Shale Gas Operators in Poland: "Changing the Way We Think"

In a session dedicated to what it's like for shale gas operators working in Poland at Shale Gas World, three of the major players on the market remain fairly optimistic, but they did indicate that they felt regulation could be streamlined to get things moving

"Poland is a great place to do business," said Director of Exploration at San Leon Energy, John Buggenhagen. "We've built a company of over 30 people and are committed to the project. We are currently the largest concession holder in the country."

Despite that, Buggenhagen observed, "I sense panic and we're in this exploration mode; exploration is risky, takes time and innovation. And there's too much misinformation in the market."

He said that as unconventionals exploration had worked in North America, looked to work in South America, and would work in Poland.

"People have to want it to work," opined Buggenhagen. "We have to work together with PGNiG, with the Ministry, and as an industry and contractors - the issue is about making money. Energy is necessary for the future and gas is an amazing option.

"Coal is how Poland generates most of its energy and that's a dirty way to do that. So we have to find ways to make natural gas work and do it cost effectively. Through partnerships with the government and industry we can have a positive debate and talk about the things that are working."

Conference chair Mike Stephenson of the UK's Department of Energy and Climate Change (DECC) asked Mr. Buggenhagen how the public perception of shale gas had changed since the previous year's conference (when "Frack Off" protesters chained themselves to the stage).

"There's a tremendous environmental lobby," explained Buggenhagen, "which I've said is very important for keeping the industry in check. But there's always this extremism that's out there.

"It's not that fraccing is bad, but that poor operators and completion - irresponsible companies and people - that's what's bad. And it's up to regulators to implement a regulatory environment that we can work with that protects local communities as well as supports energy."

He asked how it would be possible to live in the modern age without energy?

"I have a great picture of one of our rig sites and there's a wind turbine behind it," he recalled. "One of the locals came up to us and said 'The good news about your rig is that it will go away in a few weeks; that wind turbine's going to be there forever.' So it's about how you look at the problem."

Professor Stephenson noted a study according to which if Poland were to convert entirely to shale gas to generate electricity, there could be a 41-49% reduction in the country's carbon emissions.

Kamlesh Parmar, CEO of 3Legs Resources, began by saying, "I think that anyone who knows me knows I'm optimistic about shale gas in Poland, so let's get that one off of the table straightaway.

"That's demonstrated by the work that my business, together with ConocoPhillips, has done over the last few years. Our work has been focused on making shale gas work here; it takes time to do it properly. Working here is expensive - it always is in the exploration game. So whatever we spend, we have to spend very wisely," he explained, adding that he think that development of the industry was going quite well in Poland.

Of developing relationships with local organizations, Mr. Parmar said: "You turn up, put yourself on the line, meet people in their backyard and engage with them. It isn't easy, because you open yourself up to questions.

"There is a whole load of information out there, but it's just white noise, but you have to deal with it. Have to be ready to answer and to keep your cool and try to do the right thing. If the community and local governments see you engaging, and see that the companies are actually bothering to turn up, the message gets across.

He admitted that the industry's message was not as exciting as the "anti message" which produced headlines and sold papers.

"Which means that we have to work that much harder to get our message across," said Mr. Parmar, who explained that once an operator started doing that, it only got easier.

"These are the costs that you have to bear as an operator - it's what you have to do."

Kelly Brezger, General Manager, BNK Polska, said shale gas development in Poland was a function of how one got there.

"The key issue, I think, as we go forward is the relationships that we build, not only with the local communities but also with the government, and all of stakeholders that we're currently dealing with," he began, thanking members of the community in the Pomeranian region.

"At the end of the day, the key to success in terms of how we go forward is the relationships that we build."

He explained that BNK Polska had built a relationship with the Gdansk University of Technology. "We're starting to work very closely with them in terms of the actual shale gas process and how we go forward with hydraulic fracturing," explained Mr. Brezger, who said he thought that it could result in degree programs there and jobs.

"At this stage of exploration we need to understand that this is at the very beginning, and it takes time. We're talking about 33 wells.

"In our particular case, we've got 1 million acres under license and we've drilled five wells. To get to the next level - the appraisal level - you've got to get to the point where you've drilled hundreds of wells and understand the geology that you have," he explained.

Mike Stephenson queried Mr. Brezger as to what his reaction was to the changes in regulation mentioned by an earlier speaker at the conference, Piotr Wozniak, Chief National Geologist and Deputy Minister of Environment.

Brezger said, "At the end of the day there are rules and regulations wherever you work. The key issue is protecting the environment and make sure that people work in a transparent way. We all want to operate under those conditions - it's the normal course of business, as we go forward, and we will all learn just like Norway, the UK, and the US."

Responding to a comment about the good cooperation in Poland's Pomerania region, John Buggenhagen said he'd play the devil's advocate.

"We have great cooperation with the government and the ministries, but we're far from where we need to be to develop this. I challenge everyone, from the regulatory front to the company front - we need to move at a pace that we can actually develop this in a much faster frame of time. We have to change the way we think," he remarked.

"What's the elephant in the room in Poland? It imports most of its energy from Russia; most of it's electricity is generated from dirty sources of energy. The key is to offset that, so when you talk about the environment, it's the larger environment: air pollution on a global scale."

For one, he added that among the challenges, there was a need to build a regulatory agency with real people, which would require money from the Polish government.

Kelly Brezger added: "We need to somehow streamline the administrative processes and procedures to allow us to monetize the asset and to understand what we've got. That's the challenge that we face as operators in terms of investment."