Poland Shale E&P: Nothing Comes Easy

Poland has a very promising outlook for shale gas production, according to Mr. Jakub Złamaniec, Managing Partner at New Gas Contracting, a firm which does permitting, land acquisition and staffing for unconventional gas operations in Poland.

He told delegates at the Tight and Shale Gas Summitin Budapest, Hungary, “All the major players are in Poland doing exploration and seismic operations.”

But that didn’t mean that E&P would be trouble free in Poland, which had it’s own unique challenges for the unconventional gas industry.

According to Złamaniec, it was necessary for the industry to explain shale gas processes like hydraulic fracturing and horizontal drilling, because Polish landowners were not aware of the issues. 

“The media love sensational issues, so it’s better to show an interview with unhappy landowners than to show what the opportunity means for Poland,” he explained.

He admitted that administrative difficulties regarding shale gas concessions could be encountered in Poland and that wait times could vary broadly.

“When you have to get a decision in one part of the country it can be one week, while the same decision could take months in another part.

“Planning is the most important part of the business, so if you don’t know this you can’t plan,” he continued. “All companies encounter this problem and must learn how to cooperate with local authorities.”

Another difficulty, said Mr. Złamaniec, was the fact that Polish law changed all the time. 

He recalled, “For the last 20 years we’ve had a huge number of corrections in legal acts. It doesn’t help oil and gas companies to do business in Poland.”

Other hurdles in Poland included not having enough heavy equipment, good pipeline infrastructure, roads nor qualified people. He commented: “Of course Poland has good engineers working in gas, but they go abroad, to work in Africa, Asia or Great Britain.”

He said the country did not have enough specialists for gas production and that New Gas Contracting encountered some problems locating core teams, HSE managers and advisors, geologists and others. 

“This year we have only a few drilling operations and a few seismic, but next year we should have 32 drilling operations and many more seismic operations, making it more difficult,” he said, adding: “Now we are cooperating with an American company who need experienced people, surveyors and many many others.”

The lack of sufficient roads, Złamaniec said, was also a big issue in Poland.

“We are building now a few national roads, because in many rural areas where operations would go we don’t have roads. It’s a big issue for concession holders, and we cooperate with them on this. Road access is one objective. I can’t imagine how we Poles can build roads more quickly as we haven’t done this in the last 20-30 years.”

He summed up that the Polish government and the media needed to show the big picture, emphasizing things like good roads and that the country would be energy independent.

Meanwhile, he said, Poland had good prospects for becoming a big player in shale gas, because of the political certainty in the country.

Mr. Złamaniec reported: “The government incumbent won in the last election, which is a good situation. Our economic growth is good, and we’ve been able to fend off the global economic crisis, which is optimistic for the market.”

There were some very positive aspects of cost of drilling rigs in Poland, which, he said, were lower than had been predicted. “One year ago the estimate for drilling a well was about $10 million, but just now I’ve heard that it will be about $6 or even $4 million per well. This is a positive aspect.”

The CEO of 3Legs Resources, Peter Clutterbuck was also in attendance in Budapest to offer his company’s insights on shale gas exploration in Poland. One of the delegates in the audience asked him what he thought the future was for drilling rigs in Poland.

“It depends on whether the Baltic basin becomes a commercial development or not,” he replied. “When we started we only had access to rigs from Nafta Pila; for horizontals we felt a different kind was needed: something that was automated, easy to move, and environmentally friendly.”

Clutterbuck said 3Legs had 10 wells coming up in the next year, and that other drilling contractors were supplying rigs to the Polish market. 

“We see the case for several hundred rigs in the next 10 years,” he opined. That needs proof of commercial viability and that the bulk of the Baltic basin can be developed. There will be sweet spots and others not so good.”

He said he believed that some areas in Poland should not be developed, those that were either Natura 2000 protected, or were too close to residential areas.

Clutterbuck added: “We work very closely with government. We’ve done road upgrades, and farmers make more money from us than they make with agriculture.”