POLAND MARKS BLOCKS OPEN FOR EXPLORATION

Poland has designated 32 blocks open to foreign companies' applications for oil and gas concessions.

Polish officials tentatively plan to accept applications submitted before Jan. 15, 1992. A later cutoff date could be set if data packages offered recently at conferences in Houston and London are not ready when expected.

In the first licensing round, Poland is offering:

• Ten blocks in the northern lowlands in an area it designates as the Baltic syneclise. Poland's Ministry of Environmental Protection, Natural Resources, and Forestry said the blocks have oil and gas potential from Cambrian, Ordovician, and Silurian source rocks. Secondary targets might be present in Permian Zechstein carbonates and Permian Rotliegendes, Triassic, and Lower Jurassic sandstones.

• Twenty-two blocks, organized into two groups, in the central lowlands offer high quality Rotliegendes and Zechstein targets, the ministry said. The Carboniferous holds secondary oil objectives and primary gas source rocks.

The ministry's Bureau of Geological Concessions (BGC) is empowered to administer the licensing process (OGJ, June 17, p. 19).

Polish Oil & Gas Co. (POGC), Warsaw, and Robertson Group plc, Llandudno, North Wales, are compiling a nationwide data package and three regional packages, each of the latter detailing a group of prospective exploration blocks.

POGC and Robertson said most information in the three detailed packages should be available to prospective applicants by the end of July. Geochemical data supplementing the packages are to be ready by the end of August.

Ancillary data in the form of well maps, seismic maps, and a technical journal describing Poland's petroleum resources also are available.

Infill seismic and well data beyond the data packages also can be obtained, usually within 4-6 weeks of receipt of an order, POG and Robertson said.

BASIS FOR NEGOTIATIONS

A model exploration and production contract will be the basis for negotiated concessions during the first round of licensing. Other areas have been designated for later rounds of licensing.

Within 90 days of designating a development area, the ministry may elect to acquire 10-40% of the contractor's rights and obligations.

Polish markets will have first call on gas production. But if a gas discovery cannot be developed economically for domestic consumption, the contractor may choose to develop it for export.

Gas prices for domestic sales will be referenced to a basket of fuel oils delivered to the nearest Polish port. Export gas prices will be the contractor's net price fob at the point of export.

Oil prices will be based on an arm's length market price agreed to by unrelated buyers and sellers. The ministry will have the right to buy all or part of the contractor's oil entitlement at the arm's length price.

ENERGY BALANCE

Poland hopes to cut coal and lignite burning by sharply expanding its oil and gas production. Polish leaders believe this will halt the drain on the nation's economy and ease environmental damage.

However, the country's oil and gas production has declined since the mid-1970s.

At present, coal accounts for 84% and lignite 11% of national energy production ' Coal and lignite supply 68% and 11%, respectively, of Polish energy consumption,

Poland's gas production of 513 MMcfd from 93 fields amounts to only 3% of total energy output. Together with imports of 648 MMcfd, gas provides about 8% of national energy consumption.

Polish oil production of 3,300 b/d is only about 1 % of consumption, and imported oil provides about 13% of total energy consumption.

Until the end of 1990, the Soviet Union provided most of Poland's oil and gas imports.

As of Jan. 1, 1991, Poland's recoverable gas reserves were estimated at 5.8 tcf and oil reserves at 35.8 million bbl. Cumulative production was 5.04 tcf of gas and 134.1 million bbl of oil.

HISTORICAL DEVELOPMENT

Poland has produced oil and gas since the 1870s. Before World War II, the industry largely was in private hands. But since 1945, Polish government agencies have controlled all oil and gas activities.

Oil and gas has been discovered in three major provinces: Polish lowlands, Flysch Carpathians, and Carpathian foredeep.

Polish officials compare the country's sedimentary sequences and geological setting to the southern North Sea.

Although about 8,000 oil and gas wells have been drilled in Poland, many exploration plays have not been properly tested or defined because a lack of money limited the use of modern technology, officials said.

More than 6,000 wells have been drilled since World War 11, accounting for total footage of more than 334.5 million ft.

At the end of 1990, 251,000 km of Polish seismic data had been shot, including 91,000 km of digital data.

POGC carries out most majority of exploration and production activity in Poland. It is a large, vertically integrated organization with 22 operating subsidiaries throughout the country.

Three POGC production subsidiaries are based in Sanok, Krosno, and Zielona Gora.

Drilling companies based in Jaslo, Pila, Krakow, and Wolomin operate a combined 85 drilling rigs.

Geophysical companies in Krakow and Torun each have processing centers and between them run 17 seismic crews.

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