VILNIUS - PKN Orlen, Poland’s largest oil refiner and owner of Lithuania’s refinery Orlen Lietuva, and Talisman Energy, the Canadian oil and natural gas explorer, plan to start drilling for shale gas in the central European country next year, reports Bloomberg. “Talisman identified Poland as a country with attractive geological conditions and access to European gas markets,” Tony Atherton, Talisman’s country manager for Poland, said on July 20 at the Global Shale Gas Summit in Warsaw.
Poland’s reserves of shale and tight gas may be as much as three trillion cubic meters, according to estimates by Advanced Resources International. That could potentially turn the country into a net exporter of gas and reduce Europe’s dependence on Russian supplies.
Shale development, where rock formations are horizontally drilled and fractured using water and other liquids under high pressure, is driving a surge in U.S. gas output. The U.S. has effectively shut off gas imports into the country, as it is rapidly developing shale oil resources with new extraction technology and it deems there is enough domestic supply for years into the future.
Still, drilling shale gas fields in Europe profitably may prove harder than in the U.S., according to geologists.
The European Commission, the regulatory arm of the 27-nation European Union, has advised a cautious approach over Poland’s potential shale resources. “We’re still in the assessment phase, prospects for unconventional gas are unclear and we have to further analyze the details and assess the environmental impact,” said Michael Schuetz, policy officer at the commission’s energy department. “We definitely need more data on the potential.”
Skeptics abound, too. John Dizard, writing in the Financial Times on July 19, says that “Yes, shale gas is there, but it is expensive to produce, and there is much, much less of it available at today’s low prices than policy people, investors, and energy consumers are counting on. It is not a cheap and simple way to replace coal (in America), or Russian gas supplies (in Europe).”
He notes that shale gas is much more difficult to extract than from ‘conventional’ gas sources. Furthermore, the fractured shale rock often produces very high initial flows of gas, though these flows decline far more quickly than they do in “fracked conventional” conditions, he warns. Shale wells often don’t make economic sense at today’s low gas prices, says Dizard.
The shale gas potential in Poland has already started to draw interest from producers including Exxon Mobil Corp. and Chevron Corp. Talisman has three licenses to search for shale in three large blocks in the Baltic basin in northern Poland with San Leon Energy Plc.
“Gas potential, fitness, depth, organic richness are all comparable to the shales in Marcellus and Montney,” Atherton said, referring to reservoirs in the northeastern U.S. and in British Columbia.
Orlen, which has five licenses to search for shale gas, also plans to start drilling next year, Wieslaw Prugar, the head of its exploration unit, said. It will follow Polskie Gornictwo Naftowe i Gazownictwo, Poland’s dominant gas company, which started hydraulic fracturing at its first shale gas well earlier this month. “It’s still a long way before we can make a business decision,” Prugar said. “The first exploring stage is planned for five years and if during this time we confirm the presence of shale gas on a scale that would allow future investments, then it will mean starting a game that takes 25-35 years.”