Poland's energy challenge

Sept. 28, 2015
Amid the economic chaos of the past decade that has befallen Europe, Poland has managed a steady, uninterrupted climb. 

Matt Zborowski
Staff Writer

Amid the economic chaos of the past decade that has befallen Europe, Poland has managed a steady, uninterrupted climb. Thanks to radical economic reforms following the fall of the Soviet Union and eventual admittance into the European Union, a stroll through the streets of Gdansk or Warsaw today isn't much different from that of any other thriving Western population hub-complete with an abundance of late-model cars, designer brands in American-like shopping malls, and rising condos and office buildings towering over the cityscape.

Poland's self-sufficiency has brought about economic and thus political relevance within Europe. And during a time in which long-time adversary Russia is flexing its muscles in the region, Poland feels the necessity to push back in its own way. That means looking anywhere else when it comes to meeting its energy needs.

Avoiding Russia

The US Energy Information Administration notes that Poland has primarily imported crude oil and natural gas from Russia respectively through the 1-million b/d Druzhba and 974-bcf Yamal pipelines. Other gas suppliers include friendlier neighbors Norway and Germany. While it's not immediately feasible for Poland to halt energy supply from Russia, it has attempted to import from other, less-adversarial sources.

Polish gas transmission operator Gaz-System SA earlier this year reported the reversal of flow of Yamal pipeline, anticipating the import of 5.5 billion cu m/year into Poland from Germany. An LNG terminal is under construction on the Baltic Sea in Swinoujscie, but delays have pushed back expected ramp up to second-quarter 2016. As part of a 20-year LNG supply deal reached with Qatar in 2009, Poland was on the hook to pay for the 1.5 billion cu m of gas it contracted for 2015 before inking a deal with Qatargas to pay the difference should the agreed upon total not be met with other buyers.

A major producer of coal, Poland was also in the not-too-distant past thought to be the new frontier for shale gas exploration in Europe. That proved to be a dud, as an EIA study published in 2013 reduced estimated technically recoverable shale gas resources to 148 tcf from the previously estimated 187 tcf in 2011. Major stakeholders Chevron Corp., ExxonMobil Corp., Marathon Oil Corp., Total SA, and most recently ConocoPhillips have since exited the country. Despite those discouraging developments, Prime Minister Ewa Kopacz said during a news conference in February that "shale gas and energy security" remain a "priority."

Digging deeper

The upstream unit of major Polish refiner and retailer PKN Orlen and state-owned oil and gas company PGNiG SA are still doing their part to find and exploit local resources. In July, they reported the launch of a joint exploration and production project involving analytic and research work in eight concession blocks in Podkarpackie province in far southeastern Poland.

Issued for 2½-5 years by Poland's Ministry of the Environment, the concessions altogether cover 3,500 sq km wherein the companies will target the Carpathian flysch formation-from lower Cretaceous to Miocene-at up to 6,000 m. During 2008-14, several seismic and geophysical surveys were conducted in the area, as well as the drilling of the Niebieszczany-1 exploratory well.

"The Carpathian Foredeep is historically speaking one of the most prospective areas when it comes to concentration of hydrocarbons," explained Zbigniew Skrzypkiewicz, PGNiG's E&P vice-president. "For years we have been systematically documenting deposits in Bieszczady area. I believe that gaining a new partner who offers both co-financing and experience in acquisition and interpretation of geological data will open for us new perspectives in this area."

Orlen and PGNiG are already working together in the Polish Lowlands on the Sierakow project, which involves the Miedzychod-Gorzow Wielkopolski and Wronki concessions. There the companies are targeting development of jointly recognized structures of the main dolomite in the Szczecin trough. Along with preparation for hydraulic fracturing, geological work is under way to identify additional locations for exploratory wells.

Poles are never ones to shy away from a challenge. And given the adversity they've endured throughout the country's history, they know better than anyone that you can't be deterred by merely a few small hurdles. At the very least, Orlen and PGNiG are evidence of that.