Poland's push toward exploration, development, and anticipated production of shale gas appears to have become almost a national mission for the European nation seeking to break its reliance upon conventional Russian natural gas and to eventually become a supplier to the European gas market.
Polish Prime Minister Donald Tusk suggests Poland will achieve what he calls "gas security" by 2035. He based this projection on Polish state-controlled gas firm PGNiG SA's plans for commercial shale production starting in 2014.
"After years of dependence on our large neighbor [Russia], today we can say that my generation will see the day when we will be independent in the area of natural gas, and we will be setting terms," Tusk said while on the campaign trail ahead of his Oct. 9 reelection.
PGNiG flared a shale gas well at Lubocino in northern Poland earlier this year. The company plans horizontal drilling and hydraulic fracturing.
"If the work goes according to plan, trial production could be possible in the second half of 2013, with commercial production starting in 2014," PGNiG said in a September statement.
Geologists estimate shales in Poland and other Eastern European countries could contain massive gas resources. Eastern Europe is heavily dependent on gas imports from Russia's OAO Gazprom. Poland consumes 14 billion cu m/year of gas of which about 9 billion cu m/year comes from Russia.
Richard Morningstar, special envoy of the US Secretary of State for Eurasia, said the US needs to support Poland's shale development efforts in its goal to become a European gas supplier.
An advocate of Poland's goal to help ensure European and global energy security, Morningstar told an Oct. 19 energy conference at Rice University's Baker Institute that shale is "not a magic bullet" for Poland or Europe. Shale projects can take years, he noted.
Some energy analysts suggest it will be at least a decade before Poland could begin significant gas production from shale because of the country's need to build pipelines and midstream assets.
Tusk calls shale the country's "great chance" to reduce Poland's dependence on Russia for gas, create thousands of jobs, and increase government revenue.
The US Energy Information Administration estimates Poland could have some 5.3 trillion cu m of technically recoverable resources, which is believed to be the largest shale resources in Europe.
The EIA report also identified France as having large shale gas potential. Both Poland and France rely heavily on imported gas.
Unlike the French government's moratorium on shale exploration, the Polish government encourages US, Canadian, and European companies to explore for shale. ExxonMobil Corp., Chevron Corp., ConocoPhillips, and Marathon Oil Corp. are among a host of companies having exploration licenses to Poland's three shale basins: the Baltic in the north, the Lublin in the south, and the Podlasie in the east (see map).
Almost 30 companies are working on shale projects in Poland, where the government has issued more than 100 exploration licenses to help build gas reserves and diversify from its heavy reliance on Russian gas, Beata Stelmach, Poland's undersecretary of state, Ministry of Foreign Affairs, told the Baker Institute energy conference.
The EIA released an April report on global shale gas resources saying shale exploration permits also have been issued in the Netherlands, Germany, UK, Sweden, Hungary, Switzerland, and Ukraine.
Poland at 120,000 sq miles is 2.3 times the size of the Fort Worth basin in North Texas.
Changes to supply mix
The Baker Institute issued an October report entitled "Shale Gas and US National Security," saying shale could revamp the global gas market structure. Baker Institute researchers believe Russia's contribution to the European gas market will fall to about 13% by 2040 compared with 27% in 2009.
Although Europe has substantial unconventional gas, the question remains as to how fast and to what extent Europe might develop shale, said Amy Jaffe, Baker Institute energy forum director. The future of shale gas in Europe hinges upon policy decisions by national governments, she added.
Jaffe believes unconventional resources are likely to change the world energy supply mix in a few years, lowering global requirements for gas from the Middle East and North Africa.
"Shale will alter the energy security picture for major end-use markets, limiting individual producer petro-power and creating a more competitive marketplace that could even weaken cohesion inside OPEC," Jaffe said of the Organization of Petroleum Exporting Countries.
Poland is likely to emerge as a major European gas contributor, accounting for about 55% of roughly 220 tcf of estimated recoverable shale gas resources in Sweden, Poland, Austria, and Germany, the Baker Institute report said.
Separately, the European Centre for Energy and Resource Security (Eucers) said European unconventional gas potentially could stabilize gas supplies "in the face of declining conventional production, and in doing so, could reduce dependencies and help diversify the energy mix."
In a strategy paper entitled "Strategic Perspective of Unconventional Gas: A Game Changer with Implication for the EU's Energy Security," Eucers said European shale gas could reduce Europe's dependence upon imports from Russia and the Middle East.
Eucers said, "Even if only a fraction of the potential of unconventional gas resource will become available for European and other energy markets before 2020, it will:
• Undercut the very high prices of the new Siberian gas fields of the Yamal Peninsula and in particular Russia's Arctic offshore gas resources (like Shtokman).
• Offer the EU another domestic source, enabling greater diversification of gas demand and imports.
• Extend the global overcapacity of gas at least until 2020.
• Improve the EU's energy supply security in the next decades."
The Eucers strategy paper incorporated comments from an expert roundtable on Mar. 15 at Kings College in London. The roundtable was jointly sponsored by the British Foreign and Commonwealth Office and Eucers.
Poland promotes shale
The government of Poland's promotion of shale development stands in stark contrast to France. Poland currently holds the rotating European Union presidency.
Stelmach said shale gas eventually could enable Poland to export gas and help reduce Poland's reliance upon coal, which currently is used to generate 85% of Polish power. Poland seeks to reduce its dependence upon coal because the EU is looking to restrict future greenhouse gas emissions.
Poland's largest oil refiner, PKN-Orlen, expects that exploiting shale gas deposits will help transform the company from a refiner into a gas and electric company, Andrzej J. Kozlowski, Orlen executive director for strategy and project portfolio management, told the Baker Institute.
"Orlen wants to be a leader in gas extraction," Kozlowski said.
Orlen drilled for shale at Syczyn in eastern Poland earlier this year as part of its estimated $159 million plan for six shale gas test wells to be drilled through 2013.
PGNiG, which produces 4.22 billion cu m/year of conventional gas in Poland, is analyzing Lower Silurian and Ordovician shales based upon magnetotelluric and gravimetric surveys now under way.
Pawel Jagosiak, PGNiG's deputy chairman for the shale gas task team, said seismic surveys are scheduled for the Lublin basin during 2011-12.
Plans call for PGNiG to drill the first horizontal lateral from the 3,050-m Lubocino-1 vertical well yet this year.
Gaz-System, the state-owned Polish pipeline company, is considering how to upgrade its system in the likelihood of a shale gas production boom, Gaz-System Chief Executive Officer Jan Chadam has said.
Operators report progress
Marathon is the operator of 11 concessions in Poland covering 2.3 million gross acres (1.2 million net) across three basins: Baltic Syneclise, Podlasie Depression, and Lublin Trough. The potential shales are Lower Paleozoic in age.
In April, Nexen Inc. acquired a 40% working interest in 10 of Marathon's 11 concessions.
Annell R. Bay, Marathon's senior vice-president for exploration, told the Baker Institute energy conference that Marathon expects to drill its first well in the Lublin Trough before yearend.
Having completed 2D seismic surveys. Marathon envisions drilling 7-8 eight wells in Poland during 2012.
"We expect to find some liquids there," Bay said. "The same strategy is not going to work across the whole fairway. We are committed to safety and the environment."
The potential of Poland's shales only can be determined "after multiple wells are drilled and producing." Production needs to be tied into pipelines and monitored long-term, she said, noting that Poland's government is working to develop unconventional production licenses.
Meanwhile, Marathon is analyzing core and log data to target horizontal zones that will be drilled after the first vertical well is drilled. Bay anticipates that the time from spudding a well in Poland to completing a hydraulic fracturing job will be 4-5 months, assuming the equipment is available.
As of Oct. 27, ExxonMobil was analyzing results after completing hydraulic fracing of two unconventional gas wells, Krupe-1 and Siennica-1, a spokesman told OGJ in an e-mail. ExxonMobil has two licenses with Total SA in the Lublin basin as well as four licenses on Podlasie acreage.
Krupe-1 is on the Chelm concession in the Lublin basin and Siennica-1 is on the Minsk Mazowiecki concession in Podlasie basin.
Krupe-1 spudded on Dec. 3, 2010, and reached a depth of 3,807 m. ExxonMobil spudded Siennica-1 on Feb. 20, 2011, and drilled to 3,847 m.
ConocoPhillips has an agreement with Warsaw-based Lane Energy that provides ConocoPhillips with the option to develop up to 1 million acres in the Silurian shale, ConocoPhillips executives said during a September investors presentation.
San Leon Energy PLC of Ireland is buying Realm Energy International Corp. in what San Leon describes as a strategy to increase its focus on shale gas exploration in Poland. Realm shareholders on Nov. 1 approved the transaction. Closing tentatively was scheduled for Nov. 3 depending upon final approval from the Supreme Court of British Columbia, said Realm of White Rock, BC.
After closing, San Leon will have 14 shale licenses in Poland covering 1.7 million net acres. The acquisition provides San Leon with entry into the Podlasie basin adjacent to ExxonMobil's acreage.
Realm's key assets are two licenses in the Baltic basin covering 374,851 net acres and one license in Podlasie basin covering 90,069 net acres, San Leon said.
In addition, Realm has licenses in Spain and France and also has assets in Germany. San Leon also has conventional oil and gas acreage in Poland.
Chevron Polska Energy Resources has a 5-year license to explore for oil and gas in southeastern Poland.
On Nov. 2, Chevron said it spudded its first well in Poland to assess shale gas potential on Grabowiec license, on of four licenses the company has in Lublin basin. The well is being drilled in the community of Lesniowice in Chelm County. Chevron has acquired more than 1,300 km of subsurface data in Poland.
Halliburton Co. has a 3-year contract to help Chevron with its exploration of Poland's shale.
Separately, a group shares interest in the Lebork S-1 well on the Slupsk concession in Poland's Baltic basin. The well logged thick shales with gas shows in formations of Lower Silurian, Ordovician, and Cambrian age.
But fracture stimulations on the Cambrian and Ordovician intervals did not result in an effective test, BNK Petroleum Inc., Camarillo, Calif., said Oct. 30 in an operating update. BNK manages the drilling venture.
BNK now plans to use a high-pressure stimulation string across the same intervals, and the restimulation and testing of the well was scheduled for spring 2012 because a suitable stimulation string cannot be delivered before winter sets in.
A BNK subsidiary is drilling three wells as manager for Saponis Investments Sp z o.o. BNK owns 26.7% of Saponis. Other interest owners are Rohol-Aufsuchungs AG, Vienna, Sorgenia E&P SPA, and LNG Energy Ltd., Vancouver, BC.
BNK holds 195,000 net acres in the Baltic basin of Poland through Saponis and a further 880,000 adjacent net acres through another European subsidiary. (OGJ Online, Feb. 17, 2011). Talisman Energy Inc. executives said the first of three initial shale wells in Poland spudded in September.
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