Poland set to turbo boost shale gas drive

By bne IntelliNews November 30, 2012

bne -

Poland's state-controlled companies are set to pick up the pace in the hunt for shale gas, with the government saying on November 28 that it expects up to 270 wells to be drilled by the end of the decade. As part of that drive, gas monopoly PGNiG said it plans to drill at least 10 new wells in 2013.

Deputy Environment Minister Piotr Wozniak admitted at a shale gas conference that the government drive to develop a viable unconventional gas industry has produced only "very humble results so far, with only 33 wells completed," according to Reuters. He insisted, however, that the government expects to pick up the pace by drilling a further 270 wells over the next seven to eight years.

Foreign investors - mostly from the US - piled into Poland in 2011 to take over 100 drilling licences, after the US Energy Information Administration (EIA) estimated its reserves at up to 5.3 trillion cubic metres (cm). However, with test results disappointing, a Polish survey lowered estimated recoverable reserves to a maximum of 786bn cm.

While that would still boost Poland's bid to increase its energy security by potentially fulfilling decades of domestic demand, foreign investors' enthusiasm has sagged, even to the point that Exxon Mobil quit the country in the summer.

That has seen Warsaw pushing PGNiG hard to lead Polish state companies into the cause, with utilities and copper miner KGHM enlisted. The gas company could drill up to 15 new wells in 2013, depending on the results of initial efforts, Head of Exploration, Zbigniew Zabkowicz told the same conference.

"The results we have reached so far allow us to plan further works" Zabkowicz said, adding that eight wells will be drilled in the north and two in the southeast. PGNiG may also drill another five horizontal wells in its most promising concession in the Lubocino region, he added.

As part of its efforts to get the shale gas drive back on track, Warsaw finally announced a tax regime for the industry in October. It also said it will launch an industry body to co-ordinate licensing and act as a trader to help companies both enter and exit the hunt.

Wozniak said it is not yet clear what will happen with Exxon's former licences, but insisted that it is not uncommon for company's at this stage to leave concessions. "Every single licence has been changed once over the past three years," he said. "All new investors change their plans at least once."

Wozniak underlined the importance for Poland to assure nervous foreign investors by laying out clear regulations for exploration, drilling and extraction. "Shale gas will force energy market liberalisation in Poland and the CEE region," he said. "We need more gas than we have so far."

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