One Trillion Cubic Meters of Gas
Shale Gas Exploration in Poland: Expectations and Hurdles in a Rush Market
“Is there a rush market in Poland?” asked Pawel Poprawa, Chief Specialist & Head of Petroleum Geology Laboratory at the Polish Geological Institute.
If recent shale gas concessions are anything to go by, the answer is likely “yes.” Speculation is high on Poland’s shale gas potential
At the Global Shale Gas Forum in Berlin, Germany, Mr. Poprawa showed a slide of a Poland’s Silurian shale basin which had a multi-colored bandolier running across it, showing the bevy of concessions to international drilling enterprises.
Poprawa reported that exploration concessions of 50-60,000 square meters totaled 60 in the last three years in Poland, where 15 exploration enterprises are present, including Lane Energy Poland, BNK Petroleum, San Leon Energy and Exxon Mobil.
Expectations, he said, were being created by increasing gas demand, the suitable geology, great fiscal terms, and the presence of infrastructure (facilitating export) in Poland, whose economy does not currently rely on natural gas to a great extent.
“We’re almost the lowest gas consumer in Europe per capita,” explained Poprawa. “The reason for this is mostly energy resource infrastructure inherited from communist times – We rely to a great extent upon hard coal and lignite, but this structure will have to change for ecological reasons.”
According to him, electricity production from gas in Poland – now only 3% – will change drastically by 2030. Currently, one third of domestic consumption comes from Poland’s own sources, and from Gazprom imports (nearly 50%). Poprawa contended that shale gas could replace that latter politically sensitive part of his country’s energy mix.
“Every forecast shows increasing consumption over time,” he said, adding that any energy gap could be filled with shale gas.
Poprawa spoke about the shale source rocks in Poland, that a number of basins bore lower Silurian shale.
“There’s a lack of data to predict the size of resources, but there are some reports of 3,000 billion cubic meters. So you can understand the excitement being generated by shale gas development in Poland.”
He said that most of the existing wells in Poland were old wells, but that there was still a correlation between gamma ray and TOCs.
Poprawa explained that enterprises exploring for shale gas in Poland are building consensus with the local populations that are being affected by operations.
“It’s a well known public issue and local communities are looking forward to it, they see the fiscal benefit, although 60% of fees go to local administration,” he said, enumerating other potential benefits like infrastructural investment, jobs, landowner profit, taxes and national energy security.
“There will always be some concerns,” he said of the hurdles involved in shale gas drilling operations. Poprawa listed surface use concerns, like natural protection programs in Europe, one being “Nature 2000”. In terms of population density, he said the area around Poland’s Silurian shale basin was mostly agricultural.
“Water management is not the biggest problem for Poland,” said Poprawa, who noted the availability of water, “but water disposal is.”
“We’re still in an early phase,” he explained, “and there’s been no discussion of waste water. I think underground storage could be possible, but there are no preparations for it yet. Many companies include it as a high risk factor because dealing with this creates costs. The saline, the metals, have to be disposed - you reach a point where you can’t re-use it. If you have to have shale projects, disposal becomes an integral part.”
He said he believed that technology and know-how transfer would come to Poland from North America. In regard to the high cost of drilling and services, Poprawa said: “There are a few drilling companies present which are all subsidiaries. New operators will come to the market and this will change, making it a competitive market.”
Political concerns snuck back into Poprawa’s speech in Berlin, coupled with what could potentially be a lower price for domestically produced shale gas in Poland.
He said, “Poland pays double to Russia what the US pays for gas, making shale gas a positive.”
Poprawa conceded that environment protection costs could become a negative when considering exploration regulations and procedures. “Most shale gas acreage is out of tender at the moment. A new geology law is currently under parliamentary approval. The Ministry of Environment grants concessions and local administration is also involved.”
He said that concession blocks were large: an individual block can be up to 1200 square kilometers.
According to Poprawa, for many companies the obligation to drill will come later. He said companies in Poland were just now reaching the drilling stage.
Lane Energy Poland has drilled the first exploration well in the Baltic Basin of northern Poland specifically to evaluate the potential of shale gas production.
Targeted at the Silurian and Ordovician shales, Lane Energy’s first vertical well, #1LE Łebień located in the Lebork concession. Lane Energy’s second vertical exploration well, Legowo LE1 well, was spudded on August 27th