May 17

Poland Is Waiting For Shale Gas

By Curve Poland, shale gas in Europe No Comments »

 

The Polish people seem to have adopted a future-oriented perspective on shale gas extraction. They generally believe shale gas to be an important natural resource to both their country and the entire region. According to a recent study conducted by SMG/KRC for PKN ORLEN, Poles are also aware of the possible environmental and economic impacts of shale gas exploration and production. Nearly 70% of all respondents believe that the process of shale gas extraction is safe for the environment, while 97% reckon that its development will lead to the creation of new jobs.

The Ministry of Environment has already issued 113 licences for the exploration and appraisal of shale gas deposits in Poland. Although operators have only been drilling in search of this type of gas for less than two years, the awareness of various shale gas-related issues turns out to be relatively high among Poles.

Extraction of gas from shale formations raises hopes of the entire country, particularly among the inhabitants of regions where shale gas is to be produced. As many as 86% of respondents believe that access to unconventional gas deposits will give Poland independence from external suppliers and, consequently, strengthen the country’s position internationally. According to the SMG/KRC polls, 88% of Poles think that shale gas extraction projects will stimulate the economic growth of regions where they will be carried out. This will be achieved primarily by creating new jobs (97%) and generating additional revenues for local budgets (91%).

A vast majority of Polish citizens believe that shale gas production is safe for the environment, and 78% do not support protests which are being staged to halt gas exploration. 60% of all Poles would not mind having a shale gas exploration project in their immediate surroundings.

While the awareness of opportunities and benefits resulting from shale gas exploration and production seems to be very high, people’s knowledge of the resource itself and the extraction methods is decidedly lower. This issue should be addressed by authorities, educational institutions and operators. A large proportion of Poles (66%), when asked to compare conventional and unconventional gas resources, are unable to name any features characteristic of shale gas, and the majority of respondents (82%) know nothing of hydraulic fracturing (the only viable method of extraction in the case of unconventional gas resources).

Even though 43% of Poles feel that they have already received sufficient information on shale gas exploration and extraction, expectations regarding further education remain high. Relevant information is expected to be provided primarily by local authorities (55%), the government (54%), scientific institutions (54%) and gas exploration companies (48%). Accordingly, the successful exploration and optimal use of recoverable resources will require transfer of knowledge between R&D centres and the exploration and extraction industry.

With a view to meeting these expectations, PKN ORLEN – Poland’s largest conglomerate – is actively involved in various initiatives aimed to develop scientific knowledge and popularise the relatively narrow field of interest related to the appraisal and exploitation of unconventional gas deposits in Poland. An example of such initiatives is the second ShaleScience conference, designed as a platform for sharing information and opinions between Polish and foreign scientists and experts with unique experience in the field. On May 16th 2012, the Copernicus Science Centre in Warsaw will host the second international ShaleScience conference organised by ORLEN Upstream, an ORLEN Group company specialising in the exploration and production of crude oil and natural gas, in cooperation with American partners: Energy and Geoscience Institute – University of Utah and the Schlumberger Innovation Center, SLC, USA.

“Knowledge and innovation are the key to success. Global economic growth would be impossible without a state-of-the-art minerals production sector endowed with advanced technological solutions and able to meet the ever-changing technical, environmental and economic challenges. The unceasing search for improved or novel technologies has enabled us to exploit unconventional resources. The fact that we can take advantage of the extensive – nearly 20 years long – experience of the shale gas industry in the US and Canada guarantees reliability of the cutting-edge technologies we are planning to employ. I am absolutely certain that conferences such as ShaleScience are extremely necessary right now, at the onset of our journey towards commercial exploitation of shale gas. Not only do they provide a platform for expert debate, but also support us in the process of acquiring the much-needed know-how, which will be extremely useful in the years to come,” says Jacek Krawiec, CEO of PKN ORLEN.

This year’s edition of the ShaleScience conference is entitled “Developing the Mental Picture of Reservoir Quality and Completion Quality for Tight Shales” and will be attended by experts in geology, geophysics and petroleum engineering from all around the world, who will be discussing the nature of shale formations and the modern approach to effective extraction technologies which can be applied to gas trapped in such formations. This opportunity to exchange views with experienced international experts will contribute to know-how acquisition and help us design solutions tailored to the specific features of Polish deposits.

Source: 4-Traders

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May 16

Shale Gas in the EU – to Regulate or Not to Regulate?

By Curve energy market, shale gas in Europe No Comments »

 

Shale gas continues its regulatory roller coaster ride in the EU. Earlier this year, a study published by the European Commission concluded that there is already an adequate regulatory framework in Europe for shale gas activity as it currently stands, however the debate rages on.

Across Member States, the approach to further regulation ranges from the UK, where existing environmental regulation is seen as stringent enough to accommodate shale gas, to Germany where there are growing calls for increased regulation. In Poland, new regulation is focused more on the management of shale gas arrangements (for example giving companies which find shale gas priority when applying for a mining permit) and taxation of hydrocarbon production, than on imposing additional controls.

The UK is still arguably the best informed Member State, in that it was the first to carry out a detailed study. This may explain its broadly favourable stance to shale gas. The head of the UK’s Environment Agency, Lord Smith, has just given his support to hydraulic fracturing in the UK. This follows last month’s report issued by DECC (Department of Energy and Climate Change) which recommended that hydraulic fracturing should be allowed to continue, with appropriate safeguards and mitigation measures.

Other Member States are commissioning studies into shale gas which may inform their approach to regulation. In Germany, the results of a comprehensive study by experts into the environmental impact of hydraulic fracturing, commissioned by the Federal Ministry for the Environment and the State ofNorth Rhine-Westphalia, are expected this summer. In the meantime, there are growing calls for increased regulation at Federal level, and an informal moratorium on hydraulic fracturing has just been introduced in the State of Hesse pending publication of the environmental study.

In France, the Government published its expert study into shale gas in March 2012, which was clearly in favour of exploration. At the same time it issued a decree setting up a National Commission to evaluate the environmental issues involved in shale gas. This was the first sign of positive movement in the shale gas debate in France since the ban introduced in July 2011. It remains to be seen however how the election of President Hollande will affect this, bearing in mind his stated opposition to shale gas during his election campaign.

In other Member States, shale gas continues to be controversial. In Bulgaria shale gas exploration through hydraulic fracturing has been banned  following widespread protests (although there are concerns that the decision was made too hastily). A ban in Romania currently looks likely, but only until the results of EU studies into environmental impacts of the technology are known (see further below). There is talk of a similar ban in the Czech Republic, but this is in the context of a concern that its legislation is extremely out-of-date and a ban would allow time to amend all necessary provisions.

At EU level, policy and decision makers continue to monitor the situation to assess whether further regulation is necessary. Two draft reports have just been issued by Committees of the European Parliament on different aspects of shale gas. Both are non-legislative reports, and their purpose is to enable the European Parliament to set out its political position on the issue ahead of any new regulation or policy being proposed by the European Commission.

The draft report by the ITRE Committee (Industry, Energy and Research) on “Industrial, energy and other aspects of shale gas and oil” is broadly favourable. It recognises the crucial role of worldwide shale gas production in ensuring energy security and diversity in the long term, including in Europe and its contribution to achieve the EU’s goal of reducing greenhouse gas emissions by 80-95% by 2050 compared to 1990 levels (the basis of the EU Energy Roadmap for 2050).

The second draft report, on “The Environmental impacts of shale gas and shale oil extraction activities” is by the ENVI (Environment) Committee, whose members are less favourably inclined. Even so, it confirms that the risks are well-understood and can be effectively managed with existing technology and best practices. In particular, it stresses that wellbore integrity is key to preventing groundwater contamination.

Neither draft report calls for new regulation, but the ENVI report takes the stance that further screening is needed of both European and national law to assess their adequacy, with “improvement measures” to be taken where necessary.

Disclosure of chemicals used in fracturing fluid is a key issue for both reports, with the ITRE Committee urging full disclosure, and the ENVI Committee calling for disclosure on a mandatory basis. There is increasing interest within industry in exploring the possibility of adopting a procedure in the EU along the lines of FracFocus in the US. FracFocus is a web-based national registry, run by the US Groundwater Protection Council and US Department of Energy. It allows the public to access information, on a well by well basis, on chemical constituents used in hydraulic fracturing. In some US states, disclosure on FracFocus is a mandatory legislative requirement post application of the relevant fluid.

At the same time, there are many studies ongoing into REACH (the chemicals regulation), and the completeness of registration dossiers on a broad basis, not just in relation to shale gas activity. Whilst there is an understanding at EU level that REACH is not the tool to give the public access to the information it is looking for, correct information must be provided in the registration dossiers when the time comes for registration to ensure that appropriate risk management measures are in place.
Final versions of the European Parliament Committee reports will be published later this year, once they have been voted on in the Parliament. In the meantime other studies have been commissioned by the European Commission into other aspects of shale gas, for example the socio-economic impacts of shale gas and the climate impact of shale gas.

The IEA (International Energy Association) is currently due to issue its “Golden Rules on Unconventional Gas Projects” at the end of this month. These rules will aim to set out best practice and help to “reassure a sceptical public” that shale exploration is safe. Whilst these rules will not have regulatory status as such, they are highly likely to influence how shale gas regulation moves forward at EU and Member State level.

What is welcome is the increasing acknowledgement that decisions around shale gas should be based on fact, not emotion, with consideration of existing studies and commissioning of new studies as necessary to ensure that the debate is properly informed.

Source: Natural Gas Europe

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May 16

Shale Gas Will Create “New Epoch” For Polish Energy, Says PM

By Curve Poland, shale gas in Europe No Comments »

 

Prime Minister Donald Tusk has pledged that the exploitation of shale gas “will begin a new epoch for energy in Poland.”

The premier outlined his thoughts at an academic conference on shale gas in Warsaw on Wednesday.

Nevertheless, Tusk said that there was still much to be done before the project could be effectively realised, and that a legal framework needed to be formalised.

“No one will risk large sums of money in such a place that will not guarantee a continuity of investment,” he said.

Tusk outlined the need for “a tax system concerning this wealth, and a legal system that will be profitable not only for our own country, but also friendly for those who will cooperate with us on this venture.”

The Polish government believes that tapping the country’s shale gas resources will be a major step towards being more independent in the energy sector, with Poland still largely reliant on Russia for gas.

Source: Oil & Gas

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May 14

Poland Debates Natural Gas Future

By Curve energy independence, Poland, shale gas in Europe, Shale gas production No Comments »

 

The fledgling shale natural gas business in Poland is in danger of becoming too politicized, a former Polish geologist said.

Warsaw estimates it has as much as 3.3 trillion cubic feet of natural gas, lower than the 187 trillion cubic feet estimated by the U.S. Energy Information Administration.

Officials, however, said shale gas analysis carried out in conjunction with the U.S. Geological Survey confirmed the country remains in position to become a major energy producer and that more drilling will likely reveal greater reserves.

Polish politicians are divided over what role foreign entities should play in the country’s shale natural gas sector.

“Politicians don’t want to do the wrong thing but they lack experience and this makes it difficult for them to be a partner with a strong industry,” Pawel Poprawa, a shale gas expert formerly with the Polish Geological Institute, told the Platts news service.

State-controlled natural gas company PGNiG holds most of the shale concessions in the country among rival energy players.

One official who spoke with Platts on condition of anonymity said there was an emerging climate of xenophobia in Warsaw. Polish Deputy Environment Minister Piotr Wozniak, however, denied the allegations.

“If we really want to develop these resources we need foreign investors,” he said.

Source: United Press International

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May 14

Fears Grow Over Politicization of Polish Shale Gas Sector

By Curve gas, hydraulic fracturing, natural gas in Europe, Poland, shale gas in Europe No Comments »

 

Some foreign operators and industry experts involved in Poland’s nascent shale natural gas exploration sector are becoming concerned about the politicization of the industry and a tendency to favor domestic state-controlled companies.

Although Poland remains at the forefront of shale gas exploration in Europe there has been a noticeable politicization of the public debate about the industry since last October’s parliamentary elections. During the campaign, politicians appeared to be competing to reassure the public that their party could extract the most from potential shale gas production.

Firstly, the main opposition party, the nationalist and populist Law and Justice, proposed introducing a minimum 40% royalty fee on future production and new legislation outlawing “undesired investors” from acquiring companies engaged in shale gas activities.

The pro-shale gas and economically liberal Civic Platform party, which won re-election, is now drafting legislation to regulate the industry in the light of that debate.

“One political party was saying to the government, ‘you’re giving away everything to foreigners.’ Politicians don’t want to do the wrong thing but they lack experience and this makes it difficult for them to be a partner with a strong industry,” Pawel Poprawa, until recently a shale gas expert at the Polish Geological Institute, said in an interview.

“It would be much better if this were an industry like the coal industry or food industry. There’s too much politics involved and the industry pays the price, Poprawa said.

Before Christmas, the country’s new Treasury Minister, Mikolaj Budzanowski, gave an indication of the government’s thinking when he wrote to the country’s largest state-controlled companies — natural gas company PGNiG; refiners PKN Orlen and Grupa Lotos; utilities PGE and Tauron; and copper miner KGHM –urging them to enter into partnerships for shale gas exploration. Some of those companies are now finalizing the details of a partnership to develop PGNiG’s Wejherowo shale gas license area in Pomerania, in northern Poland.

PGNiG has 15 shale gas concessions in the country’s Ordovician and Silurian shales, the highest number held by a single company. PKN Orlen has six, while the remainder have none.

No Polish company has the resources to fund the intensive exploration campaign shale gas requires. In Poland, each vertical exploration well costs around $10 million and each horizontal well $15 million, up to three times the cost in the US.

In January, it was reported that months of talks about a partnership between PKN and Canada’s Encana, which would see PKN gain access to Encana’s North American acreage in return for investment in its Polish shale gas concessions, were halted because of an alleged decision by Warsaw to prioritize domestic tie-ups.

One official from a non-Polish shale gas operator in Poland said the division into “them and us” was extremely damaging and was driven by politics.

“In the beginning, foreign companies were made to feel extremely welcome — now there’s a lot of talk about foreign companies coming to exploit us,” the official said.

“The issue here is not about money, it’s skill and know-how. Companies like PGNiG have no experience in shale gas and it was madness to stop the tie-up between Encana and PKN. The signal seems to be that Polish companies should start producing shale gas by the next election [scheduled for 2015]. I can understand it as political propaganda and as a signal to the Russians, but it makes no business nor technological sense.”

Mostly foreign operators have drilled 23 exploration wells since 2010 and are contracted to drill 49 new wells this year. None has yet proved economic, but operators are optimistic that it is only a matter of time.

Although exploration costs are high, a huge incentive is the fact that gas prices are up to seven times higher in Poland than in the US.

So far each operator has adopted a step-by-step approach. They drill a vertical well, analyze the data and then decide whether to fracture the well.

If the results are promising, they may drill a horizontal well, So far, just two horizontal wells have been drilled, both by the Isle of Man-registered independent 3Legs Resources.

PGNiG appears to be considering a different approach. There’s talk it is planning to build a wellpad for 12 wells in its Wejhorowo license area.

“This is a political decision motivated by getting production going as quickly as possible. The problem is PGNiG lacks experience, it doesn’t know how to do shale gas. They had people queuing up to go into partnership with them. But a decision has been taken to try to do it with Polish companies. I’m sure they will learn from their failures,” one industry participant said in an interview.

Piotr Wozniak, the country’s Chief Geologist and deputy environment minister, denies any such decision has been made.

“There is scope for everyone. The Treasury Minister will probably try to incentivize the two or three Polish companies that have the strength to invest because this requires a lot of money. There is not enough money to be leveraged by a Polish company. They are too weak. If we really want to develop these resources we need foreign investors. I don’t think it is a decision by the minister to repel investors from PGNiG. Sooner or later we will see partners with PGNiG, Lotos and PKN Orlen,” Wozniak said.

An atmosphere of uncertainty has arisen just as Wozniak and other ministers are about to announce the first details of new regulations for the industry, including a new hydrocarbons tax set to take effect when first production starts in 2015-16.

Currently Poland has no specific fiscal regime for shale gas. The tax rate for conventional oil and gas production is less than 21% and consists of a corporate income tax, an exploitation fee and a property tax.

“The level of government take in Poland is extremely low and everybody, including investors, expects it to rise. In my opinion, the rise should be very, very moderate because we need those investors here. There are not enough companies; we don’t have an oil industry in Poland at all. It’s in our interest to incentivise rather than dis-incentivise,” Wozniak said.

Although the taxation rate is not yet known, the new fiscal regime will likely include a combination of an exploitation fee, CIT, and the new tax, Maciej Grabowski, deputy finance minister, told Platts.

Grabowski said a total government take of around 50% would be fair, without giving details. But that figure has already caused jitters among operators — head offices have been calling Warsaw asking whether such a tax rate is economical for them.

It’s too early to be talking figures, said Kamlesh Parmar, country manager for 3Legs Resources.

“We now need to look at whether or not any of these areas can be made commercial and that involves a lot more work, a lot more drilling, a lot more testing. That costs money in a global environment where money is difficult to come by. What I would really like to see is the authorities making an effort to encourage investment in this industry so that this potential can be made a reality,” Parmar said in an interview.

Source: Platts

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May 11

Poland: Updated, Higher Shale Estimates Expected in 2013

By Curve natural gas in Europe, Poland, Realm Energy, shale gas in Europe No Comments »

 

The Polish Geological Institute  (Państwowy Instytut Geologiczny) will publish its new report on shale gas reserves in late 2013.

Speaking to Natural Gas Europe, Poland’s Deputy Minister of Environment and Chief Geologist Piotr Woźniak emphasised that estimates will be based on data collected from exploratory wells drilled from 2010-2012, by international companies and Polish state-controlled firms.

The previous estimates published by the Polish Geological Institute in March put recoverable reserves of shale gas in Poland at between 346 and 768 billion cubic metres. However, the report was based on archival data, obtained in the second half of the previous century, from wells drilled between the 50s and the 90s.

Mr. Wozniak underlines, that the first PGI report was only a preliminary one. The Chief Geologist, who took the office several months ago adds, that the report “should have been published by his predecessors much earlier, three – four years ago”.

Mr. Wozniak indicated, that this time the Institute will use data from new wells. Under the exploratory concessions regime, companies must pass their data to the ministry till March 2013.

The Chief Geologist predicted that a new report, using those new measurements, will be ready for publication at the end of 2013. He added that in that new report, higher estimates should be expected.

Source: Natural Gas Europe

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May 08

Without Shale, Europe’s Gas Bill Is Mounting

By Curve energy crisis, energy market, natural gas in Europe, natural gas in the USA, Poland, Realm Energy, San Leon Energy, shale gas in Europe No Comments »

 

Germany and the U.K., Europe’s two largest consumers of natural gas, are likely to lean ever more heavily on the fuel to meet energy needs in the coming years, as the expansion of low-carbon nuclear and renewable power falls short of their needs.

This extra demand would probably be met by high-priced imports, such as gas brought in from Russia via pipelines or liquefied natural gas from the Middle East and Africa. For a continent already grappling with its long-term competitiveness, this could be bad news. “Low prices for natural gas offer manufacturing a powerful competitive advantage, potentially stimulating much broader economic growth,” said Mark Williams, downstream director for energy giant Royal Dutch Shell PLC.

The U.S. is enjoying just that, thanks to a boom in production of natural gas trapped in shale rock. In Europe, there are hopes that its shale-gas resources could eventually help it at least partially mimic the U.S. The big shift that is pushing the U.K. and Germany toward greater dependence on gas is the decline in nuclear power.

After the Japanese earthquake and tsunami triggered a meltdown at the Fukushima nuclear-power plant last year, the German government decided to close all of its nuclear reactors, which produce 13 gigawatts of power, or the equivalent of 8% of Germany’s energy-generating capacity, by 2022. This coincides with the end of life spans for all but one of the U.K.’s reactors by 2023 that will leave just 1.2 gigawatts of capacity of the 11 gigawatts that they currently produce.

Several European and British utilities have planned to build 16 gigawatts of new nuclear reactors, but some projects are now in doubt as their backers say it is uncertain that these plants can operate profitably given current electricity prices.

German utilities E.ON AG and RWE AG have abandoned a joint venture to build new nuclear plants with a combined capacity of 6 gigawatts because they lacked the capital to finance the work and external financing was scarce.

In February, U.K. utility Scottish and Southern Energy SSE.LN +0.23% PLC quit a consortium with GDF Suez SA and Iberdrola SA IBE.MC -1.59% to build plants with 3.6 gigawatts of planned new nuclear capacity in order to focus on renewable energy. GDF Suez and Iberdrola say they remain committed, but analysts say the projects are more doubtful. A major expansion of coal power would cause countries to miss their carbon-reduction targets, and it seems unlikely that renewable energy could quickly fill this gap. “Most clean energy technologies are not being deployed quickly enough, [and] are not on track to make their required contribution,” the International Energy Agency said in a report last month.

German Chancellor Angela Merkel has said an additional 10 gigawatts of gas-fired power plants will be built by 2022 to fill the gap left by shuttered nuclear plants. In the U.K., even the most optimistic scenario for the use of nuclear power leaves a 6-gigawatt hole to be filled, most likely by gas. Assuming the most efficient gas-fired power plants were built, replacing these reactors would add around 14 billion cubic meters a year to European gas demand, equivalent to almost 3% of 2010 EU gas consumption. This figure could rise further if the U.K. government can’t come up with stronger financial support for new nuclear projects.

Meeting this extra demand could prove expensive. Pipeline gas from Russia is priced on a formula tied to crude oil, so is relatively expensive. Goldman Sachs expects oil-indexed natural gas on continental Europe to sell at an average price of $13.60 per million British thermal units this year, a 24% premium to the market price in the U.K., which gets around half its gas from the North Sea. Rising demand for LNG from Asia is also pushing up prices.

The amount of LNG available to the U.K. in the first quarter of 2012 halved from the same period a year earlier, after the country was outbid by Asian customers, and it had to import more oil-indexed gas to compensate, said Barclays analyst Trevor Sikorski. “We expect the LNG market to increasingly tighten as we go through the next few years,” he said. However, recent developments in the gas industry mean this is by no means set in stone.

Many companies believe the U.K. and Germany’s neighbor Poland may hold resources that would enable them to at least partially mimic the boom in shale gas production that has pushed U.S. gas prices to 10-year lows. Industry analysts say there are still questions over how cheaply and quickly these resources could be tapped. “Forget about straight-line forecasts for natural gas demand and supply,” said Anne-Sophie Corbeau, a senior gas analyst at the International Energy Agency. Shale gas opens the way for “patterns [to] suddenly diverge from the conventional view in the most unexpected way.”

Source: The Wall Street Journal

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May 07

And Now, Some Good News In Poland

By Curve hydraulic fracturing, Poland, shale gas in Europe No Comments »

 

It sounded like a dream come true.

In a session entitled dedicated to the Operator’s Perspective at the Unconventional Gas & Oil Summit in Warsaw, Poland Kamlesh Parmar, Country Manager, Poland at Lane Energy recounted how in March ConocoPhillips, the company’s JV partner in Poland’s Baltic basin, had exercised a call option to take a 70% stake in the assets.

“This is exactly what we’ve been working for in the last two years, that at some point they would take over operator control. It’s what I’ve been working for, it’s very positive, and exactly what I was expecting,” recalled Mr. Parmar.

He explained what was attractive to ConocoPhillips.

“As listed company in London we’re obliged to put up reports of what we’re doing,” he said. “We achieved gas flows out of both wells, but does this prove commerciality? Not yet. It’s a new play in a new country with new rocks, so it’s going to take some time.”

According to Mr. Parmar, Lane Energy had fracked wells, got gas to surface and had drilled two horizontal wells in Europe. He said that drilling on the company’s concessions was hard work and now there were new challenges.

“We’re bringing a fairly new concept to Europe,” he explained. “Convincing people was hard work: We had to show them we were serious and this was a real idea.”

Parmar explained that before drilling Lane Energy was trying to raise its profile and raise awareness of shale gas potential, but later tried to calm things down. He joked: “Hang on, we haven’t got the gas yet.”

According to him, having more operators now in Poland was a good thing.

He recalled, “Then we had only PGNiG subsidiaries to provide us with services, and later, international service companies arrived. Since then, more companies are coming to Poland with rigs, and this gives us more choice, and more flexibility to do our work.”

What had it been like partnering with ConocoPhillips?

“We’re two very different companies in terms of size and set up,” he explained. “They have fantastic resources, abilities and a track record in terms of operating shale plays in the US. We came into this with great experience with our team and we’re nimble and we’re quick, so there’s flexibility on our side. We complement each other.

“Having this joint arrangement has enabled us to do our work more quickly. A large company making a fresh entry into a country takes a lot of resource for them, a lot of commitment and a lot of time,” he continued.

“We are the operator, they are our partner – they have rights to look at what we do and we clear everything with them. Now the role will reverse, now they will take over the operatorship. It’s a normal O&G arrangement. It happens all over the world, and is nothing new. It has worked a lot better than I expected as I feared that the our operation style and approach would differ because of the size of the companies.”

He added that the partners had found their way through the size difference.

Parmar recalled the time in Poland when acreage was up for grabs, but that now all the acreage that had any potential at all was thought to be licensed up. Now, he said, it was time for explorers in Poland to work together as an industry; the OPPPW industry group was one manifestation of that.

Of data sharing among concessionaires, he said, “We are all obliged to share data with the Ministry. If you have your acreage, you have it. The issue is how we can share data to move the play forward? This will accelerate the learning curve.”

In terms of service companies, he noted that many players were coming in to Poland.

“I can only dream of a price war,” quipped Parmar. “We’ve come a long way. We’re in an open economy. If we can generate the work, the service companies will come. When we started, they were not here and they are now.”

He mentioned Lane Energy’s efforts to re use water and have the least impact on people in the vicinity of drilling operations.

How was it possible to avoid problems with local communities in Poland? Back up from local authorities?

“Community engagement is absolutely vital,” said Mr. Parmar. “My focus is on government relations and local relations. You have to go there, sit in their office and explain what we’re doing. I do that myself. When explaining drilling or completion activity, it’s important that the Company is there and not just represented by 3rd party consultants.”

He reported that Lane Energy had had very little negative press about its operations in Poland. He suggested letting the local Voivodes take ownership of meetings with communities and organizing meetings through them had helped.

Source: Natural Gas Europe

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May 02

Poland May Have More Shale Gas Than PIG Estimates – RPS Energy Study

By Curve natural gas in Europe, Poland, Realm Energy, shale gas in Europe, shale gas reserves No Comments »

Poland may be able to extract 25-75 billion cubic meters (bcm) of shale gas from just three coastal license areas in Western Pomerania (Slawno, Slupsk, Starogard) operated by Saponis Investments, according to a study carried out by RPS Energy, published by Saponis shareholder LNG Energy and quoted by the daily Dziennik Gazeta Prawna.

The total deposits have been estimated at 128 bcm in the most pessimistic scenario and at 376 bcm in the most optimistic one, with recoverable resources at 25 to 75 bcm respectively, the daily wrote.

If the estimates could be extrapolated to the country level, Poland could be sitting on conditional resources of 4.6 to 13.6 trillion cubic meters of shale gas, or recoverable resources of 1 to 3 trillion cubic meters, much above the recent estimates of the Polish Geological Institute (PIG).

However, experts are skeptical whether all deposits are as rich as in the three license areas.

Source: The Warsaw Voice

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May 01

Poland: Interview With Grzegorz Pytel, Sobieski Institute

By Curve Poland, Realm Energy, San Leon Energy, shale gas in Europe No Comments »

 

Natural Gas Europe recently interviewed Grzegorz Pytel, Energy Security Expert at the Sobieski Institute, on the development of shale gas in Poland.

NGE: According to the previous announcements, the Polish government will soon terminate works on the legal framework for the future conditions for companies willing to produce shale gas in the country. In over a year time, the Polish state will probably enter the phase of issuing first licenses for production. How will the Polish Geological Institute/Unites States Geological Survey estimates of recoverable shale gas reserves in Poland – much lower than previous estimates -  influence positions of government and companies on a doorstep of negotiations?

Grzegorz Pytel: A very important issue in financial negotiations between the government and any companies, on any fiscal tax regime imposed on companies, is the assessment of the risk, that companies are taking in exploration and production of the resources. The greater the risk assessed at the outset, the lower the taxes and other fees that the government should be really prepared to collect later. For a simple reason: the higher the risk the higher the reward expected. Therefore the report published by the PGI which lowers the estimates and therefore increases the perceived risk, especially if it’s based on government-financed report, improves the negotiating position of the companies against the government.

NGE: The type of methodology used in PGI/USGS examination tends to give rather conservative results.  If such an outcome wasn’t particularly difficult to predict, what could be the rationale behind a decision to prepare and publish this assessment, in the first place?

GP: This is the good question. The first thing is, that in my view governments should never be in the business of speculating. For example in the area where governments have to be in the business of speculating, like pensions, which is really forecasting some years ahead, they always get it wrong. In this case there was simply too little data to have any any credible assessment and in such a situation the government can never win. If they overestimate, then they later can be blamed for being overoptimistic and so forth. If they underestimate, they improve the financial position of the companies in the negotiations of tax regime.

NGE: So why did they do it?

GP: Typically the answer should be based on the question in whose interest it was: a classic “cui bono” test. On the face of it, the whole thing looks like a huge PR and negotiating success of the companies exploring for gas in Poland. However looking for anything like conspiracy behind may be too far-fetched. Anyway, one of the people key in preparing this report, has already left the Polish Geological Institute and now works in the private sector, so maybe this is a kind of indication that possibly shows real things behind it. The straight answer is I do not know but it all looks quite odd to me. Draw your own conclusions.

NGE: Many critics have observed that this assessment was based on cores as mature as 50 years old. Do you share this doubts? Shouldn’t Poland just wait for data from new drillings,  undertaken by companies presently active in shale gas development?

GP: I’m myself not a geologist or geophysicist. However I’ve heard a very respected professor of geology, who was laughing at the research carried on fifty years core samples, which basically – if they had gas in the past – most likely it has evaporated anyway; whether the gas was there in the first place or it wasn`t. Assessing 50 years old samples and data doesn’t seem to be the best idea of all. Basically it has consequences on credibility.

Source: Natural Gas Europe

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