NGFE Reports: Global Shale Gas Summit – Day 1 Overview

Shale gas players excited at Poland’s prospects, but hurdles remain

The first day of the Global Shale Gas Summit, taking place in Warsaw, Poland on 19-20 July 2010, has come to a close.

Subtitled Global Application of Commercially-Viable Shale Gas Models, the conference was packed with delegates from numerous global energy enterprises, like India’s Reliance Industries Limited, and from local energy players like PKN Orlen. Polish ministry officials and geological experts were also in attendance.

The President and CEO of Orlen Upstream, Wieslaw Prugar, who monitored a panel discussion of international energy company representatives involved in exploring Polish shale gas deposits, captured the mood of those in attendance.

“We are very excited about shale gas potential. Developing an understanding of resource potentials will likely make our country a gas exporter in the future,” Prugar said “but we must face new challenges, the scale of which is significantly different than in North America. Expectations have grown but we must still prove that the geology in Poland will deliver.”

Those on the panel, like Tony Atherton, Country Manager, Talisman Energy Inc., offered their experiences at successful shale plays like Eagle Ford, Barnett and Marcellus. Last year, Talisman spent US$ 1.5 billion on shale plays in North America.

Mr. Atherton, responsible for Talisman’s operations in Poland, said shale gas is a good fit in the company’s international portfolio and that the country’s deposits bear potential.

“Talisman identified Poland as country with access to a shale gas market. The basin contains silurian shale, similar to the Marcellus play in the US. It’s organic richness, etc. are all comparable. Seismic data are being gathered and we’ll drill three wells next year.”

Talisman has stakes in three licences in the Baltic basin with partner San Leon Energy.

Dr. Pawel Poprawa, Chief Specialist & Head of the Petroleum Geology Laboratory at the Polish Geological Institute, offered his assessment of the Polish silurian basin, which covers large areas of north and eastern Poland. He said he considers it the most interesting shale rock location in Poland, and just three years ago almost no one was there. But a map now shows a huge swath of enterprises exploring the area.

Social acceptance of shale gas drilling, according to Dr. Poprawa, does not appear to be an obstacle.

“We don’t currently see any problem with this, so it’s a rather positive atmosphere. There’s a fee for use of the natural environment, 60% of which goes to local administration, infrastructure investment, jobs, landowner profit, etc.”

Dr. Poprawa did list challenges though, including the high cost of drilling and other services, as well as a limited amount of drilling and seismic services available to enterprises that want to engage in shell gas production in Poland.

Energy representatives in attendance agreed that the sharing of seismic information among them was essential in order that the shale gas industry can get off the ground.

However, the European Commission’s Michael Schuetz, Policy Officer, Indigenous Fossil Fuels, Directorate-General for Energy, was positive about the increasing role natural gas will have in Europe’s energy mix, but blunt in his estimation of whether or not shale gas could fill the bill in Poland.

“It will not be a revolution most likely,” he said. “Poland will not become a gas exporter. There’s been some speculation that Poland could become a natural gas exporter to Russia, but I do not foresee this.”

Schuetz added “The Commission is still in the assessment process. I am glad that the industry appears to be thinking over many questions that need to be resolved. [Shale gas] would increase our security of supply, reduce our emissions and since it’s indigenous would bring economic growth.”

However, when asked how the European Union might assist in the development of shale gas in Europe, Mr. Schuetz was firm in his response that it is not the EU’s job to nurture the technology.

“The industry has to develop this business,” he said, explaining, “we, of course, have to monitor that the regulatory framework is right. Within it member states have to put in place proper licensing and must enforce environmental standards.

“We want to meet our carbon emissions goals, so it’s not about supporting a particular source. Renewables is supported by government, unconventional gas is supported by the industry,” he said.

Experts from other European countries like Turkey, the Netherlands and France also spoke at the Global Shale Gas Summit to give an overview of their countries’ prospects for the development of shale gas.

Among them was Marion Kaisinger, Legal Advisor at Austria’s OMV, who is in charge of the environmental and legal aspects of the company’s upstream activities. She said that the huge quantities of water used in the fracking process could be an issue of contention, but due to her country’s strict regulations it would make efficiency and recycling of that water imperative.

“Service industries must protect groundwater when doing fracking,” she said. “We need to reduce the footprint and certain substances might not be usable - we might need to use substitutes.”

Ms. Kaisinger, summed up, “I think it’s a challenge for unconventional energy producers to work within the confines of European regulations.”