs to determine exactly how much gas is available and the rate of the flow.

Those sound somewhat hopeful words as Warsaw watches its ambitions for shale gas - so-called unconventional gas deposits found trapped within shale formations that new technology has enabled to be tapped – continue to shrink. With initial estimates in 2011 suggesting the country could contain as much as 5.3 trillion cubic metres (cm) of shale gas, the government expressed a vision of Poland as a major European and global gas player. Today, it is trying to resurrect fading hopes that shale gas will allow it to replace a significant amount of Russian gas imports.

Early last year, reserves estimates were slashed by around 90%, and although the reserves of 346bn-768bn cm that are still thought to lie below the ground would still offer the potential to meet Polish demand for decades, the investors that piled in to hunt for deposits in 2011 have struggled to find positive test results.

That has led to questions over the data used in the estimates, with reports claiming that some of it stems from probes made as long ago as the 1950s, and that the most recent surveys come from 1992. The Polish Geological Institute said in January that credible estimates of Poland's shale gas reserves should not be expected before 2014, because it is awaiting complete data obtained from one horizontal well. Lubocino is thought to be the main candidate for the role.

On top of that, Warsaw has struggled to agree a tax and regulatory framework for the segment. As bne reported on March 20, the day that consultations ended, investors are reported to be unhappy with the latest plans.

All of which has seen foreign investors backing off - with US giant Exxon Mobil causing a huge hit to morale last year when it quit the country altogether. That has seen Poland's state-controlled utilities - as well as oil refiners and miners - pushed to make the project work, with PGNiG in the lead role.

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