Wisent Oil & Gas: Slowly But Surely

The unconventionals industry in Poland had dealt with government relations and permitting, and was now moving slowly into operations, said Wes Skrobowski, CEO, Wisent Oil and Gas, who spoke at the European Unconventional Gas Summit in Vienna, Austria.

To the delegates in attendance, he stated, "We may seem critical of what is happening in Poland; despite the shortcomings and the slow going, Poland is still the only market in Europe that has been active in unconventionals, and if not for Poland, there would be no unconventionals market."

Mr. Skrobowski explain that Wisent was a small operator with only 4 licenses, focusing on shale oil in the eastern part of the Baltic basin - in the oil window. (He mentioned that the Russians were producing from the same source rock.)

The main shareholders in Wisent's operations were Stena, Hallwood Resources (bringing its experience from the US), and Petrolinvest. Skrobowski showed a slide from 2010, which said that the Baltic basin could contain 5.3 TCM of recoverable resources and had been put under very intensive prospecting.

Despite this, Poland was burning a lot of coal. "The trend in the last 15 years is to become independent through diversification, develop our own sources," he said, explaining that Poland imported 70% of its 14 BCM annual gas usage, mainly from Russia.

"It's not so much an energy independence issue, but an economic issue," he said of the gas imports. "Poland is paying Gazprom highest price in Europe."

He reported there was strong fiscal support to develop shale in Poland, and the process of obtaining a license was relatively inexpensive and easy. The level of political stability in the country, he added, had not changed.

On a map presented to conference delegates, most of the potential licenses were shown to be already taken. Mr. Skrobowski also showed the range of estimates of Poland's unconventional resource assets from the EIA, Advance Resources International, and Wood Mackenzie.

In reference to such estimates, he mentioned the "cold shower" from the Polish Geological Institute, which revised the resource estimate to a much lower number. He recalled, "We all questioned the methodology."

"The Baltic basin is sizable," he said. "The bulk of the rock is there. The Lower Paleozoic is comparable to shales in the US."

"By now everyone has done seismic, used historical data, and are tied up with new analysis, analysis on core samples. The rock still looks good. The question remains, can we produce from the rock and the only way to know that is to fracture it," commented Mr. Skrobowski. "We have to drill and we have to frack."

He reported that one of Wisent's partners was very active in the Bakken shale in the US and had drilled 186 wells in North Dakota. "We're in our third year in Poland and are not drilling at that pace," he said, adding that only three wells had been drilled in the Lower Paleozoic shale in Poland.

This was due, he said, to an insufficient services industry, a lack of drilling contractors and rigs.

In his look back at 2010, he said 112 wells should have been drilled according to a model, but only 39 had been drilled in Poland so far. There were only four rigs, while it had been predicted there would be 18. Meanwhile, drilling contractor KCA Deutag was thinking about what to do with its second rig in Poland.

"There's only one well in Poland flowing from a horizontal drilling," he remarked, "and we don't know if its still flowing.

"Poland has a vast resource at its disposal," continued Mr. Skrobowski. "Every well drilled has found hydrocarbon resources to some degree. The quantity/quality of the frack looks like a good prediction by the industry."

He said the announcement of Poland's hydrocarbon law had been slowing down the process, that its key elements had been presented in October of last year. "It's somehow in execution but was suspended. There are nine different laws that will be affected. A public consultation will start in the first quarter of 2013, which will focus on streamlining environmental requirements."

Two other things, however, raised questions and concerns for Wisent, according to Mr. Skrobowski: 1) introduction of a national operator (whether it would be obligatory or voluntary) and 2) whether there would be a fiscal regime change - no more than a 40% government take.

Poland, he said, still had the strongest support for unconventional activities.

"We have met with many local authorities and communities and this is all very positive," said Mr. Skrobowski, who said this was especially true for areas of Poland where unemployment was high.