shale gas investment guide vol. 2

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p / 1 0 opinion

p / 1 2 news

p / 1 6 results

p / 2 4 investor’scorner

p / 2 6 who’swho

p / 5 8 profiles

p / 6 2 business

p / 8 2 faces

p / 9 4 policy

p / 1 0 4 environment

p / 1 0 8 legal

p / 1 1 4 geology

p / 1 2 0 education

p / 1 2 6 jobs

p / 1 2 8 events

p / 1 3 1 bmp’s

The FACeS oF PolAnd’S ShAle revoluTion

PhoTogrAPhy by iSToCkPhoTo

on the cover:

Early results were dismal, but we’re still bullish on shaleMore on page 16

contents

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contents

p / 1 0 Leader: Local communities count

p / 1 2 whatsmakingthenews?

p / 1 6Well results to date

p / 2 4 de-riskingpolishshale

p / 2 6WHO’S WHO in concessions

p / 4 9WHO’S WHO in services

p / 5 6bythenumbers

p / 5 8CR Profile: Patrycja Kujawa

p / 6 2The farm-in game

p / 6 4 New Entrants

p / 6 6 openholecompletions

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PATryCjA kujAwA, lng energy

4 | shale ga s inve s tm ent guide | spring 2012

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p / 7 0 pgnig2.0

p / 7 5Silurian private placement

p / 7 6Bill Marble’s shale secrets

p / 8 0romaniashalegas

p / 8 2F A C e s , a p i c t o r i a l

p / 9 4Brussels, at oddsp / 9 6 Royalty rate, rising?

p / 9 8 securityconcerns

p / 1 0 1ministerpawlakp / 1 0 4 C o m m u n i t y p r o t e s t s

p / 1 0 8top10energyLawyersp / 1 1 4 fracking&seismicevents

p / 1 1 6 therewillbelessgas

p / 1 2 0mappingthebalticbasin

p / 1 2 4P i c k i n g b r a i n s

p / 1 3 2B M P S

p / 1 4 1B M P S ( I n P o l i s h )

Turn To P 16 For The reSulTS From The FirST dozen wellS

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March 7, 2012

Dear Colleague,

Today I met with Karol Kolouszek, whose construction company NTS has entered the market to build well pads to suit. Mr. Kolouszek is not the only one positioning a company for upstream unconventionals.

Viking entered the market on the back of a government-sponsored 2D seismic program. MND Drilling, a Czech company, has secured their fourth drilling contract in Poland. LST Capital, a fund, will open a ceramic proppant factory, perhaps as early as 2013. The market is competitive, and the well count is increasing, but not all is roses in Polish shale.

The first well results were moderate to poor. BNK screened out. Lane failed to flow gas at commercial quantities. San Leon drilled a few dry holes until their Rogity-1 well confirmed liquid rich hydrocarbon shows of 500 meters. The markets have reacted, poorly. All five of the independents are trading at 50-75% off their peak price in 2011.

Community relations has a long way to go, especially after Chevron walked out of a meeting in ˚urawlów, scared off by a few protestors. (See leader, p. 10.) For an example of CR done right, check out our profile of Patrycja Kujawa, whose company LNG Energy sponsored the opening of a cultural center in the gmina of Jadów, a place they may not even drill.

Kind Regards,

Parker SnyderPublisher

PUBLISHER’Seditor

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“we are happy to welcome dmS law firm as our partner, who recently picked up a renewable energy practice.

Combined with their oil & gas business, dmS is an independent with a powerful combo.”

- Parker Snyder, Cleantech Poland

the AmericAn chAmber of commerce (AmchAm) is a business organization that serves and promotes its member companies. AmCham fosters positive relationships with the government and promotes the free market spirit for the benefit of business. Ul. Emilii Plater 53, 00-113 Warsaw.www.amcham.com.pl

dms lAW firm – DeBenedetti Majewski SzczeÊniak is a law firm specializing in oil & gas, commercial law, securities and bank-ing. Recently joined by Christian Schnell and his renewable energy team. Saski Crescent, ul. Królewska 16, 6th floor, 00-103 Warsaw, www.dms.net.pl

cleAntech PolAnd (ctP) is media and consultancy for sustainable business. CTP connects capital to technology in Poland’s conversion to a low carbon economy. The Shale Gas Investment Guide covers the de-velopment of Poland’s shale basins. Ul Pustel-nicka 48/22 04-138 Warsaw. [email protected]

PWc provides cleantech companies with ser-vices in assurance, advisory and tax & legal. A global services company, PwC has been in Poland for 20 years. Locally, there are 46 part-ners and more than half of employees are fe-male. Al. Armii Ludowej 14, 00-638, Warsaw.www.pwc.pl

PAcWest is A boutique consulting firm out of Austin Texas, providing market analysis and market entry services. PACWEST has teamed up with Cleantech Poland to provide North American firms with a package of market en-try services, including market/risk analysis, partner/JV identification and networking/in-troduction to the Polish shale markets. www.pacwestcp.com

the times, they Are A-chAnGinG. or they hAve chAnGed.

Many of the drillers who are prodding the Polish soil look-ing for shale gas would have been much better off if the shale fever gripped Poland in early 1990s.

In those (some would say golden) days of laissez-faire busi-ness, when fortunes came from from selling shoes off roll-away cots and unemployment reached 20 percent, rigs would be a welcome sight pretty much anywhere. Jobs was a word that worked miracles.

Jobs are still high on the agenda today, but they have made room for competing values. In Poland, where all that’s un-derground is state-owned, including mineral resources like sand or stone, state enterprises and big business cannot have things the way they want.

After little more than a year or two on the ground, opera-tors and service companies in the upstream exploration value chain are learning a lesson that in today’s Poland, wealth has risen to a level at which people recognize pri-orities other than financial rewards. Shale gas’ potential to increase incomes can only be a part of the package they sell to communities.

As living standards increase, invariably difficult questions are more likely to arise, something that not everyone has taken into account. Chevron representatives reportedly walked out of a local meeting upon seeing that the locals brought the media along with a few protesters to ask some

environmental issues are no longer only the domain of polarizing radicals. An environmental consciousness has become a staple in many rural Polish communities.

oil and gas companies better come to terms with that.

localcommunities

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tough questions. In 2011, Geofizyka Toruƒ had to fix what some called flawed agreements after local protesters tried to stop seismic trucks from entering their land.

Communities are completely right to demand extra effort before their roads are trampled upon by seismic trucks and their landscapes are altered by drilling rigs. It’s not cheap environmentalism either, because wind farms - the sym-bol of clean energy - have to answer to similar demands.

Local communities, sometimes in accord with authorities, sometimes against them, are learning that environmental issues are no longer the domain of Greenpeace radicals chaining themselves to trees. These issues have become the staple of daily lives: it’s how you manage waste, save energy and treat water that has enormous influence on quality of life.

It doesn’t work to go about business while disregarding community concerns. Therefore, a few lessons learned: don’t walk out of meetings; don’t lure landowners into signing discriminatory agreements; and don’t play the pa-triotic national energy security card too often. Most Poles care more about their backyard than a distant Russia.

Addressing potential benefits, and being transparent to risk factors, will work better by putting everyone on the same page, even if the result would be one less fracking program.



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January 19, 2012After shAle GAs, shAle oil?

A rePort by geologists claims that deposits of shale oil are present in several regions across Poland, the largest ones lo-cated in the vicinities of Warsaw, Radom and Elblàg. Sever-al international companies already have concessions in the regions highlighted in the initial report. In particular, shale gas exploration concessions of Petrolinvest, ExxonMobil and PGNiG offer good prospects for shale oil extraction.

“We hope that these studies are confirmed in the course of further work, thus enabling us to extract oil from shale in the future,” Joanna Zakrzewska, a spokesperson for Polish oil and gas company PGNiG told Dziennik Gazeta Prawna.

Estimates regarding the extent of the resources are due to be announced in March. The companies may expect the value of their acreage to rise significantly, if shale oil de-posits are confirmed alongside shale gas ones. If its produc-tion proves commercially viable, shale oil could help limit Poland’s oil imports. Meanwhile, the leader in shale explo-rations, United States already plans to reduce oil imports considerably by 2020 thanks to shale oil exploration.

makingthenewssomeofourfavoritestoriesfromh12012

January 4, 2012cuAdrillA’s fArm-in AttemPtfAlls throuGh

cuAdrillA sAid in January it had been talking to DPV about joint operations on the latter’s concessions and/or other forms of cooperation but had failed to reach a final agreement and that the project had been dropped.

DPV is a company registered in Poland controlled by Russian investors. The company was previously owned by Emfesz, a Hungarian company, who recently have sold their control package to a Russian investor. They hold 16 concessions in Poland, some for conventional oil and gas while others for shale/tight gas.

“Right now we are preparing ourselves to execute seis-mic works on our two existing concessions and have sub-mitted the prepared environmental protection report for our third (on-going process) concession. In the meantime we will be preparing the first location for a test well, with an expected time of spud date the end of 2012 or beginning 2013,” Marek Madeja, head of Cuadrilla in Poland told Cleantech Poland.

Madeja said the delays were to do with meeting Natura 2000 stipulations. “We were requested to do a very thor-ough study,” he said. Cuadrilla has its our own equipment - drilling and hydraulic fracturing - but said it is still un-certain whether it would be taking it to Poland or employ-ing local contractors.

January 13, 2012dArt enerGy sPins off euroPeAnshAle subsidiAry

AustrAliA-bAsed Dart Energy has formed a new subsid-iary, Dart Energy International Shale, which the company said would manage its growing European shale gas busi-ness. Dart has a large portfolio of unconventional assets, owned and under option, in the UK, Poland and Germany, including two permits with shale gas potential of 12 Tcf (28 billion cubic meters) and 15 shale gas exploration licenses.

Dart executive chairman Nick Davies, said that the company had been looking to expand into shale gas for some time. “We have now assembled an initial shale gas portfolio that, although highly prospective, requires rela-tively low capital commitment over the next two to three years, and is well suited to Dart’s experience and capabili-ties,” he said, as reported on the company website.

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Oil production from major US shale basins


december 15, 2011cerAmic ProPPAnt PlAnt underWAy

lst cAPitAl announced that it will work with two of its subsidiaries, LZMO and SOL Ventures, to develop a ce-ramic proppant production plant and then divest it to a shale gas operator. Ceramic proppant could be used instead of sand in hydraulic fracturing.

The first stage of the investment will be to develop a ceramic proppant production plant, which would produce 40,000 tons of ceramic proppant per year in 2014, the first year of operations. LST Capital aims, however, to increase production to 200,000 tons annually by 2020.

SOL Ventures will be the project leader, tasked with de-veloping ceramic proppant production, patenting the tech-nology worldwide, and applying for EU financing of PLN 20 million (¤4.38 million) or two thirds of the project’s invest-ment value. SOL Ventures, originally a solar company, will eventually change its name to Ceramics Ventures.

LZMO will bring in just over 23 hectares of land rich in kaolinites, necessary for production of the proppant. The production plant will be located in the powiat (county) of ˚ary, western Poland.

January 10, 2012AureliAn And cioc enter shAle GAs GAme

british oil And GAs company Aurelian received its first shale gas exploration concession in Poland, in the Wrocław province, south western Poland.

Aurelian, so far, has been involved in exploring for tight gas only in Poland. The company’s shale gas concession covers the area of 728 sqm and is located nearby to acreage of another oil and gas company looking for shale gas, San Leon Energy.

Aurelian undertook to collect seismic data on the con-cession in the next three years. The company also in-formed that it would seek a partner for its explorations in the area.

Meanwhile, Canadian International Oil Corp (CIOC) filed two applications for exploration concessions in Po-land, near the towns of Ostrowiec Âwi´tokrzyski and Skar˝ysko Kamienna, in the Kielce province, as part of its wider European concession strategy.

CIOC joins the large group of mostly international firms

active in exploring for shale gas in Poland. The list includes PGNiG, Lotos Petrobaltic, 3Legs Resources, Mazovia En-ergy Resources, Pro Energis, Petrolinvest, Baltic Energy Resources, BNK Petroleum and Cuadrilla Polska.

January 10, 2012corruPtion susPected in shAle GAsconcession Process

PolAnd’s internAl Security Agency (ABW) detained seven people in connection to a corruption case in the pro-cess of granting exploratory concessions for shale gas in Poland. Among the detainees was the CEO of Silurian, a shale gas subsidiary of the Petrolinvest Group.

According to the ABW, other detainees were three offi-cials from the ministry of environment and an employee of the State Geological Institute (PGI). The ABW also said that the three environment ministry officials were em-ployed at the ministry’s department of geology and geologi-cal concessions. The agency did not provide further details.

Two days later, the public prosecutor’s office in Warsaw moved on to arrest six detainees, except for the PGI em-ployee. The court, however, dismissed the move, ordering that the detainees be released on bail instead.

Silurian owns nine concessions for shale gas in Poland. According to a statement by Petrolinvest, Silurian will “cooperate to clear any issues connected with the inves-tigation.” “While we are not determining anyone’s guilt, we are working to make sure that in any case the manage-ment of our subsidiaries will work as usual,” Petrolinvest’s CEO Bertrand Le Guern wrote in the statement.

Mr. Le Guern also wrote that even in the case that any-one is found guilty at Silurian, the process of concessions’ development would not “slow down.”

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January 25, 2012Polish rePort to Give loWer shAle GAs estimAte

Polish GeoloGicAl institute (PGI) announced that the official report estimating shale gas reserves in Poland will be made public in March. The report will adopt new methodology, which is expected to yield smaller estimates than in the reports published so far.

The new approach will use the history of mining activity in shale plays similar to the Polish ones. Previous reports were based upon characteristics and volume of shale rock.

The PGI report will be the first official recoverable shale gas estimate done by a Polish institution. So far, the poten-tial of the shale gas market in Poland has been measured by US estimates.

In 2009 Polish shale gas deposits were evaluated by con-sulting companies Wood Mackenzie, which released an es-timate 1.4 trillion cubic meters, and Advanced Resources International that came up with a 3 trillion cubic meters estimate.

The market, however, has largely lived by US’ Energy Information Agency’s report, which put the figure at 5.3 trillion cubic meters of recoverable shale gas. If the EIA’s report proved correct, Poland would have a 300-year supply of gas at current demand rates.

January 17, 2012bulGAriA bAns hydrAulic frActurinG

the bulGAriAn Government cancelled Chevron’s permit for the exploration of shale gas, citing lack of data to ensure the environmental safety of fracking. The deci-sion followed protests in several Bulgarian cities, where participants called for a ban on hydraulic fracturing on the grounds that it would pollute underground water reser-voirs.

The government’s decision preceded by a day a resolu-tion of the Bulgarian parliament, according to which shale gas exploration could be allowed if a technology other than hydraulic fracturing was used.

The government’s decision and parliamentary resolution signal a U-turn on Bulgaria’s previous position on shale gas exploration, which, until now, has been considered a means to diversify energy sources. Bulgaria relies 100 per-cent on gas imports from Russia.

After bans on fracking in Bulgaria and earlier in France, Poland remains the only member of the European Union where the government is consistently backing shale gas exploration. Reacting to the Bulgarian decision, Polish president Bronisław Komorowski said that “shale gas is a great opportunity for Poland” and that Poland would continue looking for “allies to fight with those who - for various reasons - would like to limit that opportunity”.

december 10, 2011 schlumberGer reAdyinG tAkeovers in PolAnd

schlumberGer, the listed oilfield services company supplier for the oil and gas sector, is seeking buys in Poland’s shale gas sector over the next two years, Kyel Hodenfield, vice president of unconventional resources at Schlumberger, told Cleantech Poland.

“We are actively looking at possible JV partners and companies developing innovative technology in Po-land in which we would make equity investments,” Mr. Hodenfield said. In some cases Schlumberger has already got as far as talking with potential acquisition targets and talks with one are very close to completion, he said.

The company is looking specifically at the manu-facturers of sensors, power supply and distribu-tion solutions. “We think that shale gas production can start within the next five years in Poland and we are now working on building a solid base here,” Mr Hodenfield said.

January 16, 2012 chevron fAils to overcome locAlconcerns

rePresentAtives of US oil and gas major Chev-ron walked out of a meeting with local community of ˚urawlów, south-east Poland, reportedly to avoid ques-tions about ecological impact of shale gas exploration in the area.

The company said that it had expected only local resi-dents to turn up. “Unfortunately, a direct dialog with resi-dents of the [˚urawlów] community was made impossible by organized protests groups and people from outside of ˚urawlów,” Chevron claimed in a statement sent to the media.

This was the second time Chevron faced questions from locals concerned about possible ecological damage from shale gas operations. Over 500 people have already signed a petition against the company’s plans. Chevron had previ-ously tried to look for shale gas in the vicinity of the nearby village of Rogów, but, again, the company could not secure local support.

The local residents were mostly concerned about the impact that hydraulic fracturing, or fracking, may have on water resources, how the water would be sourced and treated, procedures in case of accidents, as well as poten-tial financial gain to the community if shale gas produc-tion would begin.


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January 20, 2012lotos stArts shAle GAs cAmPAiGn in lithuAniA

the lithuAniAn oil And GAs comPAny Nafta Minijos will spend €2.8 million in 2012 for the search of shale gas in Lithuania, Lietuvos Rytas daily reported on January 20.

Nafta Minijos is owned in 50 percent by Geonafta, which in turn is controlled by Polish oil and gas group Lo-tos.

Lithuania is still to grant first shale gas concessions, but Nafta Minijos hopes that the concession process will be swift enough for the company to start drilling still in 2012.

According to a research from the US Energy Information Administration, shale gas may be found in rock formations 1.5 to 2 kilometers deep, located in south-western Lithu-ania and stretching westwards to Poland and the Kalinin-grad region of Russia. There are an estimated 113 billion cubic meters of shale gas in Lithuania that could cover the country’s energy needs for 30 to 50 years.

January 4, 2012PGniG siGns With G.en for locAl use of shAle GAs

PGniG, which announced promising test well results on the Lubocino well in 2011, is now teaming up with Ger-many company G.EN to sell the gas from Lubocino to the local market.

G.EN, a subsidiary of Verbundnetz Gas (VNG) is local gas distribution and retail company, with infrastructure in the vicinity of seaside towns of Puck and Władysławowo, close to the Lubocino test well. G.EN wants to buy gas from Lubocino, where PGNiG is going to follow up on dis-covery of promising gas shows by starting production tests in the second half of 2012. In total, shale gas could reach about 3,500 G.EN’s customers.

PGNiG appears to be at the forefront of shale gas devel-opments in Poland. It has been the only concession opera-tor so far to come up with a particular date when commer-cial shale gas extraction and sales will start. According to PGNiG, the date is 2014, a commitment that has been put into question by industry insiders and experts in the con-text of the slow pace of drilling in Poland.

february 10, 2012sAn leon And tAlismAn hit GAs in PolAnd

tAlismAn enerGy And sAn leon announced a success-ful completion of a shale gas exploratory well Rogity-1 on the Braniewo S concession.

“During drilling continuous gas shows were encoun-tered over more than 500 meters of the Lower Silurian, Ordovician, and Middle Cambrian sections. The rich gas shows consisted of heavy hydrocarbons, including C1-nC8,” San Leon wrote in a statement for London’s AIM stock exchange market.

San Leon CEO Oising Fanning said that systematic ef-forts to evaluate unconventional gas resources in Poland was “paying off”.

The Rogity gas find comes after an earlier gas discovery in Lewino, Gdaƒsk W concession, in 2011.

The Rogity-1 well was completed and cased for future operations, which could include pressure testing of the formations and a possible vertical frac across several inter-vals, San Leon said. The company also informed that fu-ture operations in the Braniewo S concession are expected to include a long offset horizontal well as well as a multi-stage frac.

Talisman Energy now plans to move the rig to Szczawno concession to drill the Szymkowo-1 well.

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mark gordon, portfolio manager for Soros Fund management, works in a high tower across from Central Park in new york. he’s the one overseeing the hedge fund’s investments in unconventional gas.

Well Results to DatE

B y p a r K e r s n y D e r a n D W o j c i e c h K o s c

p h o t o g r a p h y B y Ł u K a s z o s t a l s K i / r e p o r t e r


of the indePendents operating acreage over the past year, Soros Fund Management has exposure to at least three: San Leon, BNK Petroleum and Cuadrilla. (Realm as well, but it was acquired in November by San Leon.)

Mr. Gordon is in charge of evaluat-ing the hedge fund’s investments in an upstream unconventional port-folio. In October of 2011, after Lane Energy’s first horizontal well was fractured, he was quick to express frustration at the results when Clean-tech Poland met up with Mr. Gordon in New York.

Citing problems from the first few fracs, his sentiments were shared by other fund managers at institutions such as Blackrock, Quantum Part-

ners, Vanguard and Fidelity, because that hoped-for early shale gas boom never happened. These funds have upstream exposure, either through private placements or in a position taken post-IPO.

Although most industry partici-pants agree it will take 20-30 wells before early results can be said to be decisive, certain actors in the in-vestment community have spoken early and loudly about the difficulty of getting gas from shales to flow in commercial quantities. Sanford Ber-nstein, a sell-side research firm for private equity clients, led the chorus with a bearish desktop-report, citing problematic geology.

“Recent data from Poland’s shale

“while we did find gas, it did not flow in commercial quantities in either of those two wells.” – david rosenthal, exxonmobil.

gas wells validate our concerns about European shale gas: poor flow rates in over-pressured, hard-to-develop shales,” wrote Bernstein analyst Os-wald Clint.

At the start of Q1 2012, all five of the large publicly traded independents were trading at one-third to one-fifth of their peak share price. The small cap independents are a litmus test for market confidence. If they’re down, confidence is down.

In total, just over a dozen wells have been drilled and between 6-8 have been hydraulically stimulated. What follows is an overview of what information has been made public from the operators at work in Poland’s shale basins.


Unconventional gas wells drilled to date in Poland

SourCe: ComPAny PreSS releASeS, CleAnTeCh PolAnd reSeArCh

Operator Well Results

3Legs/ConocoPhllips ŁEBIENLE-1 Gasshows

3Legs/ConocoPhllips Ł¢GOWOLE-1 Gasshows

3Legs/ConocoPhllips ŁEBIENLE-2 Flared

BNKPetroleum WYTOWNO-1 Gasshows

BNKPetroleum L¢BORKS-1 Gasshows

BNKPetroleum STAROGARD-1 Gasshow

PGNiG LUBOCINO-1 Flared

PGNiG MARKOWOLA-1 Nocommercialgas

OrlenUpstream SYCZYNOU-1 Drilledtodepth

OrlenUpstream BEREJOWOOU-1 Drilledtodepth

ExxonMobil KRUPE-1 Nocommercialgas

ExxonMobil SIENNICA-1 Nocommercialgas

SanLeon/Talisman LEWINO1G-2 Gasshows

SanLeon/Talisman ROGITY-1 Gas&liquidshows

SourCe: ŁukASz oSTAlSki/rePorTer

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bAltic bAsin (north PolAnd)In north Poland, targeting the Siluri-an, Ordovician and Cambrian shales, at least six modern exploratory wells have been drilled to date. The first to drill in the basin was 3Legs Resources (Lane Energy) working in partnership with ConocoPhillips.

Although limited data has been released from operators other than 3Legs, the basics are fairly well known: gas shows were encountered in all six wells drilled in the Baltic, although hydraulic stimulation failed to flow gas at commercial quantities.

ŁEBIE¡ LE-1 was drilled by 3Legs to a depth of 3085 meters. A core section of approximately 215 meters was re-covered; 200 meters were gas bearing. DFIT (diagnostic fracture injection testing) was done on Ordovician and Silurian shales, and a single stage frac on Silurian, where gas flowed to the surface.

Ł¢GOWO LE-1 In August 2010, 3Legs began drilling on a second test vertical well to a depth of 3580 me-ters, and encountered gas shows of 220 meters in lower Silurian, Ordo-

vician and Cambrian shales, mostly methane, but also a small percentage of ethane and propane.

ŁEBIE¡ LE-2 Then 3Legs moved to drill a second horizontal section of some 1000 meters at 4080 meters in depth in a target zone that was approximately 5 meters. When this horizontal well was stimulated in Q3 of 2011, the results were moderate but not commercial: using nitrogren lift, the well recorded an initial pro-duction (IP) on September 8, 2011 of about 2,200 mscf/day, which declined to 500 mscf/day on September 13th. Also with the aid of nitrogen lift, the well continued to flow 450-520 mscf/day, but was soon shut-in pending fur-ther analysis. WYTOWNO - 1 This well was oper-ated by BNK Petroleum, in partner-ship with several other companies. It was drilled to a depth of 3580 meters, and encountered gas shows of 220 meters in lower Silurian, Ordovician and Cambrian shales, mostly meth-ane, but a small percentage ethane and propane.

L¢BORK S-1 Operated also by BNK, this well was drilled to a depth of 3590 meters with over 220 meters of core taken. Gas shows were recorded over 285 meters in lower Silurian and Cambrian shales, mostly methane. BNK was not able to successfully keep proppant in place during the fracture stimulation. “The reservoir was over pressured but it took even higher pressures to stimulate the shales than anticipated. It appears that both the Ordovician and Alum shales have complex fracture matrices, which were predominantly responsible for the reduced amount of proppant placed,” the company said in a re-lease. BNK plans to restimulate the L´bork well in 2012.

STAROGARD - 1 Spudded on July 16, 2011, this well was operated by BNK Petroleum and LNG Energy. It was drilled to a depth of 3524 meters, while numerous gas shows were en-countered over 250 meters in lower Silurian, Ordovician and Cambrian shales including methane, ethane, propane, butane and pentane. The presence of heavier hydrocarbons, ac-cording to David Afseth president of

“we took samples from over 2,500 meters. in five to six months, we will make a decision whether or not to drill horizontally.”

– wiesław Prugar, orlen upstream


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LNG Energy, is “consistent with Sa-ponis’ thermal maturity mapping of the Baltic Basin.”

BNK Petroleum’s country manager Jacek Wróblewski says that the gas shows encountered on all three loca-tions do give a positive outlook on the commercial viability of the wells. “We are now analyzing the data in a US lab, after which we will be able to speak on commercial potential of the wells,” he said.

LUBOCINO - 1 This well was drilled and operated by PGNiG, the Polish state owned oil and gas company. Although little data was released, according to a press spokesperon, “Analysis of the gas confirms very good energy characteristics, absence of hydrogen sulfide, and low nitrogen content.” Images of the gas flare were released by the prime minister’s of-fice, as this well was drilled previous to the elections held in October 2011.

LEWINO 1G-2 Talisman in coopera-tion with San Leon drilled this well on the Gdansk West concession to 3,600 meters. Gas shows were en-countered over 1,000 meters in the middle and lower Silurian shales, Or-dovician and upper Cambrian, mostly methane, but also a small amount of ethane, propane, butane and pentane. Over 300 meters of core were taken for evaluation.

ROGITY - 1 Talisman in cooperation with San Leon announced gas shows of over 500 meters in Lower Silurian, Ordovician, and Middle Cambrian sections. The gas shows consisted of heavy hydrocarbons, including C1-nC8. The richness of the gas shows is consistent with a wet gas system, ac-cording to a company press release.

PodlAsie bAsin (centrAl PolAnd)Comparatively less is known about the subsurface in the Podlasie region than in north and south Poland. The first modern well was drilled by ExxonMobil in February of 2010. Although well results were not made public, David Rosenthal, vice presi-dent for investor relations, was quoted on a Q1 2012 earnings call saying the gas quantities were insufficient to justify bringing it into commercial production.

Marathon Oil, who holds 7 conces-sions of about 1.5 million acres (6000 km2), including acreage in the Pod-lasie basin, had begun drilling. An-other 6-7 wells are planned, according to a press release issued by the com-pany.

lublin bAsin (south-eAst PolAnd)The Markowola -1 well, drilled by PGNiG, in the Lublin basin near Kozienice, southeast of Poland, may have been the first shale gas well drilled (mid 2010), although PGNiG’s annual report refered to it as a tight gas. No commercial gas flows were recorded, although details have not been released to the public.

Orlen Upstream announced the completion of two wells in the Lublin basin: Syczyn OU-1 and Berejowo OU-1. According to CEO Wiesław Prugar, “[Orlen] took samples from over 2,500 m deep, and will have them analysed in the lab. In five to six months, we will make a decision wether or not to drill horizontally.”

ExxonMobil also drilled in the Lu-blin basin at a depth of 3807 meters. Although the results are not public, an early 2012 earnings call confirmed that no commercial quantities of gas

were found. “While we did find gas, it did not flow in commercial quanti-ties, so we’ll be analyzing that, [and] evaluating the various characteristics of the shale there and working on our go-forward plans,” Mr. Rosenthal added.

At the time of printing, other opera-tors were at work on wells sites: Chev-ron spudded the first of what could be 6-7 wells in November of 2011. ENI was about to get underway with its first of several exploratory wells.

MEDIUM TERM? According to oil and gas expert Grze-gorz Pytel, Sobieski Institute, an oil-field takes some time to be developed. As for the first few wells, it’s just a matter of luck whether they are suc-cessful.

“With respect to the resource base, we don’t know. If we look at North Sea estimates, back in the 1980s, the Norwegians estimated the re-source base to be zero. The question is whether or not the companies will find certain low-hanging fruit to give the investors early pay off. It’s a ques-tion of luck,” Mr. Pytel said.

In the meantime, companies may go elsewhere if the opportunities are better. Take for instance, ExxonMobil in Hungary, who after drilling just a few wells, left to explore elsewhere. In the meantime, the Hungarian unconventional resource base was de-veloped by others who stayed when ExxonMobil left.

“Also, there’s always the possibility that they don’t talk about what they have found,” according to Mr. Pytel. “There is a kind of game of play, how companies interpret results. Is it good for companies to say, we have good re-sults, or is better for these companies to be cautious?”


Pgnig’S luboCino well SiTe in norTh PolAnd. SourCe: Prime miniSTer’S oFFiCe

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Normalized to January 1, 2012 price of five independents on Polish market ComPAny tiCker 1/1/2011 4/1/2011 7/1/2011 10/1/2011 1/1/2012 CurrentSan Leon SLE:LONdON 309.38% 450.00% 350.00% 175.00% 100.00% 150.00%Talisman TLM:NYSE 183.13% 205.76% 167.08% 93.00% 100.00% 107.00%3Legs Resources 3LEG:LN 300.70% 261.54% 100.00% 100.00%LNG Energy LNG:VENTuRE 53.85% 384.62% 307.69% 153.85% 100.00% 107.69%BNK Petroleum BKX:CN 326.67% 306.67% 160.00% 100.00% 100.00%

Stock price of five independents on Polish marketComPAny tiCker 1/1/2011 4/1/2011 7/1/2011 10/1/2011 1/1/2012 CurrentSan Leon SLE:LONdON 24.75 36 28 14 8 12Talisman TLM:NYSE 22.25 25 20.3 11.3 12.15 133Legs Resources 3LEG:LN - - 215 187 71.5 71.5LNG Energy LNG:VENTuRE 0.46 0.5 0.4 0.2 0.13 0.14BNK Petroleum BKX:CN - 4.9 4.6 2.4 1.5 1.5

SourCe: ComPAny PreSS releASeS, CleAnTeCh PolAnd reSeArCh

Stock Price of Independents on Polish MarketNormalized to Jan 1, 2012

SLE:LONDON

TLM:NYSE

3 LEG:LN

LNG:VENTURE

BKX:CN

450.00%

300.00%

150.00%

0.00%Jan 2011

Apr 2011July 2011

Sept 2011Jan 2012

Current

Commodities exploration is a game of risk. Shale gas, especially so, as basins are not continuous and homogeneous, but rather uncommunicative and anisotropic. That’s what makes de-risking a shale play challenging, and even more challenging in Poland where subsurface information is little known.

p a r K e r s n y D e r , D i r e c t o r c l e a n t e c h p o l a n D

in shAle GAs exPlorAtion, the results from one well are no guaran-tor of wells adjacent, even in the most productive parts of the Barnett, Haynesville and Marcellus. In these rather prolific basins, only 30% of wells produced at all, meaning 2 of every 3 wells were duds, dry wells or not commercial, no mat-ter how successful over-all production.

The risk inherent in shale gas exploration makes it a game that has been historically taken up by independent wild-cat drillers like George Mitchell, the father of the Barnett in Central Texas. He succeeded where others failed because he had the fortitude (and long term contract commitments) that kept him pursu-ing the “prize” when others pulled out or closed shop.

Industry analysts have sometimes noted few majors have helped to prove a shale basin. In the last few years, the majors have usually entered a ba-sin by acquiring an independent, as in the $41 billion purchase of Houston-based XTO by ExxonMobil in late 2009.

the business case for an early-stage farm-in.

In North America, the cost per acre can be characterized according to a basic model: as the value per acre in-creases, the net present value (NPV) goes from a nominal value, usually the cost of acquiring the rights, and

it increases in stages as the basin is de-risked from $500 to $1000 to $10,000 or more as sub-sequent wells bring the play into production.

As operators drill in Poland, investors will ask: were there gas shows? How long were the shale sections? What type of hydrocarbons

were found? If the well was stimu-lated, what was the initial production? How long was this production sus-tained?

POLAND SPECIFICTo date, the first few Batlic wells expe-rienced gas shows. [See Results, p. 16] The gas shows generally went from gas to condensates/liquids as the drilling across the Basin went from west to east. The shale sections were rather large, from 100 meters to 500 meters.

DE-RISKING THE INVESTMENTLet’s switch to Poland. Clients based in North America who have set up shop here in Central Europe to oper-ate acreage have been asking these questions: how much is my acreage worth? How will an exploration pro-gram de-risk my acreage? Does drill-

ing on an adjacent concession, given the lack of seismic and subsurface data, do much to increase my valua-tion?

Cleantech Poland, as an alternative energy consultancy, works for E&P companies to help them assess risk. One client had us do a basin-wide study of certain value chain verticals including pressure pumping. Another client asked us to evaluate the poten-tial for mid-stream gathering net-works, while another had us look into

were there gas shows? how long were the shale sections? what type of hydrocarbons were found? if the well was stimulated, what was the initial production?

de-Risking Polish Shalean investor’s point of view


“The market was still bullish on Polish shale when San leon bought out realm; the average

value per acre paid for realm’s european assets was around $525, a premium even on

un-risked acreage in north America. “

Valuationovertimeacrossagenericbasin

riskprofileofplayacrossagenericbasin

However, when the 3Legs well was fractured, the initial production was low and the decline rapid, from an IP of 2 mmcf/day to 0.5 mmcf/day in just five days, which is well below the IP of a typical production well in the Barnett and Haynesville which can measure 4 to 7 mmcf/day and have es-timated ultimate recoveries (EUR) of 1 Bcf or more. The BNK well that was fractured screened out and failed to hold the proppant in place. The results of other hydraulic fracturing programs were not reported publicly.

Investors took a dismal view of these first wells, especially on the back of news that dry holes were drilled by ExxonMobil in the Lubin and Podlasie basins, and all five independents trad-ing on public exchanges were signifi-cantly down off their early peak when this publication went to press.

WHY DE-RISKING MATTERSIt matters for two reasons: the cost of drilling and the cost of raising capital.

Drilling for shale gas in Poland is ex-pensive, around $10 million per well. Let’s say a typical private placement for an independent un-listed opera-tor fetches $30-70 million. Factoring administrative overhead, that may be enough to drill 2-5 wells, certainly not enough to de-risk much of a given geo-graphical area, especially when consid-ering a typical number of wells drilled each year by an independent operator in the Barnett can be as many as 50.

Fewer wells means a longer de-risking scenario. But what will that mean to operators in Poland? Well, if an operator’s first results are poor, and the operator has a large exposure to upstream unconventional, then the value per share will go down, making

the terms for subsequent investment rounds disadvantageous. In short, an operator will have to give away more of the company to raise more equity to drill more wells. This could make the market even more dependent on risk dilution through farm-ins or ripe for acquisitions.

Analysts have noted the differences between Poland and North America:

$1/acre$400/acre

$1,000/acre

$10,000/acre

$300,000 $120,000,00 $300,000,000 $3,000,000,000

Fig 1. approximate valuation over time increases as basin is de-risked

veryhigh high medium low

$1/acre

$400/acre

$1,000/acre

$10,000/acre

Fig 2. Risk profile decreases as knowledge about basin increases

the availability of rigs, the proximity of gathering networks, a more efficient supply chain. What hasn’t been dis-cussed is how a protracted de-risking scenario will alter the structure of a market that favored independents in North America but may come to favor hybrid state-owned entities who can finance exploration from their balance sheets.

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AureliAnbnk Petroleum

chevroncuAdrillA

dArtdPv|emfesh

eniexxonmobil

hutton enerGylAne enerGy (3leGs)

lnG enerGylotos PetrobAltic

mArAthon oilmitsuinexen

orlen uPstreAmPGniG

sAn leon enerGysiluriAn-hAllWood

tAlismAn enerGytotAl

272829303132333435363738394041424344454647

DoubLeDownon

BaLTIC FLaRES

WHo’S WHo In concESSIonS

p h o t o g r a p h y B y i s t o c K p h o t o


aurelian oil & gas (aiM:aul)annasrokowskaokonskacountrymanagerul.Âniadeckich1700-654,warszawa(+48)226299037www.aurelianoil.com

BoarD MeMBershartley,roybainbridge,rowenchaŁupKa,pawełsmallwood,johnstorey,robin

holDing coMpaniesenergiacybinkasp.zo.o.energiatorzymsp.zo.o.energiaKaliszsp.zo.o.energiazachodholdingssp.zo.o.energiaKarpatyzachodniesp.zo.o.energiaKarpatywschodniesp.zo.o.aurelianoilandgassp.zo.o.

“licences with high working interests will be farmed out in the coming year, where appropriate, for example: karpaty east and west. Candidates also include Siekierki.”– Corporate presentation

corporate presentation FeBruary 2012

plans For current year

thecommercialisationdecisionfortheKrzesiƒki-1discoverymadeonpoznaƒblock207willbemadeoncethewelltestshavebeencompletedinQ12012;drillKarpatyeast-1Q42012.

plans For next 3 years

drillKarpatyeast-2,trzek4andbieszczady2(dependingonoutcomeofpreviouswells)in2013.

neeDs For services (Water, Waste, legal, accounting, etc)

wearecommercialisinggasfromtrzek-2andtrzek-3.viaalowpressure,lowmethanetieinanda“gastowire”optionasasmallerpilotdevelopment,withfirstgasexpectedattheendof2013,requiringcapitalexpenditureofapproximately€12mlnnettoaurelian.

ConCessionsname

Cybinka

Torzym

Kalisz

Poznaƒ Płónoc

4/03/p (east of

Poznaƒ)

5/03/p (east of

Poznaƒ)

Bielsko-Biała

Budzów

Bestwina

strumieƒ-K´ty

ConCessionsname

Cieszyn

Por´ba

Jordanów

mszana Dolna

Prusice

Wetlina

Bieszczady

ConCessions aCreage

1043

758

446

3520

ConCessions aCreage

700

600

965

1200

2562

BloCK numBers

410, 430

413

432

433

286, 287, 306,

307

477, 478

416, 417, 436,

437, 438, 456,

457, 458

BloCK numBers

202, 222

203, 223

249

206

207

208

411, 431

412

410, 411

410

wh

o’s

wh

o

272829303132333435363738394041424344454647


BnK petroleuM (tsx:BKx)mr.Kellybrezgergeneralmanagerpl.piłsudskiego1,00-078,warszawa(+48)225401730www.bnkpetroleum.com

BoarD MeMBersregener,wolfnelson,warren

holDing coMpaniessaponisinvestmentssp.zo.o.indianainvestmentssp.zo.o.

“The re-stimulation and testing of the lebork S-1 well is planned for the spring 2012, when temperatures are warmer.“– Press release

press release


“there-stimulationandtestingoftheleborks-1wellisplannedforthespring2012,whentemperaturesarewarmer.[weare]buildingoutthewellpadforthetrzebielinoconces-sion;drillingisexpectedtobeginbytheendoffebruary,2012.aftercompletionofthefirsttrzebielinowell,therigisscheduledtomovetothefirstindiana(bytów)concessiondrilling.”


indiana concessions:“begindrilling1stQ12012,requirementtobeginoperationsbysept2012for1stwellsanddrill&test2ndwelloneachconcessionbyjune2014.;saponis:

havetodrillandtest2ndwellbyjune2014oneachconcession.”


“the2dseismicprogramisprogressingwithapproximately50%ofthedataacquired.theprogramconsistsofabout407kmonthesaponisconcessionsand333kmontheindianaconcessions.”

ConCessionsname

starograd

słupsk

sławno

Darłowo

Bytów

Trzebielino

ConCessions aCreage

900

1050

950

1200

1200

1200

BloCK numBers

70, 90

47, 48

26, 46

45, 65, 66

48, 67, 68

47, 66, 67

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chevron (nyse: cvx)johnclaussen,countrymanageralejawyscigowa6,02-681,waszawa(+48)22460100www.chevron.com

BoarD MeMBersjones,davidsewersKi,marianclaussen,johnpsefteas,georgeromero,andres

holDing coMpanieschevronpolskaenergyresourcessp.zo.o.

“Chevron has a 6-7 well program planned for the coming months.”– Sgig

intervieW With john claussen country Manager


“wearedoing2dseismicrightnow;weplanon3dseismicnextyear.”


“weexpectpilotcommercialproductiontogoonlineassoonas2013or2014.”


“landpermittingandlandaccessingeneralinpolandisahugeissue.alsosub-surfaceinformationisscarce.”

ConCessionsname

Zwierzyniec

KranÊnik

Frampol

grabowiec

ConCessions area (Km2)

1000

900

800

1210

BloCK numBers

338, 339, 358,

359, 379

336, 337, 357

337, 338, 357,

358

339, 340

wh

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wh

o


cuaDrilla resourcesmarekmadejacountrymanagerul.syrokomili5c03-335,warszawa(+48)2281897www.cuadrillaresources.com

BoarD MeMBersmiller,markturner,petermadeja,marek

holDing coMpaniescuadrillapolandsp.zo.o.

“our own Cuadrilla rig is currently drilling in the midlands concession in the uk.”– marek madeja

intervieW With MareK MaDeja, country Manager


Marek Madeja: “weareintheearlystages,andarecurrentlygoingthroughseismic;thiswillbecompletedbyendoffirstquarter2012,anddrillingistocommencebyendof2012.”


MM: “ourowncuadrillarigiscurrentlydrillinginthemidlandsconcessionintheuK,andhasfoundshalegasbetweenbirminghamandmanchester.cuadrillaisnowdrillingathirdwellthere.”

ConCessionsname

mi´dzyrzec

Podlaski

Łuków

ConCessions aCreage

1000

660

BloCK numBers

238, 258

257, 237

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Dart ltDcountrymanageral.jerozolimskie56c00-803,warszawa(+48)226302290www.dartenergy.com.au

BoarD MeMBersroles,peteruliel,eytanbain,douglas

holDing coMpaniesdartenergy(poland)sp.zo.o.chelmllpsp.o.zo.o.

“dart’s coal bed methane concession is located on the same block as exxonmobil; dart has permission to explore the coal bed, whereas exxon has permission to explore the shale.” – Sgig

intervieW With zBignieW zuK, country Manager


zbigniew zuk: “weplantocompleteprocessingandinterpretingthe2dseismicdonelastsummeronourmilejowconcession.weareasloplanning2wellsin2012ontheuscbandchelmconcessions.”

looKing For a partner or Want to Do a jv?

sgig: formerlyknownascomposite,theconcessionsarenow100%ownedbydartenergy.

ConCessionsname

milejów

usCB

Chełm

ConCessions aCreage

372

323

760

BloCK numBers

298, 299, 318,

319

390, 391, 410

300, 319, 320

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eMFesz ng sp. z o.o.michałKołodziejekcountrymangeral.ujazdowskie4100-540,warszawa(+48)223195720www.emfesz.hu

BoarD MeMBerschilKiewicz,jurijKardapoltsev,dimitryKasatKin,Kirill

holDing coMpaniesdpvservicesp.zo.o.

“dPv is owned by hungarian emfesz, which in turn is owned by the the ukrainian Firtash group of Companies (gdF).”– Sgig


sgig:accordingtootheroperator’sfamiliarwithdpv’splans,theyareatthestageofseismicandgeologicalresearch.

ConCessionsname

54-61/98/Ł

Kraszewice

Wieruszów

mi´dzybórz

ConCessions aCreage

4870

610

560

440

BloCK numBers

272, 273, 291,

292, 293, 311,

312, 313

269

289

288

ConCessionsname

Białobrzegi-

rusinów

Korczmin

lipsko

radom

opole

lubelskie

3/2007/p

4/2007/p

Deblin-

˚yrzyn

ConCessions aCreage

724

629

1192

895

338

963

958

420

BloCK numBers

294, 274

318, 338, 339

315, 316

295, 296, 275

316, 296

233

253

297, 276, 277

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eni s.p.aal.jerozolimskie30/700-024,warszawa(+39)(0)[email protected]

BoarD MeMBerscingolani,enricocastriota,robertonapolitano,aldo

holDing coMpaniesenipolsKasp.zo.o.

“The acreage is located in the north-east of Poland and consists of 1,967 square kilometers.”– Sgig

press release


theacreageislocatedinthenorth-eastofpolandandconsistsof1,967squarekilometers.drillingoperationswereexpectedtostartin2011,withatotalexplorationcommitmentof6wells.


enihasreachedanagreementfortheacquisitionofminskenergyresourcesandtobecomeoperatorof3licencesinthepolishbalticbasin,ahighlyprospectiveshalegasplay.

ConCessionsname

malbork

elblàg

młynary

ConCessions aCreage

850

550

600

BloCK numBers

70, 71, 90, 91

71, 91, 92

51, 52, 72

wh

o’s

wh

o


exxonMoBil (nyse:xoM)adamKopyÊçpublic&govtaffairsadvisorul.chmielna85/8700-805,warszawa(+48)604490056www.exxonmobil.com

BoarD MeMBersbenavides,armandojohnston,jamesbiddle,Kevinthomas

holDing coMpaniesexxonmobilexplorationandproductionpolandsp.zo.o.exxonmobilexplorationandproductionpolandenergiachelmsp.j.exxonmobilexplorationandproductionpolandenergiazamoÊç sp.j.

“in 2011, exxonmobil complet-ed two farm out agreements. Subject to Polish regulatory approvals, emePP will retain a 51% interest and operator-ship of all concessions.”- Adam kopysc

intervieW With aDaM Kopysc, puBlic aFFairs


adam Kopysc: “in2011,exxonmobilexplorationandproductionpoland(emepp)safelycompleted:three3dseismicsurveysinwołomin,chełmandwerbkowiceconcessions;drillingandfracturingopera-tionsontwoshalegaswells:Krupe-1inthechełmconcessionandsiennica-1inthemiƒskmazowieckiconcession.”


aK:“in2011,emeppsignedtwofarm-outagreements,withhuttonenergyforfourpodlasiebasinconcessions(legionowo,

miƒskmazowiecki,wodynie-Łukówandwołomin)andwithtotalfortwolublinbasinconcessions(chełmandwerb-kowice).subjecttopolishregulatoryapprovals,emeppwillretaina51%interestandoperatorshipofallconces-sions.thesedealsdonotindicateanyshiftinemepp’sinterestinpolishshalegasopportunities.”

jiM johnson, exxonMoBil general Manager, KraKoW, sept 2011:

“onourwellsite,wetriedtoreducetrucktraffictoaminimum.wehavenotrunacrosspublicprotestsregardingsiteissues.”

ConCessionsname

Wołomin

legionowo

miƒsk

mazowiecki

Wodynie-

Łuków

“319-320”

(Chełm)

“359-360”

(Werbkowice)

ConCessions aCreage

1030

730

1030

1120

1162

995

BloCK numBers

215, 216, 235,

236, 256

194, 195, 196,

214, 215, 235

215, 216, 235,

236

216, 217, 236,

237, 256, 257,

258, 277, 278

319, 320

359, 360

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hutton energyannamaiocorporatecommunicationsmanageral.jerozolimskie8102-001,warsaw(+48)226950270(+44)(0)[email protected]

BoarD MeMBersmessina,davidmaio,frank

holDing coMpaniesstrzelecKienergiasp.zo.o.

“Through its subsidiary Strzelecki energia, hutton is the 100% owner of six concessions in Poland totaling approximately 1.3m acres.”- Anna maio


anna Maio, corporate communications Manager: “within24months,between2012and2013,huttonwillcompleteatleastoneboreholeonthesouthprabutyconcessionatasufficientdepthtoconfirmpresenceandthicknessofsilurianandordovicianshales.thecompanywillalsobeundertakinganextensiveseismicacquisitionandinterpreta-tionprogrammeacrossitswhollyownedjurassicandcarboniferousconcessions.”


Frank Maio, exploration Director: “mostcountriesineuropedon’thave3d,whichputstheseplacesbackin1985.thismeansthatthereisawholeworldofpotential.weplantodo15000acresofseismicin2012andcompleteanotherboreholewithinthenext24months.”


David Messina, commercial Direc-tor: “theproblemiswaitingtimeandhighcosts.thereneedstobemoredrillingequipmentinpoland.thereisatechnicalandimplementationgapincompletions.uptillnowsomeopera-tionswerecompromisedbecauseofthelackofproperequipment.inourbusinesswedon’twanttojustfrackawellandgetpoorresults–weneedtobeabletocomplete.”looKing For a partner or Want to Do a jv?aM: “currentactivityspanspoland,ukraine,czechrepublic,france,spainandthenetherlands.throughitssub-sidiarystrzeleckienergia,huttonisthe100%ownerofsixconcessionsinpolandtotalingapproximately1.3macres.”

ConCessionsname

Prabuty

Południowe

Koło

Podd´bice

Łódê Zachód

oleÊnica

Wieluƒ

ConCessions aCreage

481

1189

645

809

1160

888

BloCK numBers

112, 132

189, 190, 209,

210, 230

230, 231, 250

251, 252

307, 308

290, 310

wh

o’s

wh

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3legs resources plc Kamleshparmar,commercialdirectorul.chmielna13a,02-001,warszawa(+48)[email protected]/lane-energy

BoarD MeMBersparmar,Kamleshneedham,cliveronaldholt,christine

holDing coMpanieslaneenergypolandsp.zo.o.laneresourcespolandsp.zo.o.

“The benefits of developing a domestic energy supply from a clean fuel such as natural gas are potentially very significant, particularly in the prevailing economic climate.”– Peter Clutterbuck


sgig: laneenergy(3legsresources)drilledtheverticalŁebienle-1testwelltoadepthof3085min2011,recovered215mofcore,andfoundapproximately200mtobegasbearing.theŁegowowellwasdrilledtoadepthof3430m.inlate2011,theŁebien-le2wellwashorizontallfractured(thefirstinpo-land);thewellachieved2.2mmcfinitialpro-duction,whichquicklyfelloffto500mscf/d;aidedbynitrogenlift,thewellcontinuedtoflow450-520mscf/d.

plans For next 3 yearspeter clutterbuck, chief executive of 3legs (press release - 16/11/2011): “ourprimaryfocusnowisondevelopingimprovementsinhydraulicfractureandcompletiondesignwhichwillfurtherenhancewellproductionrates,inadditiontoconsid-

eringtheacquisitionofnew2dand3dseismicandthedrillingofanumberofnewwellsinthenearterm.thisiscriticalinordertoconvertthisverylargegasinplacevolumeintocommercialreserves.”

looKing For a partner or Want to Do a jv?Kamlesh parmar commercial Director: “thefarminbyconocophil-lipswasagreatwayforourbusinesstosecurefunding-viaacarry-fortheinitialfieldoperations(3dseismicanduptothreeexplorationwells),withtheaddedbenefitofaccesstotheirtechni-calexpertiseinshaleprojectsintheus.inreturn,theyhavetherighttoacquirea70%interestinourbalticconcessions,solongastheygiveusnoticetodosobymarchthisyear.”

ConCessionsname

Damnica

lebork

Karwia

Cedry Wielkie

st´gna

godkowo

glinica-Psary

Bytom-gliwice

Dàbie-laski

ConCessions aCreage

965

1000

350

800

600

750

1100

400

800

BloCK numBers

7, 27, 28

8, 28

8, 9

50, 70

51, 71

72, 92

350, 351

370

371, 372, 391,

392

tA

bL

eo

FC

on

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lng energy ltD.patrycjaKujawadevelopmentdirectorul.bagno2/22500-112,warszawa(+1)[email protected]/s/poland.asp

BoarD MeMBersafseth,davegayton,robertlarKin,paulgreen,richard

holDing coMpanieslngenergylimited.sp.zo.o.

“Poland is attractive to us because of the large resource base.”– lng Corporate presentation

intervieW With patrycja KujaWa, DevelopMent Director


patrycja Kujawa: “we’llbeshooting50kmofseismiciniławainearly2012,onewellinw´growin2012.nextthreeyearsweplanondrillingtwowellsiniławaandpotentiallymoreseismiconbothconcessions.”


pK:“lngenergyhas50%interestinmaryianisp.zo.oandjoycesp.zo.o.,lngalsohasaminorityinterestinsaponissp.zo.o.”

lng corporate presentation:

“polandisattractivetousbecauseofthelargeresourcebase(riskedgipof792tcf),superioreconomics(oil-linkedgasprices),attractivefiscalregime(19%corporatetax,abouta1%royalty),andadevelopedlocalgasmarketwithinfrastructure.”

ConCessionsname

starograd

słupsk

sławno

W´grów

iława

ConCessions aCreage

900

1050

950

729

652

BloCK numBers

70, 90

47, 48

26, 46

195, 196, 216,

217

91, 92, 112

wh

o’s

wh

o

tA

bL

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FC

on

te

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Marathon oil (nyse:Mro)johnporrettoexternalcommunicationsspecialistul.złota5900-120,warszawa(+48)223799440(+1)7136296600www.marathon.com

BoarD MeMBershubacher,carllandry,stephen

holDing coMpaniesmarathonoilareaasp.zo.o.marathonoilareabsp.zo.o.marathonoilareacsp.zo.o.marathonoilareadsp.zo.o.marathonoilareaesp.zo.o.marathonoilareafsp.zo.o.marathonoilareagsp.zo.o.marathonoilareahsp.zo.o.marathonoilareaisp.zo.o.marathonoilareajsp.zo.o.

“This partnership [nexen] provides not only financial risk mitigation but combines the extensive unconventional drilling and completion experience of marathon and nexen to fully evaluate the potential of these concessions.”– Annell bay

intervieW With john porretto, external coMMunications specialist


john porretto: “in2012,weplantodrill6-7wells.marathonoilhasdrilled,coredandloggeditsfirstwellinpoland,andisevaluatingthedata.thecompanyplanstodrillandcorethreeadditionalverticalwellsoverthenextfewmonths,anddrillatotalofsixtosevenwellsbytheendof2012.”


jp:“poland’sgeologicbasinscouldholdsignificantnaturalgasresourceswhich,ifproventoexistanddeemedcommercial,couldhaveaverypositiveimpactonpolandintermsofemployment,economicgrowthandincreasedenergysecurity.marathonoil,alongwithourpartners,isintheearlystagesofexploringandevaluatingthefullpotentialofoursignificantholdings.anydevelopment

decisionswillbebasedontheseexplora-tion/data-gatheringactivitiesinthemonthsahead.”


jp: “poland’slowerpaleozoicshalegasobjectiveissimilartomanynorthamericanplays,includingthosewheremarathonoilisactive,andweplantotransferthoseskillstothisexcitingnewbusinessinpoland.”


editor’snote:accordingtoacompanypressrelease,mitsuihasacquireda9%interestbypaying$61mln,withanimpliedvaluationof$340/acre.nexenacquireda40%workinginterestinmarathon’s10concessionscovering2.3millionacres.

ConCessionsname

Kwidzyƒ

Brodnice

orzechów

Płoƒsk s

Płoƒsk se

rypin

lidzbark

Ciechanów

sokołów

Podlaski

siedlce

ConCessions aCreage

1200

1200

1200

360

247

672

980

1189

690

680

BloCK numBers

110, 111

131, 132

179, 280, 299,

300

213, 214

194, 214

151, 152

92, 112, 132, 152

174, 194, 195

196, 197, 216,

237

217, 237

wh

o’s

wh

o


Mitsui & co. ltD.al.jerozolimskie65/7900-697,warszawa(+81)332857540www.mitsui.com

BoarD MeMBersoKano,hidekitsurugi,hiroyuki

holDing coMpaniesmitsuie&ppolandsp.zo.o.

“Poland is considered to be one of the most attractive shale gas potential areas in europe.”– Press release

press release


“seismicandothergeologicalanalysis,aswellasdrillingofexplorationwellstoevaluatetechnicalpotentialoftheconcessionswillbecarriedoutoverthenext5years.”


“polandisconsideredtobeoneofthemostattractiveshalegaspotentialareasineurope,wherethedevelopmentofshalegasbythemajoroilandgascompaniesisexpectedtoaccelerate.”


“mitsui&co.,ltd.(“mitsui”)hasenteredintoadefinitiveagreementwithsub-sidiariesofmarathonoilcorporation(nyse:mro)toacquirea9%workinginterestin10ofmarathon’spaleozoicshalegasexplorationconcessions.anotherpartnerisasubsidiaryofnexeninc.,whichownsa40%workinginterestoftheconcessions.”

ConCessionsname

Kwidzyƒ

Brodnice

orzechów

Płoƒsk s

Płoƒsk se

rypin

lidzbark

Ciechanów

sokołów

Podlaski

siedlce

ConCessions aCreage

1200

1200

1200

360

247

672

980

1189

690

680

BloCK numBers

110, 111

131, 132

179, 280, 299,

300

213, 214

194, 214

151, 152

92, 112, 132, 152

174, 194, 195

196, 197, 216,

237

217, 237

tA

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nexen incjarosławraczynskigeneralmanagerul.wiejska17/500-480,warszawa(+1)4034709184www.nexeninc.com

BoarD MeMBersftorKova,petraharvey,lewisburgess,KarenQuarlesvanufford,andrew

holDing coMpaniesnexenpetroleumpolandsp.zo.o.

“we are in Poland for a reason: we have experience and we are using this experience in europe.”– jarosław raczynski

intervieW With jarosŁaW raczynsKi, general Manager


jarosław raczynski: “weareanexpe-riencedshalegasoperatorincanada.it’sgoodforpeopletounderstandthatweareinpolandforareason:wehaveexperienceandweareusingthisexperienceineurope.”


jr:“thechallengeinnorthamericaisthegasprice.therocksaregood.thepotentialforproduction,especiallyinbritishcolumbia,isfantastic,butthepricesarequitedepressed(...)lot’sofpeopleexpectthepricetobestrongerineuropeinthefuture.”


jr: “weareanon-operatoronouracreagebutweareworkingclosewithmarathon.wehaveatechnical(uKbased)teamandtheyarecooperatingwithmarathon.”

sgig: nexenhas40%interestin10outof11marathonconcessions.

wh

o’s

wh

o

ConCessionsname

Kwidzyƒ

Brodnice

orzechów

Płoƒsk s

Płoƒsk se

rypin

lidzbark

Ciechanów

sokołów

Podlaski

siedlce

ConCessions aCreage

1200

1200

1200

360

247

672

980

1189

690

680

BloCK numBers

110, 111

131, 132

179, 280, 299,

300

213, 214

194, 214

151, 152

92, 112, 132, 152

174, 194, 195

196, 197, 216,

237

217, 237

tA

bL

eo

FC

on

te

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s


silurian hallWooD plcwilliammarblechiefoperatingofficerul.górnoÊlàska16/1700-432,warszawa(+48)[email protected]

BoarD MeMBerssKrobowsKi,wieslawsutherland,munromarble,williamguzzetti,billmeduna,russell

holDing coMpaniessilurianenergyservicessp.zo.o.siluriansp.zo.o

“i’m not worried about Polish shale. in my entire career, i’ve only seen one shale, in Texas, that we weren’t able to produce.”– william marble

intervieW With WilliaM MarBle, coo


William Marble: “currently,weareprepar-ingtodotwoexplorationwellsonouracre-ageinn.poland.atpresent,wehavenoplansforseismic.”

plans For next 3 yearsWM:“weareveryenthusiasticaboutpolishshales,andaboutshaleingeneral.wearedevelopingabusinessplananticipating40yearsofproduction.”


sgig: “silurian-hallwoodisajointventurebetweenpetrolinvestownedsilurianandn.americanoperatorhall-wood.inthefallof2011,afteraprivateplacementinvestmentround,silurian-hallwoodsuccessfullyraised$20mlnfortheirexplorationprogram.”

ConCessionsname

lidzbark

Warmiƒski

W´gorzewo

goldap

ConCessions aCreage

895

130

620

BloCK numBers

73, 74

56

57, 58, 59

wh

o’s

wh

o


talisMan (nyse:tlM)tomaszgryzewskicorporateaffairsul.emiliiplater5300-113,warszawa(+48)[email protected]

BoarD MeMBersKuijper,renevansandicK,leonard

holDing coMpaniestalismanenergypolskasp.zo.o.

“in north Poland, we’ve proven that the gas exists.”– Tomasz gryzewski

intervieW With toMasz gryzeWsKi, corporate aFFairs


tomasz gryzewski: “weplanon3verticalwells,andahorizontalwellbasedononeoftheverticalwells.”


tg:“innorthpoland,we’veproventhatthegasexists.companiesarestartingtothinkaboutmid-stream.we’rewellpositionedbecausethepomeraniaregionseemstobemoredevelopedthancentralpoland.”

Miscellaneous

tg: “thepolishgovernmentisnotlikelytoinvestinnumeroustransmissionandrefiningprojects.likelyoperatorswillhavetothinkaboutdevelopingtheirownsolutionsonasmallerscale.”

ConCessionsname

gdaƒsk W

Braniewo s

szczawno

ConCessions aCreage

780

1043

603

BloCK numBers

48, 49

52, 72, 73, 92,

93

151, 152

bAker huGheshAlliburton

schlumberGerWeAtherford

50515253

DoubLeDownon

BaLTIC FLaRES

WHo’S WHo In SERvIcES



BaKer hugheseuropeheadQuarters:bakerhughesgmbhbakerhughesstrasse129221celle,germany

personel:adriantopham,businessdevelopmentjensrodiek,countrymanager

ManageMent BoarD:frankKoehrmannronniemacgregor

polanD:regusmetropolitanpl.piłsudskiego300-078warsaw,polanddirect:+48224490111nip:5252471931Krs:0000325223

clients incluDe:marathonexxonmobilpgnigaurelian

aBout us: bakerhugheswasestablishedingermanyin1957,aschristensendiamondproducts.bakerhughesinternational(bhi)formedin1987afteramergerbetweenbakerinternationalandhughestoolcompany.

Kit storage: duringQ22012bakerhughespolandspz.o.owillopenanoperationalsupportbasenearwarsawtoreducemobilisationtimesandcosts.

coMpetitive aDvantage: bakerismovingawayfromlegacyproductlinesandwilllikelysimplifytheirbrandingtobhioverthecomingmonths.internation-allyrecognized,bhihasbeenoperatingincooperationwithseveralpolishoilfieldservicecompanies.

on personnel: bakerhughesisestablishedinpoland,andhastrainedemployeesatlocalcompaniesinclud-ingdiamentandzrgKrosno.

gooD to KnoW:bakerhughesprovidedthepumpingequip-mentonthepgnigtightgaswellniebieszc-zany-1alongwithzrgKrosno.

in their WorDs: “boththeu.s.andeuropeanregulatorysystemsarefairlyonerous,soit’slikelybothusandeuropeanchemicalscanbeusedinter-changeably.”–adriantopham,april2011inwarsaw

The bAker hugheS heAdquArTerS in Celle germAny SuPPorTS 1200 PeoPle And A rAnge oF ProduCTS


halliBurton halliburtoncompanygermanygmbhsp.zo.o.lubicz2331-503Kraków,polandtel:(+48)224707900nip:526-106-28-30Krs:0000333519

personel:markswift,businessdevelopmentjerzywozniak,countrymanager

ManageMent BoarD:jerzywozniaktakojanKremerwernerchristiandonke

clients incluDe:bnK/saponismarathonchevronenipgnigaurelian

aBout us: oneofthelargestoilfieldservicescompaniesworldwide,basedinhoustonanddubai,halliburtonhaschosentolocatetheireuropeanbaseofoperationsinwarsaw.

polanD operations: halliburtonoperatesinpolandfromabaseinteresin,40kmwestofwarsaw.halliburtonservicessupportedfromthisfacilityincludedi-rectionaldrilling,mwd,lwd,cementing,coiltubing,pressurepumpingandstimulation,wireline,drillbitsandcoringandcompletions.

coMpetitive aDvantage: halliburtonhasover50yearsofeuropeanexperienceinpressurepumpingandstimula-tion.thetechnologyusedbyhalliburtontounlocknorthamericanshaleshasnowbeendeployedtopolandtohelpoperatorsdeveloplocalshaleopportunities.

on personnel: atyear-end2011,halliburtonemployed100polishnationalsinpolandandacrosseurope.manyhavebeensenttonorthamericatotrainintheshalebasins.polishtrainedspecialistsincludethedisciplinesofgeomechanics,petro-physicsandstimulationengineering.

gooD to KnoW:in2010,theycompletedthefirsthydraulicshalefracturingprograminpolandworkingforpgnig,thestateoilandgasoperator.

in their WorDs: “halliburtonhasbeenactiveinpolandforclosetotwodecades.whatbeganwithsoftware,wellloggingandequipmentsaleshasgrowntoincludethefullsuiteofhalliburtonservices.”-markswift,continentaleuropemanager,december2011interchangeably.”

se

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es

An ArTiST’S render-ing oF The ForTh-Coming STorAge kiT And mAinTenAnCe FACiliTy bASed in TereSin.


schluMBerger oilFielD eastern liMiteD sp. z o.o.alejajanapawłaii25,7thfloor00-854warsaw,polandtel:(+48)225262060nip:107-001-64-55Krs:0000352578

personel:dougbentley,businessdevelopmentstanisławzwolan,countrymanager

ManageMent BoarD:amressawieileenhardellhichembenmohamed

aliharikiKenghengangmichaeltjahjanaivanavuckovicvivienchanabrahamverburgsaullaurelesclients incluDe:marathonlaneenergy/conocophillipssanleontalismanbnK/realmchevron

aBout us: schlumbergeristheworld’slargestoilfieldservicescompanyinoperationsince1926.inpoland,theyoperateafullrangeofdrillingandcompletionservices.

coMpetitive aDvantage: internationallyknownasoneofthebigfouroilfieldservicescompanies,schlumbergerwasthequickesttoscaletheiroperations,andnowoperateafullstaffoutofanofficetowerinwarsaw.

Kit storage: previoustothepolishshaleboom,bucharest,romaniawasschlumberger’smainbaseofoperations.in2012,schlumbergerwillopenafacilityinwołomin,north-eastofwarsaw.

plans For polanD:althoughthereisnopublicestimateofschlumberger’sspendingprogram,likelytheywillmakewarsawthebasefortheircentraleuropeanoperations.

gooD to KnoW:schlumbergerdidthehydraulicfracturingonlaneenergy’sŁebienle-2well,thefirsthorizontalwelltobefracturedinpoland.

in their WorDs: “naturalgasisagrowthbusinesseverywherebecauseitisenvironmentallysensitive.itwillcomeoutasabridgingfuel.”–dougbentley,businessdevelopment,schlumberger,nov2011

SChlumberger wAS ArguAbly The quiCkeST To SCAle Their PolAnd bASed oPerATionS.

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to be completed in Q2 2012. Weath-erford is now firmly established in Poland.

We offer all the services to deploy strategies for Reservoir Quality – “Geographic Sweet Spot” (Core labs,

unconventionAl resources Are an extension of Weatherford’s exist-ing core capabilities. Weatherford has recently opened a brand new 400 sq meter office in downtown Warsaw as well as a new 5,000 m² base due

weatherford’s commitment to its Polish part-ners and clients was recently show cased at an event near zielona góra , where, on the 14th of September 2011, weatherford co-organized the diament open day outdoor event together with the Poszukiwania naftowe diament Company.

r a F a Ł F r y z o W i c z , B u s i n e s s D e v e l o p M e n t M a n a g e r p o l a n D

weatherfordinpoland

lab for unconventional and seismic interpretation) increasing Drill-ing Quality – “Vertical Sweet spot” (surface logging, directional drilling, LWD/MWD, logging and interpre-tation) and deploying Completion Quality – “Lateral Sweep Spot” (stimulation, flow back, micro seis-mic, completion tools and water and solid management).

FULL RANGE Today we are creating a new bench-mark by answering Poland’s call for high-quality products, services and efficiency in conjunction with a fo-cus on advanced technology. We are taking the opportunity to round out our core service offerings to provide integrated solutions from reservoir to wellhead; from core sampling and analysis in our lab in Hannover, to integrated completions with our 20,000 HHP frac fleet; micro seis-mic and Zone SelectTM multistage tool; from our assure conveyance options for logging to the GC Trac-erTM for productivity prediction, and from our MotarySteerableTM and cementing services to flow back testing and water management equipment, all are available in Po-land in 2012.

On the evaluation side of the equa-tion, Weatherford, has amassed a complete tool kit for meeting the highly data intensive exploration and evaluation needs in the mar-ket. From Microseismic, Compact logging, LWD, Mud Logging, and RockWise, Weatherford offers a com-prehensive package of high end tech-nology custom fit for unconventional

SourCe: weATherFord

logging uniT during diAmenT oPen dAy evenT neAr zielonA górA.


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plays. Those high end services are supported with extensive 24 hour expertise in unconventional formation evaluation and interpre-tation products add tremendous value to any project.

Furthermore, the Weatherford value added package, also includes two important points during the design phase: reduce foot print and minimize environmental impact. Specifically, Weatherford has im-plemented a specific methodology within Continental Europe by in-troducing low emissions, low noise pollution, and small footprint equipment.

With these and other initiatives, Weatherford keeps evolving within the market where the sole objective is to deliver the highest quality ser-vices while offering the most flex-ible options to our client base.

The drilling, completion and lo-gistic challenges are great but the rewards will be greater and Weath-

erford will participate in all the stages to meet and exceed expecta-tions. All with the same endurance, persistence and hard work that have shaped the country’s own identity, Weatherford has come to stay in Po-land.

OPEN DAYWeatherford’s commitment to its Polish partners and clients was re-cently show cased at an event near Zielona Góra , where, on the 14th of September 2011, Weatherford co-organized the Diament Open Day outdoor event together with the Po-szukiwania Naftowe Diament Com-pany.

Several of Weatherford’s product lines were invited to show their equipment and services in a large outdoor opening in the polish coun-try side. The following Weatherford product lines participated in the show and presented their equipment: Directional Drilling, Liner Hang-

ers, Completions, Wireline Logging including 2 Wireline Trucks, Frac-turing Equipment including Blender and Hydration Unit.

During the event Diament also displayed their complementary equipment. All our equipment was accompanied by skilled personnel and experts providing explanations to interested customers with regards to the benefits and features of our equipment as well as the operations in question.

Our well versed experts provided power point presentations to the attending audience, presenting ap-proximately 5 hours of high tech knowledge to the satisfaction of our customers. Some of topics presented including a comprehensive intro-duction to Weatherford, Directional Drilling, Shale Completions, Wire-line Logging & Microseismic, Frac-turing, Frac Water Management and Project Management.

SourCe: weATherFord

hydrATion uniT during diAmenT oPen dAy evenT neAr zielonA górA.


by the numbersCountry by country comparison of Poland with respect to

other european and north American countries

usA (tx) usA (PA) cAnAdAfiscAl reGime *

royalty rate **

corporate income tax ***

income tax loss treatment

Government take ****

GAs Production

Annual Production (bcm)

domestic consumption (bcm)

net exports (imports)

Gas Price ($/mmbtu) †

country indicAtors

GdP/capita (2010 $usd)

roadways (km)

roads (km/capita)

Population

land Area (sq km)

Population density (pop/sq km)

7.5% + $0.0003 /mcf

franchise tax

carry forward

varies

160

95

65

$4.20

46,000

405,000

0.017

24,000,000

696,000

34

5% (Alberta)

15% (Alberta)

carry forward

20%

178

92

86

$4.20

40,000

1,042,000

0.032

33,000,000

9,900,000

3

10-20%

10%

carry forward

varies

5

22

(-17)

$4.20

46,000

156,000

0.013

12,000,000

119,000

101

SourCeS: world bank statistics, CiA world Factbook, (PA gas production from PA geological Survey, TX production from Texas railroad Commission)

* methods of calculating fiscal regimes vary. For instance, germany gives a preferential royalty to coal bed methane. Poland has a royalty rate that varies from high to low methane and might be revised under the new geology and mining law. France has both “community” and “department” royalties. in the uS, royalty rates are negotiated with the landowner. in Alberta, the government has a low royalty rate to attract investment.

north AmericA

PolAnd GermAny ukfrAnce

$0.05 / mcf

19%

carry forward

20-45%

5

16

(-11)

$14.60

11,200

424,000

0.011

38,400,000

312,000

123

$0.05 / mcf

34%

carry forward indefinitely

30-40%

2

47

(-45)

$8.80

41,000

951,000

0.015

64,000,000

640,000

100

9-35%

31%

carry forward

35-50%

20

97

(-77)

$8.80

40,600

644,000

0.008

82,000,000

357,000

230

20-30%

30%

carry forward

60%

84

91

(-7)

$5.80

35,000

398,000

0.007

61,000,000

242,000

252

turkey

12.5%

28%

carry forward 5 years

40%

1

26

(-25)

$5.60

8,200

426,000

0.006

76,000,000

783,000

97

** royalties in the u.S. are agreed upon between gas company and landowner. *** France has an income tax deduction that is either 23% of revenue or 50% of profit. **** government take is an estimate of total royalties and taxes † gas Prices (2010) in uSA & Canada given by average henry hub price on uSmeX, eu countries from energy portal (www.energy.eu) for industrial users. Turkey price of gas from current contract price with Azerbaijan. Poland from negotiated price with gazprom.

north AmericA

interpretation:pol anD pays a hig he r price For ga s than othe r eu countriespol anD ha s a royalt y reg iM e that is a Mong the Most Favor aB lethe l arg est econoM ies in the eu are net ga s iM porte rs

member countries of the euroPeAn union

what keeps lng energy’s Patrycja kujawa busy in her travels through Poland? A lot of listening to what local communities have to say.

It takesa village

To raise a drilling rig

it’s sAturdAy eveninG, deep De-cember. The mayor of Jadów, a vil-lage an hour outside Warsaw, holds up a shot of twice-distilled Kentucky bourbon and encourages everyone at the table to join him: “Here’s to shale gas!”

What’s not really quite clear at the start of the dinner is whether he’s drinking to the future of the village or thanking one of his guests: Patry-cja Kujawa, the business development manager for LNG Energy. Ms. Ku-jawa’s company sponsored the party

B y p a r K e r s n y D e r p h o t o g r a p h y B y s z y M o n s z c z e s n i a K

to celebrate the opening of the com-munity’s first cultural center.

Last year, Ms. Kujawa was hired by the listed Canadian junior to oversee the company’s Polish interests, par-ticularly two concession blocks held jointly with San Leon Energy in the Baltic and Podlasie basins. The com-pany also has a 20 per cent stake in the BNK-operated Saponis group that holds three Baltic basin concessions. Since then, Ms. Kujawa has been responsible in part for mediating be-tween the needs of oil and gas com-

panies and the communities where they’ll locate their wells. Jadów is one of the locations where LNG Energy is thinking of drilling. Community relations is just part of her job. Ms. Kujawa is away most weekends. This time, she’s in Jadów to accept the mayor’s toast. CR IN PRACTICEMs. Kujawa is no stranger to the oil patch, having worked in Alberta, Canada - home to the oil sands and Canada’s largest conventional depos-

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SourCe: PATryCjA kujAwA

“These guys have my cell phone number, and they call if they need anything. That’s what community relations is about: getting out there and putting yourself in front of the people who live where you want to drill.”

– Patrycja kujawa, lng energy

its. First she covered Canada’s north-ern oilfield as a reporter, then as the editor of an oil magazine, and then as graduate student of natural resource economics at the University of Al-berta.

Though she may have sharpened her teeth reporting from the oil sands, she learned the trade first hand from her father, a mining engineer who’s career took him from the Polish coal mines to mining towns in Canada. Ms. Kujawa grew up in the far north in places dependent upon resource extraction – from gold to iron ore to uranium.

Upon moving to Poland, she went

to work for LNG Energy, grooming communities for the sight of drill-ing rigs and pump trucks. Her em-ployer might never drill in Jadów, or a number of the dozen or so locations Ms. Kujawa has visited over the last year. But in the event they do, the local sołtys (village administrator) and mayor will know what to expect before a large drilling rig dots the sky-line.

At a recent shale gas conference in November 2011, Ms. Kujawa shared her perspectives on community rela-tions, while showing a photo from a newspaper in one of the communities where LNG Energy is drilling. The

company’s president and CEO, Da-vid Afseth, was photographed among local villagers trying to drive a nail in with the sharp edge of an axe in a ritual that involves taking a shot of vodka each time you miss.

“These guys have my cell phone number, and they call if they need anything. That’s what community re-lations is about: getting out there and putting yourself in front of the people who live where you want to drill,” Ms. Kujawa says.

Her efforts have born some inter-esting fruit: one gentleman called her to ask for a job, another to de-scribe seismic work going on in his backyard. Occasionally, as in Jadów, LNG Energy will be asked to show its support by sponsoring a cultural event.

BEEN THERE, SEEN THATAlthough Ms. Kujawa was born in Poland, she grew up in Canada. After receiving a two-year diploma in jour-nalism, she worked in Fort McMur-ray, in northern Canada, far away from the city life in Edmonton and Calgary.

Ms. Kujawa lived there, absorbing the life of a work camp, where she witnessed firsthand the cultural dev-astation of a boom town. In her view, Ft. McMurray was poorly equipped to handle the influx of oil workers. Partly as a result of the transient na-ture of their jobs, Ms. Kujawa saw the alcoholism and broken families the workers left behind.

“i’m An environmenTAliST who loveS nATure.”


Oil sands in Alberta, Canada

SourCe: new world ATlAS, rePrinTed wiTh PermiSSion

0 200km 200Miles

As a journalist, she wrote about the oil patch for magazines and newspa-pers reporting on industry hot topics: the effects of sour gas, the debate on seismic vibrators, the social impact of the oil sands. After completing her master’s thesis, she wrote an energy economics column for an industry publication where she reported on the shale boom in the country of her birth.

After moving to Poland, Ms. Ku-jawa started traveling through the country, keeping a watchful eye on the communities she promises will share in the benefits. Having sharp-ened her sense of fairness, Ms. Kuja-wa is quite convinced that Jadów will not be another Ft. McMurray. “Gas extraction is not as exhaustive and locally concentrated as produc-tion from the oil sands. Company towns won’t spring up around gas rigs. It’s rather that people living close to drilling operations are going to see increased demand for services and la-bour at certain times of the year. This is much easier for communities to absorb and adapt to in a positive way,” Ms. Kujawa says.

An avid triathlete and a long dis-tance runner, now she spends most of her time running between various government offices.

“I’m an environmentalist who loves nature,” she says. “But I also have a pragmatic point of view. I believe eco-nomic development depends on the efficient use of natural resources.”


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After the land grab, the next stage of market development dictates de-risking the acreage by farm-in agreements. As seismic and drilling program increase, farm-ins will play a more important role.

The farm-ingame

in shAle GAs mArkets, there is a gap between parties that hold prospective acreage and those with technology and access to financing. The bulk of the acreage has now been distributed in Poland. The next step will be reshuffling it so that the acre-age holders and the companies with know-how can team up to produce the actual gas.

An early example of this in Poland was the ConocoPhilips and 3Legs Resources farm-in agreement from 2009. ConocoPhilips would fund seis-

mic exploration and the drilling of up to three wells in return for the right to acquire a 70 percent interest in 3Legs’ Baltic acreage of 4,000 square kilometers, or 1 million acres. Cono-coPhilips has until March to produce a notice to acquire 70 percent interest in 3Legs’ acreage.

“This farm-in was a great way for our business to secure funding, via a carry, for the initial field operations - 3D seismic and up to three explora-tion wells - with the added benefit of access to [Conoco’s] technical exper-

tise in shale projects in the US,” said Kamlesh Parmar, 3Leg’s country manager in Poland.

Following the farm-in, the develop-ment of 3Legs acreage’s got underway. Two vertical well tests were drilled in 2010, both of which encountered organic rich shale. Last year the ven-ture also drilled two horizontal shale test wells – believed to be the first horizontal wells targeted at shales in Europe.

“We are at the forefront of this ac-tivity in Poland and already have a

B y j o h a r p e r p h o t o g r a p h y B y M i c h a Ł n i W i n s K i & B o g D a n n i e z n a n y 1 l o t . p l


“The shale gas industry is relatively new in Poland and there are still a lot of unknowns, so anything that enables participation by multiple operators

has got to be a good thing.”– kamlesh Parmar, 3legs resources

couple of laterals down, while the other operators in Poland are all at various stages of their own drilling campaigns. All of Poland’s acreage that has shale gas potential now looks to be licensed up so the initial grab for acreage is now almost over,” Parmar said.

Farm-ins may be industry standard but are not easy to implement in Po-land. “As far as I’m aware, there is no legal basis for farm-ins in Poland,” said Greg Pytel of the Sobieski Insti-tute in Warsaw. He adds, however, that companies are finding ways for actual farm-in agreements.

“Legally no license can be just shared with anyone and it cannot be split into what are essentially equity stakes in a new enterprise. Compa-nies have been trying to solve this by keeping one licence, or very few licenses, per one registered subsidiary of the mother firm and then sharing the shareholding out at the subsidiary level. This may lead to ownership am-biguities,” Mr Pytel said.

Apparently, operators remain un-fazed about how much mess farm-ins could cause in the ownership struc-ture on each operator’s acreage. “The shale gas industry is relatively new in Poland and there are still a lot of unknowns, so anything that enables participation by multiple operators has got to be a good thing,” Mr. Par-mar said. “Farm-ins facilitate sharing and leveraging up of know-how.”

“There are standard farm-ins and de facto farm-ins, the difference being the legal status of ownership of the li-cense, which could be problematic in the future, but at this stage provides some flexibility,” said one industry source who preferred to remain anon-ymous.

Selected Polish farm-in deals

3 Legs/Conoco Phillips

Date announcedGros acreageInterest aquiredCash paid ($m)

Program cost paidCarry ratioProgram details

OperatorshipEstimated grossProgram cost (US$m)

Implied value of carry ($m)Implied value – $/acre

August 6, 20091,0078,000

70%7

100%1.43x

Seismic & 3 wells(1 horizontal)

ConocoPhillips*Up to $38m

18.424

October 13, 2009720,00053.23%

3

73.33%1.38x

Undefinied

BNK$25

821

June 9, 20112,100,000

9%61 (as reported

by press)NaNaNA

MarathonNA

NA340

March 1, 2010598,000

60%2.14

100%1.67x

Seismic up to 6 wells (up to 3 horizontal)

Talisman$80-120m

42.14117

BNK/RAG&Sorgenia

San Leon/TLM

Marathon/Mitsu

SourCe: jeFFerieS

*3legscurrentlyoperator;operatorshiptransferstoconocophillipsiftheyesercisetheiroptiontotake70%.

Standard farm-ins are more clear-ly defined financial contracts, while their de facto sibling can evolve, the source said, within a less struc-tured, open-ended format. “This is a suck it and see style of coopera-tion,” the source said, noting that flexibility could be both an advan-tage and potentially a downside.

“The unknowns are still large in terms of what is possible at most levels in this industry, so the open-ended arrangement could leave some of these entities - on both sides - looking for tighter arrange-ments down the line, but by then it could be too late for them. It all depends at this stage on how much risk they want built into the initial

agreement,” the source said.According to Henryk Szlajfer, who

is conducting independent research into shale gas in Poland, another key factor in farm-ins and cooperation is how much of the future revenues from shale gas production stay in Po-land.

“Wherever capital comes from at this stage is less important than where it ends up once production be-gins on an industrial scale,” Mr. Szla-jfer said. How Poland will manage the shale gas revenue stream is still being worked out, which adds to the mar-gins of error in estimating technical, political and economic outcomes that farm-ins attempt to narrow.


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CeA volluT PArunT diS rerePer uPTATi-AePere volenT eT iS enim Suqu

no longer are the upstream markets in Poland dominated by state-owned companies like nafta Piła and geofizyka kraków. The last twelve months have seen a number of new entrants in oilfield services.

new Entrants

B y p a r K e r s n y D e r p h o t o g r a p h y B y Ł u K a s z o s t a l s K i / r e p o r t e r


AccordinG to Radovan Jedlicka, business development manager for MND Drilling, the services market has changed considerably in the last 12 months. “Last year’s story was the challenge getting access to the market. This year, it’s about market share,” he said at a November 2011 conference in Warsaw. MND Drill-ing, a Czech based company, moved into the market to drill for ExxonMo-bil.

In addition to the Czech company, two drilling contractors, KCA Deutag and Drilltech, are other two new en-trants who made inroads with Poland-based operators. KCA Deutag is drilling on Mar-athon’s acreage, in a program that may com-plete six wells by the end of 2012. Drilltech picked up the contract for ENI, the Ital-ian operator at work in North Poland on a five-well program.

Among seis-mic compa-nies, Global Geophysical set up shop in Warsaw after coming to Poland to do the seismic work for Marathon Oil. Acoustic Geophysical, moved into the market by securing the seismic work for Lane Energy, op-erating acreage in northern Poland in partnership with ConocoPhillips.

United Oilfield Services (UOS), a So-ros-backed startup, raised tens of mil-lions in private equity, and is trying to land their first contract in Poland. Cezary Filipowicz, a former Orlen executive who hired the current CEO Wiesław Prugar, was brought on as a business development manager.

NOT JUST OILFIELDUOS president Dennis McKee sees the kind of opportunity in Poland that he formerly saw in the U.S. basins where he worked for a decade. “The bottom line is I’m an engineer by trade and I see great opportunity here. I’ve built four different service com-panies over the last ten years, and our hope is to bring the right technology and equipment to drill and complete wells in Poland,” Mr. McKee said.

Other companies whose core busi-ness is not in the oilfield are expand-ing to target unconventionals. NTS, a construction company, will put its graders and stabilizers to work building well pads. LST Capital, a fund, announced plans in the fall to construct a ceramic proppant fac-tory. The first stage of the investment will be to develop a production plant, which would produce 40,000 tons of ceramic proppant per year in 2014, the first year of the plant’s operations. Stakeholders in the project aim, how-ever, to increase proppant production to 200,000 tons annually by 2020. The proppant production plant will be located in the powiat (county) of ary, in the Gorzów Wielkopolski/Zielona Góra province.

GOING BIGGERThe big four are expanding to new markets. Weatherford began in Po-land with well testing and is now offering a full suite of services from wireline to mud logging to comple-tions.

“In the fall we held an open day in west Poland and got the operators out to see all our equipment,” said Rafał Fryzowicz, Weatherford’s business de-velopment manager. Staging formerly out of Germany, new kit is on order for the Polish market. Schlumberger and Halliburton have both chosen Po-land as the center for their pan-Euro-

pean operations.Looking to be

kept busy in Po-land for several years, Schlum-berger bought and remodeled a storage/mainte-nance facility in Wołomin. Baker Hughes is open-ing a staging and maintenance fa-cility, which will be located 15 km northwest Was-raw. Halliburton will also open a new facility in

Teresin, 40 km west of Warsaw.Some entrants are new to Poland

altogether. Viking, owned by Trans-atlantic, won the ION operated Min-istry of Environment 2D seismic con-tract and aims to shoot over 1500 km across Poland.

“The bottom line is: i’m an engineer by trade and i see great opportunity here.”– dennis mckee, united oilfield Services.”

“last year’s story was the challenge getting access to the market. This year, it’s about market share.” – radovan jedlicka, mnd drilling


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Comparison of shale basins in North america and Poland

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it is Well knoWn that the reservoir properties of shales found in Poland are very similar to those of the Barnett Shale in the United States. The Barnett Shale has been labeled the grandfather of shale reservoirs where “shale as a source rock” was first established. The Montney, Haynesville and Marcellus formations can also be used as close comparisons as shown in the table below.

From the first well results obtained from Poland shales, it’s clear that different approaches will be needed in order to optimally exploit the significant reserves. Packers Plus specializes in open hole multi-stage fracturing systems and is well positioned to enable operators to realize the potential of these reserves.

p a c K e r s p l u s

packersplusopenholemulti-stagecompletionshowtomaximizerecoveryfromunconventionalreservoirs

Canada USa Poland

Montney Barnett Haynesville Marcellus carBoniferous BalticBasin

dePth,ft 6,500-11,000 6,500-8,500 11,000-13,000 4,000-8,000 6,500-10,000 7,000-14,500

GroSSthiCkneSS,ft 1,000-1,400 150-700 1,200-1,300 50-300 2,600-3,200 500-2,500

netthiCkneSS,ft 450-525 100-600 200-350 50-250 200-600 200-800

thermalmatUrity(ro),% 2.2-3.8 0.8-1.3 1.8-2.5 0.7-2.15 1.3-2.0 1.2-2.6

toC,% 1.0-5.0 4.5 0.5-4 1.0-5.0 1.0-5.0 0.7-9.9

SiliCaContent,% 45-60 35-50 34 20-60 20-60 25-63

ClayContent,% <35 33 20-35 34–44

totalPoroSity,% 2.0-4.5 4.5 8-15 1.6-7.0 4-8

Permeability,nd 250-450 70-500 377

GaS-in-PlaCe,bCf/SeCtion 130-320 50-150 200-250 40-130 200-PreSSUreGradient,PSi/ft 0.65 0.46-0.50 overPreSSUred 0.45-0.60 0.45-0.60 0.40-0.60

cAse study - bArnett shAle neWArk eAst field

This case study compares open hole and cased hole completions in the Barnett Shale. Many such compari-sons are available for various tight oil and gas formations, all of which share a common theme: open hole completions outperform cased hole completions (Snyder and Seale, 2011; Wilson et al., 2011).

SourCe: ComPAny dATA



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*stagefracisamarkofschlumbergerlimited;allremainingmarksareproprietarytopackersplusenergyservicesinc.someorallofthesystems,methodsorproductsdiscussedhereinmaybecoveredbyoneormorepatents,orpatentspending.©2011packersplusenergyservicesinc.allrightsreserved.

BACKGROUNDLocated in the Fort Worth Basin and covering approximately 5,000 square miles of north-central Texas, the Barnett represents the grand-father of shale reservoirs where the necessary set of technologies were developed to make hydrocarbon ex-traction economically feasible in shale. These technologies include horizontal drilling and multi-stage fracturing, which together have allowed for economic exploitation of this very tight gas reserve (<0.5 microdarcy perme-ability, 3 to 5% porosity). A number of fracturing meth-ods have been attempted in the Barnett Shale including open hole, single stage “Hail Mary” fracturing; cemented liner, limited entry fractur-ing; cemented liner, multi-stage fracturing; and open hole, multi-stage fracturing.

THE CHALLENGEAn operator working in the Newark East Field in the core area of the Barnett Shale (Fig-ure 1) had used the conven-tional cemented liner “plug and perf” method multi-stage fracture their horizontal wellbores. Due to the numerous operations and equipment required for this method, the operator sought a more effective multi-stage fracturing solution. The operator’s goals were to reduce costs, simplify the completion process and eliminate long standby time during fracture treatments. The hope was to at least maintain equivalent well productivity achieved with the con-ventional cemented liner, plug and perf methodology.

THE SOLUTIONBetween 2004 and 2006, the opera-tor chose to run Packers Plus Stage-FRAC* systems to complete their wells in Denton County, Texas. StageFRAC is an open hole, multi-stage fracturing system that uses hydraulically set, mechanical Rock-

SEAL® II packers instead of cement to isolate sections of the wellbore, and FracPORT™ sleeves to create openings in between the packers for fracture treatment.

Size-specific actuation balls are injected into the system to allow for hydraulic opening of the FracPORT

sleeves. The balls create internal isolation from stage to stage, elimi-nating the need for bridge plugs. The major advantage of the StageFRAC system is that all the fracture treat-ments can be performed in a single, continuous pumping operation with-out the need for a drilling rig, saving time and costs. Once stimulation treatment is complete, the well can be immediately flowed back and pro-duction brought on line.

THE RESULTSThe StageFRAC completed wells achieved the operator’s goals by eliminating two weeks of comple-tion operation time. An unexpected benefit of the StageFRAC comple-tions was a dramatic reduction of excessive fracture initiation pres-sure, as high fracture gradients are

a characteristic of shale rock. On earlier cemented liner treatments, it was common that some hydrau-lic fracture treatments could not be initiated on some stages simply due to excessively high breakdown pres-sure.

Long-term production from Stage-FRAC completed wells was compared with all non-verti-cal wells in Denton County completed from 2004 to 2005 (Lohoefer et al., 2010). Up to 60 months of produc-tion from over 200 wells were evaluated. One, two and five year cumulative gas values were determined for each non-vertical well completed from 2004 to 2005 and then averaged to determine the production for the field at each time point. Similarly, cumulative production values were calculated for five Stage-FRAC wells and averaged for each time point. At each time point the StageFRAC com-pleted wells outperformed the non-vertical offsets for production increases of be-tween 25% and 37% (Figure 2). Therefore, the StageFRAC completions accomplished

all initial efficiency objectives and, after five years of long-term produc-tion history, the additional benefit of improved production.

REFERENCESLohoefer, D., Snyder, D.J. and Seale, R. 2010.Snyder, D. and Seale, R. 2011.Wilson, B., Lui, D., Kim, J., Kenyon, M, McCaffrey, M. 2011.

For more information visit www.packersplus.com

Cumulative production for StageFRaC and non-vertical offset

wells in denton County


the stAte-oWned Polish Oil and Gas Company (PGNiG) and PKN Or-len - via its subsidiary Orlen Upstream - have both secured sizeable acreage along Poland’s shale belt from Gdaƒsk to Lublin. In a short time, both will be looking to de-risk the holdings and build value upon them.

Both companies might consider farming out their acre-age or farming in into others’ conces-sions. Super majors such as Exxon Mobil and Chevron, or smaller play-ers like BNK Petroleum, are already reported to mull over going into busi-ness with the two treasury owned companies.

DON’T GO IT ALONEOrlen Upstream will spend PLN 500 million ($159 mln) over the next two years on shale gas exploration in Po-land. “One of the possible directions in which our shale gas exploration projects could develop is cooperation with a partner having a relevant track record and know-how in the area of shale gas production,” said an Orlen press spokesperson in a written reply to Cleantech Poland. The company holds eight licenses on its own and one license together with PGNiG.

A spokesman for Canada’s Encana Corporation said the company had been in talks with Orlen Upstream on a possible deal on shale gas explo-ration and exploitation, but that no agreement had been reached. “It’s cor-rect that we have had talks, but until we have an agreement we do not have anything,” said Alan Boras, a spokes-person for Encana. The proposed deal would see Orlen

pany seeks no farm out, but is looking to increase its shale gas acreage fur-ther. PGNiG confirmed in late 2011

an interest in the holdings of BNK Petroleum, with over 4,000 square kilome-ters (a million acres) in the Baltic basin with 20 per-cent of its Polish interests shared with LNG Energy and 53 percent with RAG/Sorgenia.

Polish operators could, however, be pushed into quite other direction with their strategies. Owning a large number of shale gas concessions, these state-owned companies, instead of looking for international partners, may have to respond to the govern-ment’s pressure to become responsible to get the gas flowing fast and control as much market as possible (see story on page 70).

Upstream swap some of its Polish shale licences in exchange for an in-terest in Encana’s shale acreage in

the U.S. and Canada. Since Orlen Upstream wants to keep its upstream and downstream activities in balance, it seems that the Polish company will farm in into some of Encana’s devel-oped and producing acreage in the US.

BEYOND THE BIGGEST PGNiG, which holds 15 unconven-tional gas concessions, the most in Po-land, has a different strategy. The com-

“The proposed deal would see orlen upstream swap some of its Polish licences in exchange for an

interest in encana’s acreage.”

B y j o h a r p e r

The overall imagery of the potential shale boom in Poland has been thoroughly north American, but as the Polish government is pushing to get shale gas production going, state-owned operators may hold the keys to the market.

statekeepers

SourCe: enCAnA CorPorATion

landosatdecember31,2010


Dry Gas

Liquids Rich

Oil

Encana’s acreage in North America: 11.7 million net acres


Dry Gas

Liquids Rich

Oil


As APProximAtions of shale gas resources are whetting political appe-tites for extra income streams to the budget, state-owned energy and min-ing companies are finding themselves under pressure.

The Polish leader in shale gas explo-ration, the Polish Oil and Gas Compa-ny (PGNiG) is teaming up with other state players hoping to produce an ambitious development program on the Wejhero-wo conces-sion, north-ern Poland.

In late January, PGNiG signed let-ters of intent with state-owned energy utilities Polska Grupa Energetyczna (PGE) and Tauron, and one of the world’s biggest producers of electrolytic copper and metallic silver, KGHM.

The signing of the letter followed a call from the ministry of the treasury that Polish companies should take a decisive lead in shale gas exploration in Poland. “Polish companies should sign agreements regarding explora-tion of shale gas in April 2012. If we could intensify activity and level the chances of the Polish industry against the European competition, then we can do it only here an now,” treasury minister Mikołaj Budzanowski told a conference in Warsaw, referring to differences in gas prices in the US and Poland.

None of the companies that signed

far to the company’s shale gas plans. “Usually, mere prospects of positive market developments are reflected early on the stock exchange. I haven’t seen anything to that tune related to PGNiG’s shale gas exploration,” Mr. Prokopiuk said.

PGNiG’s turn to fellow state-owned companies could mean that the rumored farm-in deals between Polish players and US or Canadian corporations (see page 68) are not go-ing to happen. A farm-in deal between another state-owned concessions op-erator, Orlen Upstream, and Canada’s Encana is now viewed as “doubtful” by market observers, owing to Poland’s ambitions to divide and conquer the market.

the letters have experience in gas E&P. However, all three could, in theory, be looking for gas to be an important energy source as the Pol-ish coal has been on the defensive re-cently, owing to the European Union’s restrictive policy on CO2 emissions.

PGNiG is also moving forward with a €500 million bonds issue program

that will support shale gas ex-ploration in Wejherowo and 14 other concessions, as the big-gest acreage holder in Poland, that the compa-ny operates on.

PGNiG’s investment

strategy for years 2011-2015 foresees investment expenditure of nearly PLN 26 billion (€6.2 billion), with PLN 15 billion (€3.6 billion) earmarked for oil and gas exploration, including an un-specified amount of capital going into shale gas exploration.

All in all, there is a change com-pared to the 2012 shale gas explora-tion plans that the company made public last year, foreseeing exploration expenditure of just PLN 200 mil-lion (€47 million). “Compared to the company’s total capex running into billions, the market could guess that shale gas was not high on PGNIG’s agenda,” said Łukasz Prokopiuk, an analyst for PGNiG at IDM brokerage house.

Mr. Prokopiuk adds that investors in PGNiG’s stock have been neutral so

“Pgnig’s turn to fellow state-owned companies could mean that the ru-mored farm-in deals be-tween Polish players and

uS or Canadian corpo-rations are not going to

happen.”

Calls from the government have not only spurred Poland’s biggest concession holder to announce a more ambitious development program, but had it join forces with other state-owned giants in an at-tempt to dominate the market.

PGniG

PGNiG capital expenditure 2011-2015

SourCe: Pgnig

PLN 25.96 billion (€6.2 billion)

Exploration and production

Storage

Wholesale trading (1.8%) Sales (0.4%)

Others (1.8%)

Distribution

New business areas

57%22%

11%

6%

2.0



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As a new industry, shale gas production will face challenges. operators are confident they’ll produce gas, but big questions remain with how they’re going to bring it to market.

What are the

Bottlenecks?

p h o t o g r a p h y B y s z y M o n s z c z e s n i a KB y W o j c i e c h K o s c

unconventionAls’ no man’s land – that’s what Poland used to be a mere few years ago, when the first concessions to look for shale gas were granted. Then the news dissemi-nated quickly and the shale potential was boosted by the context in which energy issues have been discussed.

In some ways, shale gas has been presented as a miracle solution to Polish en-ergy challenges. It’s expected to let the economy kick the ad-diction to coal right at a time when coal’s CO2 emissions rate make it a rather undesired com-ponent of the energy mix, according to the European Commission.

Shale gas is expected to free Poland from Russian energy depen-dence, a problem of other Central European countries (see page 80 for Romania’s troubles). In Poland, the feeling that Russia is up to no good when it comes to gas has been a suspicion especially since Nord Stream became operational, a pipeline linking Russia to Germany via the Baltic Sea.

It’s easy to forget, though, that the grand vision of Poland’s becoming a local gas superpower, exporting the resource to all neighbors currently

depending on exports from its his-torical foe, is going to require clear-ing high hurdles. Getting anyone to indentify which hurdles was usually preceded by the remark: “yes, there are bottlenecks operators are fac-ing but it would be good to know if there’s gas there at all...”

Such a skeptic tone gives one an

idea where the industry is: few well results have been made public and what few were have been lackluster. While fundamental unknowns are challenging the market, companies spending capital will have to solve the challenges soon, as exploration is a period when no cash coming in to pay the bills.

According to one manager from a

servicing company looking to make inroads into the Polish shale gas market, they key bottleneck is peo-ple.

“Let’s face it. There is no trained personnel on the ground with skills and experience in unconventionals,” he said, preferring to remain anony-mous. “The industry relies on expats

that do the work to help train a new generation of specialists,” he added.

“While we would like to get to a level where our entire staff is made of Polish employees, it typi-cally takes 10,000 hours, or four years to train them,” he said.

Personnel shortages are likely a kind of bot-tleneck that will indeed take a long time to ad-dress. Other bottlenecks that the industry has been facing are being re-moved faster, according to Tomasz A. Gry˝ewski,

corporate affairs director at Talisman Energy.

“Just twelve months ago, there were problems everywhere you looked. There were no specialist ser-vices. Now, companies are coming in on an increasing scale, providing geophysical research, water treat-ment, water management or taking care of waste from drilling,” said Mr.


“just 12 months ago, there were problems everywhere you

looked. now, companies are providing geophysical research,

water treatment, water manage-ment and taking care of waste.”

– Tomasz A. gryzewski, Talisman energy

Gry˝ewski. “As hydraulic fracturing will be done more and more often, the choice in who will provide it will be-come bigger as well,” he added.

According to Mr. Gry˝ewski, the overall situation in Poland about a year ago was that just about every as-pect of it was a big problem to solve. The companies that have moved in in the meantime pushed a great deal forward and it’s time for the officials to catch up.

Mr. Gry˝ewski’s words are echoed by Maciej Wesołowski, a lawyer

with law firm DLA Piper Wiater. Mr. Wesołowski dismisses operational problems as anything that will hin-der operators more than it should, pointing to other problems that are far more likely to be long-standing. Unfortunately, he adds, these issues are deciding for the entire sector to take off.

“Operators and anyone involved will have to face up to problems cre-ated by the obsolete transmission and distribution infrastructure,” said Mr. Wesołowski.

According to Mr. Gry˝ewski, there’s only so much shale gas com-panies will be able to do if infrastruc-ture does not live up to the needs of increased production.

“Even taking all the unknowns into account, companies are already developing strategies for the next couple years in terms what will hap-pen once production makes business sense,” said Mr Gry˝ewski.

“You can only haul so much gas to individual recipients like, for ex-ample, thermal power plants. Several


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companies have secured deals to sell gas in such a way but once you’re past certain amounts of gas, there has to be a system in place,” he added.

However, political decision mak-ers might have their own rationale when they’re not focused on tailor-ing the gas infrastructure. According to a last year’s study prepared jointly by the ministry of economy and the Faculty of Drilling, Oil and Gas at AGH University of Science and Tech-nology, there are obstacles here and now for the development of an energy system based on gas.

The study says that, first of all, even if the decisions about develop-ment of gas-fired power plants should be made now or in the near future, they are not going to be made before shale gas is ultimately proven in commercial quantities. Secondly, the costs of CO2 emissions are far from certain and if Poland’s ongoing at-tempts for a less radical CO2 policy in the EU take effect, their effect will be gas’ reduced cost competitiveness and therefore less demand and even smaller incentive for new gas infra-structure.

“In an optimistic scenario, the potential of growth in demand for gas in Poland could exceed 15 billion cubic meters annually, which would represent a 100 percent growth in de-

mand or 40-80 billion cubic meters per annum. Achieving such level of demand would take switching the entire economy to gas, a completely unlikely development,” the study said.

“In an intermediate scenario, the

growth in demand for gas is just be-low 5 billion cubic meters annually, meaning that the market potential would become a major obstacle for the development of unconventional gas,” the study concluded.


in an optimistic scenario, the potential of growth in demand for gas in Poland could

exceed 15 billion cubic meters annually. Achieving such level of demand would

take switching the entire economy to gas, an unlikely development.

SourCe: iSe, krAków univerSiTy oF eConomiCS

Forecast of natural gas consumption in Poland 2012-2035


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it’s not Just farm-in deals that push forward the nascent Polish shale gas market. Silurian Hallwood, a joint-venture of Poland’s Petrolin-vest and US Hallwood Energy Group, went down perhaps a more rocky road last fall to attract capital via a private placement with foreign inves-tors.

While the company targeted PLN 113 million (GBP 23 mil-lion) and the private place-ment yielded slightly over half of the target sum, or PLN 66 million (13.3 million), the company’s ex-ecutives were rather happy with the result.

“The process of raising the capital by Silurian Hallwood was carried out in a very difficult time for the capi-tal markets in the world. Investors are cautious on one hand, while on the other hand they seem interested in investment in the Polish shale gas,” Petrolinvest’s CEO Bertrand Le Guern said in a press release.

Mr. Le Guern has a valid point,

exploration and production as fast as possible. The acreage the joint-ven-ture will operate is located in north-eastern Poland, along the border with Russia’s Kaliningrad region, and to-tals 2,333 square kilometers, divided into four concession areas.

The company, while looking to discover shale gas also mentions oil as a primary target for exploration.

The oil hopes are based on the fact that on the other side of the border, Russians are ex-tracting oil from rock of essen-tially the same geological profile.

“Silurian Hall-wood has a very differentiated story from other shale plays in Poland due to the

high probability of oil in our acreage, which is of a similar size to the entire Bakken shale play in the US,” said Wes Skrobowski, CEO of Silurian Hallwood, in a company press re-lease. He added that the oil prospects would “add significant value to the proposition on the route to IPO.” The IPO date of Silurian Hallwood is still to be determined.

when saying that late 2011 was not the best time to raise capital. Gener-ally, investor interest in the sector is said to have been declining since 2009. According to the Financial Times, the shale gas sector managed to attract USD 27 billion from capi-tal markets in 2009, a figure that de-clined to USD 21 billion in 2010, and just USD 8 billion in 2011.

The fundraising effort was under-taken by Chrystal Capital Partners, a corporate finance boutique. Accord-ing to Chrystal Capital, the Silurian-Hallwood shares were placed with “with a large European family office and three additional smaller family offices.”

Happy to secure what they could, Silurian Hallwood is now set to start

“Silurian hallwood has a very differen-tiated story from other shale plays in

Poland due to the high probability of oil in our acreage, which is of a similar size

to the entire bakken shale play.” –wes Skrobowski, Silurian-hallwood

The interest of the capital markets in taking on upstream exploration risk might be declining, and Silurian hall-wood’s private placement of shares late last year did not produce the ex-pected results, but the company says e&P will soon make investors happy.

silurian-hallwoodPrivate Placement


bill mArble gAve uP hiS liFe long dreAm To Tour on A hArley, juST To Come To PolAnd And oPerATe ShAle ACreAge.


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Shale Secrets

if you’re lucky, william marble will take out a piece of paper and explain a few

of the techniques that earned him a reputation in the barnett.

during an exclusive interview with Cleantech Poland,

we got lucky.

B y p a r K e r s n y D e r

“When i Got the cAll I was on my motorcycle,” says William Marble, chief operating officer for Silurian-Hallwood, a joint venture exploring for shale oil and gas in northern Po-land.

“It was Tony, my old boss and good friend. My wife and I were in Seattle on our way to visit every national park in the United States. Tony said drop everything and come to Poland. The next day I was on a plane,” he con-cludes.

His kids thought he was crazy, and for good reason. Mr. Marble has

little to prove. He has “retired” twice from the oil and gas business after 35 years working as an engineer in some of the most demanding basins in North America. Regularly his wells outperformed the competition and he earned for his efforts.

Mr. Marble first cut his teeth in shale working for Hallwood Energy in the Barnett. The company began small, but by the time it was sold to Chesapeake in 2005, the buyout was valued at close to $565 million. Mr. Marble and his colleagues had figured out how to unlock the secrets of the

shale. By the time the company was sold, Hallwood had raised the aver-age initial production of their wells from 1 million cubic feet (mmcf) to between 3 and 7 (mmcf).

When Mr. Marble and his wife started to criss-cross the United States on a Harley, Mr. Marble had convinced himself he was done ex-ploring. But now he’s back in school (to learn Polish) and will begin opera-tion on concessions held in joint ven-ture with the Polish-based operator Silurian. According to predictions, he’ll be exploring in the oil window.

p h o t o g r a p h y B y s z y M o n s z c z e s n i a K


Paweł Poprawa, a geologist witih Polish Geological Institute, has in-dependently estimated the resource base to be 37 billion barrels of oil in place with an estimated 3.7 billion barrels recoverable, on four conces-sions: Lidzbark Warmiƒski, K´trzyn, W´gorzewo and Gołdap.

THIEF ZONEMr. Marble has a philosophy for op-erating shale: 1. design with the best technical expertise you can, 2. apply the best human experience you can, and 3. learn again and again from your mistakes.

As a rule of thumb, during fractur-ing, when the pressure downhole reaches 5,000 - 6,000 psi, Mr. Marble

says he will maintain pressure, stay-ing close to the maximum allowable.

“If an operator hits a thief zone, most will back off, even stop op-erations. But not me. I’ll continue to pump and stress the rock,” Mr. Marble says. In a shale, a thief zone is an area of the reservoir with a higher perme-ability that tends to “steal” pressure.

“In the Barnett, we would constant-ly ask ourselves what would happen if you stressed the rock differently. We were willing to experiment more than others. Sand for instance, is more important as a diverter than as a prop-pant. You can use sand to jam up the thief zone, pack it full, and reduce the permeability of what was an open con-duit.”

“After all, you don’t have to open the shale up too much. How wide is a water molecule? How wide is a methane molecule? Here’s some more things to consider...”

Scan the QR code to read more of Bill Marble’s secrets.

bill mArble And hiS wiFe roAd ThouSAndS oF mileS beFore mAking iT To The edge oF The ArTiCle CirCle.

PhoTo CourTeSy oF bill mArble


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“bill could live out his dreams, driving his wife around the u.S. on a harley. it didn’t take much convincing to

get him to Poland. bill is always up for a challenge.” – Anthony gumbiner, Silurian-hallwood

mr. mArble WAs the Vice President for Hallwood Energy Corporation and has 32 years experience in the oil and gas industry. He worked with Schlumberger, Texas American Bank and various Permian basin indepen-dents. Mr. Marble received a BS in Petroleum Engineering from the New Mexico Institute of Mining and Tech-nology. He is a registered engineer in the State of Colorado, and a member of the Society of Petroleum Engineers.

Geologists ponder maps, logs and other data in search of prospective hydrocarbon traps. Then they put a dot on a map and gives it to the en-gineers.

In the past, the well was designed, drilled and completed in the target-ed formation. The geologists would exchange information to ensure that the target was hit in an optimal position. Once drilled, log readings were made to estimate potential re-serves, and to verify additional drill-ing opportunities.

Although this is a simplification, often the communication was lim-ited between the rock-focused geolo-gist and the math-focused engineer. But no more, not in the age of un-conventional gas. While the basic needs for geologic analysis remain unchanged, there is a significant increase in the need for communi-cation and coordination between these two disciplines. Communica-tion between these groups is essen-tial to promote innovation and op-timization in these technologically

in his oWn Words

BEEN THERE, SOLD THATIn 2002, Hallwood saw the Barnett south of Fort Worth as a missed op-portunity that most others had avoid-ed up until then. Mr. Marble and his colleague Russ Meduna, an engineer, went about exploring shale and build-ing infrastructure in an area which had never seen commercial produc-tion.

According to Mr. Marble, “In the core area, the gas-producing shale was bounded on the bottom by the Viola, a limestone barrier that tended to help control the frac, making the wells produce more gas and less water. But in Johnson county there was no Viola barrier and the typical shale fracs of-

ten yielded water with little gas.” Apparently, his methods worked. In

2002, Hallwood began with just four wells. By June of 2004, they had 35 vertical wells and 6 horizontal wells and had cut their drilling time in half.

Anthony Gumbiner, President of Hallwood Energy, has known Bill Marble since the 1980s, when he re-structured Saxon Oil. In the Barnett, Mr. Marble worked for Mr. Gumbiner, who is now on the management board of the Silurian-Hallwood joint venture operating Polish Baltic acreage.

According to Mr. Gumbiner, “After we sold the company to Chesapeake, Bill could live out his dreams, driving his wife around the U.S. on a Harley.

Of course, I had to track him down on his motorbike. It didn’t take much convincing to get him to Poland. Bill is always up for a challenge.

challenging unconventional plays.The geologist is no longer rel-

egated to placing a dot on a map and waiting to see if the engineer finds the target trapped, sourced and sealed. Now the geologist’s work continues, and in more detail than before. Rock mechanics, mineral-ogy, clay content, secondary min-eralization, Young’s Modulus and Poisson’s Ration have become every-day terminology that all disciplines must work to understand. – WILLIAM MARBLE, ENGINEER


There are no figures calculating romania’s shale gas potential, nor laws regulating it. but shale gas is on everyone’s lips in a country that’s facing a depleted well of conventional gas resources.

M i r o n a h r i t c u

Escaping the Hook

The winding mounTAin roAdS



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romAniA should hAve started looking for new energy solutions a long time ago. The country’s proven gas resources will run dry in the early 2020s, leaving the country entirely dependent on Russia, even if nowa-days only 20 percent of gas supplies come from Russian resources.

In 2009, Romanian authorities realized that the country’s assumed shale gas potential might save it from the Russian energy hook.

However, the size of Romania’s shale gas reserves remains unproven. “Rough estimates are based on the evolution of the sedimentary basin and on the assumption that, since some rocks used to generate hydro-carbons at one point, they might still produce,” said Mihail Batistatu, asso-ciate professor at the National Insti-tute of Oil and Gas.

Gheorghe Buliga, former president of the National Agency of Mineral Resources (NAMR), values the coun-try’s shale gas potential at about 1,000 billion cubic meters. His es-timate is more courageous than the one from the US Energy Information Agency from 2011, which put techni-cally recoverable shale gas resources of Romania, Hungary, and Bulgaria combined at 500 billion cubic feet.

SHY SHALE PLAYThe Romanian government has nei-ther the money, nor the know-how to explore the resources and is hop-ing that oil and gas firms will do the job instead.

But the activity in Romania’s po-tential shale plays have been rather timid. US major Chevron is probably

up to USD 1 bln in the exploration of two blocks in the Dobrogea area. Other potential investors are Hun-gary’s MOL and Canada’s East West Petroleum.

RESIGNED TO DEPENDENCYIn Romania, even the 2011-2035

National Energy Strategy, the main energy policy document, doesn’t men-tion shale gas, conceding that “once the internal conventional gas reserves are exhausted, Romania will rely en-tirely on imports.”

It’s not clear, either, what the Ro-manian authorities are planning to do about regulating the industry. The NAMR president thinks that spe-cific regulations will surely occur, but rather at the European Union level than at a national one. Most probably, however, the change will come once the potential of Romania will be con-firmed by the coming years drilling.

leading the pack. In February 2011, Chevron completed a USD 25 million takeover of a concession in the Barlad area from British Regal Petroleum. Chevron showed a bit of confidence towards the region’s prospects, after British Regal gave up on it after some test wells didn’t perform.

Chevron also won concessions for three more areas, totaling 2,700 square kilometers, in south east-ern Romania. The company says it will get going with exploratory work in 2012.

There are hopes attached to Chev-ron’s results. “We have a broad esti-mate of unconventional gas resourc-es, but we wait for the exploration works by Chevron to confirm them,” said the NAMR president, Alexandru Patruti.

Apart from Chevron, there are other active companies. In October 2011, representatives of Sterling Re-sources announced they would invest

only in 2009, did romanian authorities realize that the country’s assumed shale gas potential

might save it from the russian energy hook.

Romania Concessions


Company Concessionname Acreage Development

Chevron România Holding BV Barlad Block EV-2 6,284 km2 104.7 km of 2D seismic measurements

Chevron România Holding BV 17 Costinesti ~1,000 km2 No measurements

Chevron România Holding BV 18 Vama Veche ~1,000 km2 No measurements

Chevron România Holding BV 19 Adamclisi ~1,000 km2 No measurements

MOL EX 1 Voivozi ~1,000 km2 2D and 3D seismic measurements

East West Petroleum 2 Tria ~1,000 km2 No measurements

East West Petroleum 3 BâÉile Felix ~1,000 km2 No measurements

East West Petroleum 7 Perian ~1,000 km2 No measurements

East West Petroleum 8 Biled ~1,000 km2 No measurements


No one wants poor for their community, not the operators, not the protestors, not the politicians, not the pundits. Why then is shale presented as a dichotomy between us and them: yes we want it or no we don’t? To get beyond the irrational and find a moderate between extremes, we reached out to local protestors, international operators, and Brussels politicians to give our photographer an assignment: shoot the movement through an agnostic lens. Enjoy FaCES, a few of which are helping to define - depending on your point of view - Europe’s present day opportunity or flop-ortunity. What do you see?

Facesp h o t o g r a p h y B y s z y M o n s z c z e s n i a K

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Kamlesh Parmar, 3Legs Resources

Adam Sochaczewski, Gas Plus International

Patrycja Kujawa, LNG Energy

David DeBenedetti, DeBenedetti

Majewski SzczeÊniak

Jose Bove, Member of the

European Parliament

Bogusław Sonik, Member of the

European Parliament

Tomasz Goskowski, wójt (administrator)

of St´˝yca

Dan White, Global Geophysical

Bill Marble, Silurian Hallwood

Hieronim Wi´cek, local objector

Beata Stelmach, deputy minister of foreign affairs

Roman Rewald, Weil Gotshal

& Manges

Doug Bentley, Schlumberger

Jens Rodiek, Baker Hughes

Paweł Poprawa, Polish Geological

Institute

Bogdan Marcinkiewicz, Member of the

European Parliament

Rafał Fryzowicz, Weatherford

Dariusz Kokoszka, wójt (administrator)

of Jadów

Jerzy Buzek, Memeber of the

European Parliament

Marian Cichosz, local objector

Poland would like to see the eu embrace shale gas to improve the energy security of europe. Skeptics say it’s a cover-up, because Polish interests are rather at odds with the eu’s. Sonja van renssen reports from brussels.

PolAnd WAnts to sell shale gas po-tential to boost the European Union’s energy security. Reactions from members of the European Parliament (MEPs) to a recent shale gas report ordered by the European Commission show that not everybody is buying their side of the story.

In late January, the Commission unveiled a study which concluded that there are no “significant gaps” in cur-rent EU laws for the development of shale gas. In the Commission’s view, there’s no need to change the law, should Poland or any other country wish to develop its resource base.

In reaction, Green MEPs accused the Commission of distorting its own research.

“Innumerable reports have high-lighted the negative impacts of shale gas exploitation on land, water re-sources and greenhouse gas emis-sions, as well as the potential of a new financial bubble. The Commission should follow the recommendations of its own research and come forward with proposals to adapt the relevant EU legislation,” said French Green MEP José Bové.

In a letter sent to Mr. Oettinger, the Greens point out that the study, by law firm Philippe & Partners, also warns there “is no reason for complacency” and that “some adjustments to legisla-tion should be further considered”.

Indeed, the new study mirrors con-cerns set out in a report for the Parlia-ment last year that the relatively small scale of shale gas exploration would be mostly exempted from environmental impact assessments (EIAs), and as a consequence, from public consulta-tion. This opens the door to environ-mental damage and public opposition,

Marcinkiewicz.More tussling over shale gas explo-

ration is still coming up in Brussels. The Parliament is starting work on two reports on shale gas. One will be led by another Polish centre-right MEP, Bogusław Sonik, in the environ-ment committee and the other will be led by right-of-centre Greek MEP Niki Tzavela in the energy committee. First drafts are due in the spring time.

especially when these projects are later scaled up.

Two centre-right Polish MEPs wel-comed the Philippe & Partners’ study, however. “Today it is quite clear that current EU legislation is sufficient,” said Jerzy Buzek, former president of the European Parliament. “We may need to specify issues related to envi-ronmental protection and the necessi-ty of public consultation,” said Bogdan

Brussels, at odds

s o n j a v a n r e n s s e n p h o t o g r a p h y B y s z y M o n s z c z e s n i a K

euroPe iSn’T The PlACe For hydrAuliC FrACTuring, SAyS joSé bové


“innumerable reports have highlighted the negative impacts of shale gas exploitation on land,

water resources and greenhouse gas emissions, as well as the potential of a new financial bubble.”

– josé bové, meP

Negotiations are likely to be tough. “Sonik will be advocating for his coun-try’s energy independence and not for the EU public interest,” says French Green MEP Michèle Rivasi, a mem-ber of the environment committee. The committee will have to hammer out a joint position on the report before it is submitted for approval by the par-liament.

“The EU debate should be based on facts and scientific research, not on prejudice and groundless fears,” Mr. Marcinkiewicz countered.

A difficult issue will be the value of shale gas in tackling climate change. “If we do not convince the Americans to invest in Poland, then the enor-mous costs of exceeding CO2 limits will be shifted onto the individual cus-

tomer. Shale gas is a kind of hope car-rier within the scope of CO2 emission reductions,” said Mr. Marcinkiewicz.

Ms. Rivasi believes the opposite: “Development of shale gas in Europe could go against our ambitious climate scenario,” she warns. “Instead of in-vesting in dirty energy, let’s focus on energy efficiency as well as clean and renewable technologies.”

ShAle gAS iS euroPe’S oPPorTuniTy, SAyS boguSŁAw Sonik


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An opposition party’s idea on how to secure the state’s revenue is just one of many to come as shale gas exploration speeds up. Problem: shale gas companies do not have a clue yet about the economics of their activity.

Royalty rate, rising?B y W o j c i e c h K o s c p h o t o g r a p h y B y s z y M o n s z c z e s n i a K


A yeAr AGo, Polish politicians ap-peared to be fully supportive of the developing shale gas industry in Poland. The mood is changing to be less positive however, as a discussion gets underway on how much of shale gas revenue will end up in the state’s coffers. New ideas for changes in the current royalty regime are surfacing, but operators say that the discussion is premature and abstract.

“It’s best to wait until the economics of shall gas exploration become clear. We won’t know anything about costs and profitability until there are more well results,” said Tomasz Maj, general manager of Talisman Energy in Po-land. “Otherwise, operators might find out that the proposed royalty scheme or anything to secure the state’s reve-nue from shale gas production just ren-ders the entire sector uneconomical and the opportunities will end before they really begin,” Mr Maj added.

Poland’s current royalty regime (about 20% of gross revenue including corporate taxes) appears so favorable to operators, however, that it has been only a question of time when the first ideas on how to change it will surface. The government and the opposition are in agreement that the Polish state should be an important beneficiary of the expected shale gas bonanza, a logi-cal consequence of natural resources being state-owned.

The Citizens’ Platform-led govern-ment has only said so far that it was important that the state benefits from shale gas exploration and the relevant regulations are expected to see day-light in early 2012. The main opposi-tion party, Law and Justice (PiS), came up with particulars more quickly.

The PiS proposition builds upon the

gas market dominated by the state-owned Polish Oil and Gas Company (PGNiG). The draft law - if it ever be-comes binding to businesses - will also make operators to farm out a stake in each concession area to a state-owned company.

“The royalty rate is bound to go up, but instead of dropping abstract numbers, there should be a debate involv-ing operators about a model that Poland will be implementing,” Mr Chmal said. “Hiking the royalty rate and making the state a stakeholder in each concession resembles the Nor-wegian model - only it took Norway decades to arrive at it,” he added.

- far from confirmed - Energy Informa-tion Administration (EIA) estimate of 5.3 trillion cubic meters of recoverable shale gas in Poland. The proposition goes even deeper into speculative ter-ritory by saying that “there are clear signs that the extraction of hydrocar-bons in Poland will be highly profit-able.”

According to a draft law authored by PiS, the royalty fee will should be at least 40 percent of the value of ex-tracted gas, a significant hike in com-parison to today’s rate of 1-2.5 percent, depending on the scale of production. According to Tomasz Chmal, the cur-rent low rate is a legacy of the Polish

Polish PoliticiAns like to refer to Norway as a model country in terms of how it has been managing the enormous wealth from exploration of natural resources. Simplyfying a bit, Norway’s Oil Fund, which manages well over USD 500 billion, invested this capital in European and US stocks and bonds. According to a 2011 study from Levy Economic Institute of Bard College in the US, however, the strat-egy isn’t all that perfect.

“For the past generation Norway has supplied Europe and other regions with oil, taking payment in euros or dollars. It then sends nearly all this foreign exchange abroad, sequester-ing its oil-export receipts to invest mainly in European and US stocks and bonds,” the study said.

“It is claimed that treating these savings as a mutual fund invested in

a wide array of US, European, and other stocks and bonds (and now real estate) avoids domestic inflation that would result from spending more than 4 percent of the returns to this fund at home. But the experience of sovereign wealth funds in China, Singapore, and other countries has been that investing in domestic infrastructure serves to lower the cost of living and doing business, making the domestic economy more competitive, not less,” the study also said.

If Poland ever creates anything like the Norwegian Oil Fund, the decision makers might want to think twice before the shale gas income props up foreign stock and bond markets. Even more so because some of Poland’s eco-nomic goals are exactly what the Levy Institute’s suggests Norway could im-prove.

norWAy, no WAy?


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“operators might find out that the proposed royalty scheme or anything to secure the state’s revenue from shale gas

production just renders the entire sector uneconomical.” – Tomasz maj, Talisman energy


beATA STelmACh, dePuTy Foreign miniSTer, SAyS Po-lAnd will uSe ShAle gAS To imProve iTS energy SeCuriTy.

Poland wants to go ahead and develop its shale resources to cover its energy needs, before it will attempt to change the international rules of the game.

the shAle GAs message from War-saw has changed. In the early days of the concession process, the govern-ment was going to great lengths call-ing for international support for the development of shale gas in Poland.

Recently, however, the tone has switched, with the government now pushing state-owned companies to scoop up the lion’s share of the market. The bottom line remains the same: a functioning shale gas sec-tor will address some of Poland’s most important energy woes and improve the country’s geopolitical standing.

“The strategic goal that Poland would like to achieve taking advantage of shale gas sector is to improve Poland’s energy security,” Barbara Stelmach, deputy foreign minister, told Cleantech Po-land during an interview at the foreign ministry. “Poland will use any op-portunity to ensure its energy secu-rity, and if shale gas is going to help, we will certainly take care of it,” she added.

“Under the Lisbon Treaty, each member state of the European Union has the right to create and pursue its own policy regarding the energy mix,” Ms. Stelmach said, referring to concerns that the controversial shale gas extraction technique of hydraulic fracturing could prompt the European Commission to draft legislation that

would render shale gas market unprof-itable or simply ban the extraction on environmental grounds.

These concerns are not well ground-ed, according to the minister. In con-trast to what some members of the European Parliament are saying [see story on page 94], Poland’s success in shale gas will be the success of the Eu-ropean Union, she said.

Security

ConcernsINTERVIEW: Beata Stelmach

p h o t o g r a p h y B y s z y M o n s z c z e s n i a KB y W o j c i e c h K o s c

“It’s not true that the climate for shale gas in the EU is negative. Major-ity of the MEPs are for it, with an ex-ception of those representing the lobby of environmental protection, like the Greens. They’re giving in to the argu-ments that shale gas extraction means environmental damage,” Ms. Stel-mach said.

“It’s our job, then, to pres-ent analyses, organize events and workshops with experts and companies to educate people about shale gas,” she said. “In Bulgaria, for ex-ample, the opposition to shale gas was due to lack of proper information about it rather than having quality informa-tion about shale gas’ harm-

fulness,” Ms. Stelmach said. Bulgaria banned hydraulic fractur-

ing in January, foiling plans of oil and gas companies like Chevron to develop their acreage.

“If we don’t develop shale gas in Po-land, a member of the EU, the sector will develop outside of Poland and out-side of the EU. So that would have been a wasted chance to make the EU more

“There’s still a great margin of error regarding how much gas there is and whether it’s

going to be profitable.” – beata Stelmach


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competitive globally,” Ms. Stelmach said.

When asked, however, how shale gas might improve Poland’s geopo-litical position, the minister was more cautious in her remarks. If the resources are confirmed, would Po-land try to get into markets that are currently 100 percent dependent on gas imports from Russia? According to Ms. Stelmach, meeting Poland’s own demands should come first.

“We want to minimise risks com-ing from imports of energy sources,” she added, dismissing reports like the 2010 analysis from the Oxford Institute of Energy Studies predicting

“it’s not true that the climate for shale gas in the eu is negative. The majority of mePs are for it, with

the exception of those representing the lobby of environmental protection, like the greens.”

– beata Stelmach

that conventional gas imports from Algeria, Qatar or Russia’s Yamal pipe-line will still be cheaper than shale gas in 2020. “The costs of shale gas production have been driven down to a great extent. We are now benefiting from the decades of development of the shale gas industry in the US,” Ms. Stelmach said.

“There also is a benefit in sight for the treasury but Poland will approach this issue with care. We want to en-sure that the Polish treasury benefits from shale gas but we don’t want to scare companies away by unreason-able fiscal and taxation regime.”

She added, however, that at the cur-

rent stage, making shale gas a line item in any long term energy security policy is premature. “There’s still a great margin of error regarding how much gas there is and whether it’s going to be profitable,” Ms. Stelmach said.

According to the minister, neither is there any reason to think that shale gas will become the new coal - the dominant fuel these days - of the Pol-ish economy. “Poland will do its best to develop the shale gas sector, but the energy mix will remain, made up of coal as well as renewables, and we will not give up on the nuclear program,” Ms. Stelmach said.



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Are shale development costs too high? Polish deputy prime minister and minister of economy waldemar Pawlak says that once estimates of shale gas resources are proven, the economics of shale will make sense.

Minister Pawlak


r e : s h a l e


hoW Would you Justify the economic sense of shAle GAs develoPment, Given thAt Pro-duction in Polish conditions Will be more exPensive thAn in the u.s. further more, there Are mAny countries thAt could sell GAs to PolAnd At comPeti-tive Prices.

At the current stage of exploration, it’s difficult to estimate the cost of acquiring gas from shale formations. However, comparing the geological conditions of unconventional natural gas deposits in North America and Po-land, the market for drilling services and population density, we expect that the cost of gas production from uncon-ventional plays will be higher than in the US or from Poland’s conventional

deposits. But recent changes in the gas market in the U.S. provide some grounds for optimism. In the US, pro-duction of gas from shale formations is causing prices to drop. Gas prices in the US are already about three times lower than in the EU.

WhAt Are the necessAry in-vestments in infrAstructure to helP develoP the shAle GAs mArket?

At the current stage of exploration we will certainly have to bet on the de-velopment of the market for services. An important step will include service companies’ purchasing new drilling equipment. Once producton starts, in-vestments to expand the gas transmis-sion network will be necessary.

WhAt Are the benefits of shAle GAs thAt PolAnd Presents to the eu? Are PolAnd’s ArGu-ments AcknoWledGed in Any WAy?

Gas is going to be a very promising source of energy in the coming years, something that the EU is well aware of. There’s a need to produce more gas from available conventional fields as well as to seek new sources of gas. Also, the scenarios of the Interna-tional Energy Agency are predicting an increased use of gas for electricity generation. Development of shale gas production will reduce the EU’s depen-dency on external gas supplies, thus reinforcing the European countries’ energy security.

SourCe: PreSS oFFiCe


Are shale development costs too high? Polish deputy prime minister and minister of economy waldemar

Pawlak says that once estimates of shale gas resources are proven, the economics of shale will make sense.

does PolAnd intend to neGoti-Ate the Price of GAs from rus-siA, if Polish shAle GAs tesourc-es Are Proven to be As biG As in the estimAtes of the enerGy informAtion AGency?

Natural gas price negotiations were conducted in 2011 at the level of in-volved companies. Unfortunately, no agreement was reached. The issue is now with the Court of Arbitration in Stockholm.

you recently told the Polish Press AGency thAt the ministry of economy Will beGin cooP-erAtion With the treAsury And the ministry of environment so As to coordinAte Activities relAted to shAle GAs throuGh-out the Government Adminis-trAtion. WhAt is thAt for?

Seeking unconventional gas resources is a strategic project for the Polish economy and it has to require a con-certed action across the government. There’s an ongoing work to establish the government proxy for the devel-opment of hydrocarbon production. I hope that the institutionalization of government support for shale gas production will accelerate the develop-ment of this prospective sector in Po-land. The current idea in the govern-ment is that the chief geologist should be the proxy for shale gas (editor’s note: Piotr Woêniak is the chief geolo-gist as of December 2011).

WAldemAr PAWlAk is in charge at the ministry of economy, whose competences have long been related to those of the ministry of environ-ment. For example, while the min-istry of economy is responsible for the energy sector, it is the ministry of environment responsible for CO2 emission permits and environmen-tal impact assessments.

Recently, the lines have blurred a bit. Following last year’s parliamen-tary elections, Pawlak’s ministry has stepped in to “cast a long shadow” on the ministry of the environment. Not officially, but due to changes in the ministry of environment’s lead-ership: four out of six key positions have been filled by former ministry of economy officials.

The minister of environment, Marcin Korolec was an under secre-tary of state responsible for energy during Mr. Pawlak’s previous term at the ministry of economy in 2007-2011. The director of Mr. Korolec’s political office is Wojciech Saryusz-Wolski, who coordinated the min-istry of economy’s activities during Poland’s EU presidency last year.

Three key under-secretaries of state in the ministry of environment also worked for the ministry of econ-omy, often in a position where envi-ronmental policies were more often than not seen as hindrance. Piotr Woêniak, now an under-secretary of state, and the country’s chief geolo-gist, was minister of economy from 2005 to 2007. He’s a likely appointee to a position seen as a government proxy for shale gas development.

Two under-secretaries of state in the ministry of environment, Beata Jaczewska and Aneta Wilmaƒska, had worked for ten years or so in the ministry of economy’s department of economic development. Ms. Jacze-wska is now responsible for climate policy. Ms Wilmaƒska supervises the Infrastructure and Environment Program and NFOÂiGW, the Nation-al Fund for Environmental Protec-tion and Water Management.

Finally, Sylwia WaÊniewska, the current head of the National Centre for Emissions Management, a body implementing regulations on green-house gases, used to work as deputy director in the Ministry of Economy.

PAWlAk’s lonG shAdoW


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no(go somewhere else)

operators who think that the new geology and mining law allows them to pay little attention to public protests, could find themselves alienated from the local commu-nities where they want to drill.

B y W o j c i e c h K o s c p h o t o g r a p h y B y W o j c i e c h D r e W K a / e x p r e s s K a s z u B s K i . p l


PolAnd hAs not seen many pro-tests against shale gas exploration. What few have taken place however, have left both sides of the conflict in a state of deep mistrust.

Operators claim that they’re going to great lengths to explain what shale gas E&P is about, but too often from the point of view of local residents, they seem to parachute into com-munities not recognizing how deeply skeptical are some local residents. Re-cently, they’ve found themselves up against an opposition.

At these meetings, residents usu-ally come to meet operators with dif-ficult questions, some related to waste management and water sourcing. Tomasz Brzos-kowski, adminis-trator of the gmi-na St´˝yca where BNK Petroleum is drilling, isn’t surprised to hear they meet protest. “The government has failed com-pletely to deliver any information down to the local level when the concessions process was going on. So I have to do the job myself now,” he said.

In the last few months, operators have clashed with locals in two en-counters that were publicized in the Polish media. In early 2012, execu-tives of Chevron walked out of a meet-ing in ˚urawlów, eastern Poland, re-portedly on seeing that local residents attended along with experts, journal-ists and environmental activists.

The association is taking on shale gas now, but Mr Wiƒcek appears to have lost faith. “We feel completely sidelined with regard to anything that concerns shale gas,” he said.

Mr Brzoskowski admits local au-thorities and residents represent little firepower, when faced with the Polish state’s goal of energy indepen-dence. He cites the new law on geol-ogy and mining that seems to strip local authorities of influence on land use studies in case mineral resource deposits are discovered. “You either push through a land use study, map-ping the resources, or the governor of the province will do it instead, but the costs will still be on the commune,”

Ms Brzoskowski said.According to Mr.

Brzoskowski, however, there’s a way out of ev-ery situation. As much as he understands the objectors, he also says that an indiscrimna-tory ‘no’ isn’t way to go. “We’ve talked a lot already and we will get

to a point where our concerns are addressed at no harm to what BNK is planning to do,” Mr. Brzoskowski said.

For BNK’s country manager Mr. Wróblewski, the grievances he had heard last year are a thing of the past as the company would like to move on exploring. Mr Wiƒcek seems to agree, with his tongue in his cheek: “There’s nothing that BNK can offer us and we know they are not going to listen to us.”

In October 2011, a meeting took place between local authorities of St´˝yca and Sul´cino communes and representatives of BNK Petroleum. BNK reportedly failed to convince the attendees that shale gas operations bear little risk while holding big per-spectives for the locals.

BNK’s country manager Jacek Wró-blewski claims that the October 2011 meeting wasn’t a sign that there’s an anti-shale gas attitude on the ground. “Objectors speak up loud and get most of the attention but they’re not representative of the people,” he said. “These objectors are people who bought summer houses in the area. People who actually live there have

a more positive attitude,” Mr Wró-blewski said.

Hieronim Wiƒcek however dis-agrees with Mr. Wróblewski’s point of view. Where BNK has been working, he has lived for 20 years. “This is a recreational area. People have houses and land here because it’s a perfect place to get away from the city, like I did. This is no place for industry,” said Mr Wiƒcek, who heads an as-sociation of local residents that have successfully battled against the open-ing of a gravel quarry.

“objectors speak up loud and get most of the attention but they’re not representative of the population.” – jacek wróblewski, bnk Petroleum

“we feel completely sidelined with regard to anything that concerns shale gas.”

– hieronim wiecek, local resident


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in Poland, one doesn’t need to haul water long-distance in hundreds of trucks. Still, spending resources on mandatory water treatment without re-using the resource would be a gross inefficiency.

B y W o j c i e c h K o s c p h o t o g r a p h y B y s z y M o n s z c z e s n i a K


Frack, treat, Frack again

Sweden

Austria

Lithuania

France

Spain

Germany

Poland

Czech Republic

0 5000 10000 15000 20000 25000

20 303

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6622

3265

2825

2232

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in shAle GAs exPlorAtion, water is a key resource. Sourcing water and treating it post-use is a crucial ele-ment of the exploration process and one that is going to receive a lot of attention, not least from the environ-mentally-oriented shale gas objectors.

Once and if the Polish shale gas market moves from exploration to production, water will become an important cost due to sheer amounts that need to be used for hydraulic fracturing (fracking), as well as costs of transport and treatment.

Treating water is a requirement of environmental regulations and com-panies don’t have much choice but to observe them. There also is a busi-ness sense to treating water, as costs involved in treatment of so-called flowback, or hydrofrac, water, which is water coming back from the well during fracking, makes re-using the resource a logical next step. Even in country that’s nowhere near as arid as Texas.

There are no universal estimates of how much water an operator will need to execute a single fracking job on a single well. According to information circulated in the public domain by US company Chesapeake, hydraulic fracturing of a typical horizontal deep shale natural gas or oil well requires an average of 4.5 million gallons [about 17 million liters] of water. On the other hand, the Polish operator Orlen Upstream assesses water use per well at 7.5-11.3 million liters.

Flowback water that comes back up the well during fracking adds some elements of waste management to the exploration process, owing to saline

dissolved solids ratio, which makes treatment more difficult.

An extra difficulty in handling flow-back and produced water is still to come, according to Paweł Poprawa, a geologist with the Polish Geological Institute. Mr Poprawa says that once drilling and fracking is launched on hundreds, maybe thousands, of wells across Poland, the very amount of wa-ter that will need shipped to and from well pads will mean new challenges in logistics, efficiency and capacity of services and infrastructure needed for water treatment.

“Transportation to treatment fa-cilities involves costly trucking and tends to cause controversy with the locally increased truck traffic. Water collection pipelines are best but will take some time to develop in Poland once we move from exploration to production,” said Mr Locke.

qualities or heavy metals that could be brought up to the surface.

“Flowback water is typically 10 to 50 percent of the total water used. It comes back during well testing over 5-30 days and before the well goes into production,” said Adam Locke, a hydrogeologist with US environmen-tal services company CDM. Flowback water tends to be all re-used for more fracking, following on-site filtration and dilution.

Together with production, a new aspect of water treatment will come into light. “Small quantities of water, called “produced water”, are produced along with the gas. “Produced water it is often hauled to a centralized facil-ity, though there are many operators [in the US] that are reusing produced water as well,” said Mr Locke. Over time the flow back/produced water rate of return drops while the water quality decreases, especially the total

“over time, the flow back/produced water qual-ity decreases, especially the total dissolved solids

ratio, which makes treatment more difficult.”– Adam locke, hydrogeologist

Water resources per capita by country

m3/inhabitant

SourCe: euroSTAT


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Frack, treat, Frack again


D a v i D D e B e n e D e t t i

is transferred from the bank to the rig operator at the conclusion of the lease agreement. That way, the rig operator incurs costs on an ongoing basis and

then acquires the rig at the end of the lease agreement.

In an operational lease, the agree-ment is entered into for a term less than the rig’s amortization period (the useful economic life), which means that the lease payments generally do not cover the full costs of the rig. So, if the rig op-erator wants to buy the rig at the end of the lease period, the price will usually depend on the residual value of the rig. Also, an operational lease means that the bank amortizes the rig in its books, which is a key distinction from a finan-cial lease.

Lease agreements have been more popular in Poland than perhaps else-where given VAT issues but historically, I would point to easier enforcement by banks than under standard structured finance arrangements. A lease allows the bank to be the owner, making en-forcement of its rights easier compared

At the risk of over-generalizing, banks worldwide and in Poland in par-ticular, are not good at financing new ventures. Banks by their nature are risk averse, especially in the current climate for financing.

So, the best way to approach a bank with a shale gas project will be to make sure it fits into their standard view of how fi-nancing can be done. With that in mind, in the first of a series of articles, I want to look at how banks like to finance invest-ments in Poland, and perhaps the best structure to first exam-ine is a Polish lease agreement.

Poland has developed a fairly stan-dard practice for structured finance projects, with leasing playing a greater role in financing than new arrivals may be used to. Other than leasing, there will be a more standard structured fi-nance, with security documentation to be put in place, including a pledge on hard assets, a pledge on financial assets, a shareholder guarantee, or a promisso-ry note. But I want to focus for the time being on lease agreements.

Lease agreements will generally be structured as financial or operational leases with the key difference being tax treatment.

In a financial lease, the property (let’s call it a “rig”) is held by the lessee (the “rig operator”) while being owned by the lessor (the “bank”). The rig opera-tor can amortize the rig, and a financial lease usually requires that ownership

As a “permanent expat” (or “lifer” when the temperature goes below -10 C), i get to see how the square peg of shale gas deals has to fit into the round hole of Polish law. let’s take a look at lease agreements for a real world example of jurisprudence in action.

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leasingadrillingriginpoland

“lease agreements will generally be structured

as financial or operational leases with the key differ-

ence being tax treatment.”

to a structured finance, which require a longer checklist in the event a rig opera-tor were to default in its payment obliga-tions. Even so, don’t be surprised if your

bank requires a shareholder guarantee or further security. After all, a bank will not want to actually come and take your rig: as it should be: they’re just in it to make money.

As you go forward with your investments, remember that a certain type of practice in lend-ing has developed and it may be just a question of adjusting your vocabulary and expectations to

Poland. It’s a great place with a sound fi-nancial system: the bureaucracy may be burdensome, but once the bureaucratic machine is fed, the rule of law in Poland makes it a good place to be.

dAvid debenedetti NY Attor-ney, Partner at DeBenedetti Majew-ski SzczeÊniak Law Firm. He special-izes in issues related to green energy law. In the field of non-conventional (shale) gas, he works with strategic and financial investors in planning and structuring their investments. He is founding co-chair of the Am-Cham unconventional gas working group, which was set up to help bring together American investors to ad-dress common issues.


iT’S A long roAd From here To There.


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like it or not, one of the first questions asked when shale gas became a hot topic: how will it be regulated? Cleantech Poland asked five warsaw lawyers to frame a discussion on the barriers to development.


the GeoloGicAl And mininG lAW, though recently amended, is the work of legislators who had no idea about unconventional hydrocarbon produc-tion. When drafted, it didn’t take into consideration that Poland could one day be Europe’s hottest shale play.

When news started circulating about North American energy majors obtaining concession rights, there were calls to put in place regulations concerning shale gas exploration and


Legal Barriers to Shale Gas Development

production before a fast developing market spins out of control.

What ‘out of control’ means is sub-ject to interpretation. Certainly, en-vironmental issues and royalty rates loom large. Most people agree that the regulatory framework should ensure shale gas development has the least possible environmental impact, and that Poland, where all resources are state-owned, manages to secure a de-cent income from production.

The approach in Poland is quite the opposite of what happened in the US, where the development of shale gas preceded state regulations that sought to exert some measure of control over the process. With the top-down ap-proach typical of Poland (and the Eu-ropean Union), operators are anxious to identify current barriers to develop-ment. With that in mind, Cleantech Poland asked representatives of law firms what are those barriers?

“Potential legal disputes will be reviewed by common courts, creating a risk that the proceedings will take an excessively long time.”

– Tomasz dobrowolski


DAviD DEBENEDEtti, DEBENEDETTI, MAJEWSKI, SZCZEÂNIAK

From the most recent conversations I had with my clients, the greatest barrier to the market seems to be the fundamentals of the legal system on which shale gas exploration and pro-duction rest.

Businesses want to know: is the royalty system going to be three per-cent, like Texas, or 80 percent, like Norway? Will the government say ‘thank you’ to current operators of exploratory concessions and grant the actual production licenses according to the usual public procurement prac-tice?

I hope that there’s an understand-ing that in order to have true produc-tion, one’s efforts in exploration must conclude with moving on to produc-tion without having to go through the tendering process. People spend USD 50-100 million to make a billion. No one does exploration for fun, or for the benefit of the community at large.

ROmAN REwALD, WEIL, GOTSHAL & MANGES

The new geological and mining law does not fully implement directive 94/22/EC into the Polish legal sys-tem.

The new law has been drafted and passed without taking into account the needs of upstream producers. For example, here’s a question: who owns the right to produce once the resourc-es are identified?

The current law provides for the right of first refusal with respect to the establishment of a mining usu-fruct for the company that discovers and documents the resources. This right of first refusal applies to the es-tablishment of a mining usufruct and not to the granting of an extraction concession.

In addition, the law provides that the minister of environment may, but is not required to, grant the extraction concession to the holder of the right of first refusal. This means that once the right to the geological documenta-

tion (created during the exploration process) expires, the concession may be granted to a third party.

There also are significant con-cerns regarding the lack of an express regulation regarding what a mining usufruct entails. The terms of the agreement that establish a mining usufruct are to be determined by the parties and it cannot be ruled out that entities may find themselves in con-flict with the minister of environment regarding, for example, the duration of the mining usufruct or the mining usufruct fees. This may considerably extend the time necessary for the pre-paratory stages of investments.

mAciEj wEsOłOwski, DLA PIPER WIATER

Environmental regulations could be problematic. One possible interpreta-tion of the law is that investments in shale gas production could be regard-ed as having a significant, or poten-tially significant environmental im-

“ Poland should consider establishing one, specialist body which would be competent in

all procedures relating to oil and gas.”– maciej józwiak


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pact, with investors obliged to obtain an environmental decision before any operations could begin.

Knowing that some of the explora-tion concessions entail areas under special nature protection regimes, including landscape parks or Natura 2000 areas, it is likely that obtaining permits to carry out work there could prove difficult or impossible.

Local policy could present a barrier. Production of shale gas is only possi-ble on land with an appropriate mas-ter plan or land use study in place. In communes without areas designated for this purpose, local authorities will be able to block operations.

tOmAsz DOBROwOLski, KL GATES

A new law should be on the table in about two months. Once it emerges, the draft law and the discussion about

it will allow investors to assess busi-ness risks with regard to shale in Po-land.

There are a few potential draw-backs in the recently adopted geo-logical and mining law. The new regulation has changed the regime of granting concessions so that there might be problems with those conces-sion holders who contest the result of tender proceedings for production concessions.

Potential legal disputes will be re-viewed by common courts, creating a risk that the proceedings will take an excessively long time. Such disputes should better be reviewed by special-ist courts, for example, the anti-mo-nopoly court.

The criteria for exploration and production tenders are supposed to be non-discriminatory and give pri-ority to “best systems of exploration or production of hydrocarbons.” The winning tender will be decided by a three-person commission, but how such a commission is going to pro-ceed is unclear.

The tender criteria, as given in the geological and mining law, are quite general and could give grounds for doubts regarding interpretation un-less a planned governmental decree on hydrocarbon exploration and pro-duction enters into force.

When the market will move from exploration to production, someone will have to reconcile the confusion on upholding one’s right of first re-fusal.

mAciEj jóèwiAk, WIERZBOWSKI EVERSHEDS

In my opinion, both the EU and Pol-ish regulations are sufficient and comprehensive to regulated both ex-ploration and production, particularly in terms of the environment.

That being said, Polish regulations do need ammended. For example with respect to the length of administra-tion procedures. Administrative regu-lations may seem clear, but there’s too much leeway in terms of the time in which an administration is obliged to issue decisions. Companies might, then, have difficulties in scheduling their work and planning their costs.

Poland should consider establishing one, specialist body working under the ministry of environment and in cooperation with local governments, which would be competent in all pro-cedures relating to oil and gas.

uk based Cuadrilla admits to causing earthquakes in the vicinity of their natural gas drilling operations in an area prone to seismic activity. but what’s that mean for Poland?

Small Earthquakes, Not Big OnesB y p a r K e r s n y D e r p h o t o g r a p h y B y i s t o c K p h o t o


in the sPrinG of 2011, Cuadrilla Resources recorded several seismic events of 1.5 and 2.3 on the Richter scale in the vicinity of their drilling operations in the United Kingdom.

The company immediately stopped operations, acknowledging that the events seemed to coincide with the pressure pumping in their stimula-tion program, at a time when large amounts of chemicals and water were being pumped up to 3 kilometers be-neath the surface to induce tiny frac-tures in shale formations.

After the seismic events, the op-erator commissioned a study to as-sess the cause of the earthquakes and released the results of the study in November 2011. Cuadrilla Resources, also operating acreage in Poland, con-cluded that the seismic events were indeed caused by their hydraulic frac-turing program.

The CEO of Cuadrilla Mark Miller said, “We unequivocally accept the findings of this independent report and are pleased that the report con-cludes that there is no threat to people or property in the local area from our operations.” The Cuadrilla report added, “This unusual combination of factors, including specific geology of the well site, coupled with the presser exerted by water injection, is highly unlikely to occur again.”

According to Paweł Poprawa, a geologist with Polish Geological In-stitute, “The seismic experience of Cuadrilla is just a small occurrence in a huge industry that operates all over the world. Triggering seismic tremors is very rare. It happens but not often.” Mr. Poprawa maintains that the ex-perience of Cuadrilla are not likely to be repeated in Poland. “In Poland, we

the rePort concludes that it is highly probable that the fracing at Pre-ese Hall-1 well triggered the recorded seismic events. This was due to an un-usual combination of factors including the specific geology of the well site, coupled with the pressure exerted by water injection.

This combination of geological fac-tors was rare and would be unlikely to occur together again at future well sites. If these factors were to combine again in the future, local geology would likely limit seismic events to around magnitude 3 on the Richter scale in a worst-case scenario. Cua-drilla’s water injection operations take place over 3 km below the earth’s surface. This significantly reduces the likelihood of a seismic event of magni-tude 3 or less on the Richter scale hav-ing any impact at all at the surface.

pavement of a street in vicinity of the Cuadrilla operations, even though the crack had not been caused by the seis-mic event.

The Cuadrilla Seismic Report, which was done in consultation with the Department of Energy and Cli-mate Change, proposed monitoring future drilling operations, conclud-ing that pressure pumping should be stopped if a seismic event of 1.7 on the Richter scale were to be reached.

According to Paweł Poprawa, of the Polish Geological Institute, “In Po-land, we monitor big fracturing opera-tions. Overall, I don’t think we need new regulations. We just need to keep checking empirical data against our assumptions.”

don’t worry about it at all because Po-land is aseismic, in other words, it is not an area of seismic activity.”

When asked what might have caused the seismic tremors in the UK, Mr. Poprawa said, “In Blackpool, there’s a couple of earthquakes a year, so seismic events happen there natu-rally. There’s never been a consider-able earthquake caused by hydraulic fracturing.”

Although the UK incident caused no structural damage, some people at the surface reported to have felt the trem-ors, and the story went viral support-ing the claim that “fracking causes earthquakes.”

A local newspaper published a pho-tograph of a large crack in the asphalt

The report sets out an early detec-tion system to monitor seismic activ-ity at Cuadrilla’s drilling site and. The early detection system proposed in the report is as follows:

level 1: If no seismic events above magnitude 0 are recorded, regular op-eration can continue

level 2: If an event of between 0 and 1.7 is encountered the company should continue monitoring seismic-ity after injection until seismicity falls back to lower levels.

level 3: If a seismic event of more than 1.7 is encountered, the company should stop water injection and release pressure in the well, to reduce the pressure it exerts, while continuing to monitor.

from the cuAdrillA rePort: GeomechAnicAl study of boWlAnd shAle seismicity

“in Poland, we don’t worry about it at all because Poland is aseismic, in other words,

it is not an area of seismic activity.” – Paweł Poprawa, Polish geological institute


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The Polish GeoloGical insTiTuTe is soon To Publish

iT’s own esTimaTe, which will likely be lower.

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PAWeł PoPrAWA is one of Poland’s principal voices on shale gas. So far, in spite having access to a great wealth of data, he has resisted the temptation to estimate how much gas the rocks might contain.

This spring, however, as he finishes up work on the first official Polish report on the resource base, his and his team’s findings will be the new benchmark against which actual gas shows, if there are any, will be mea-sured.

The report, being put together by PGI in cooperation with the US Geo-logical Survey (USGS), uses a meth-odology that could actually be more informative to operators than the one used in the analysis of world’s shale gas resources from the US Energy In-formation Agency (EIA).

“The EIA report simply looked at the basic characteristics of rock for-mations, like their volume or thick-ness, and made an assumption of how

Paweł Poprawa of Pgi, the Polish geological institute, says an accurate shale gas estimate must be lower than estimates in circulation so far. And risks to the public? here’s a few that should get your attention.

there will belessgas

much gas there is based on analogous information from the US basins,” Mr. Poprawa said.

A CONSERVATIVE APPROACH“The approach this time is different. We will single out a shale basin in the US that’s closest to what we know about Polish basins and look at its historic shale gas production profiles to relate them to the Polish acreage,” Mr. Poprawa said.

The result will be, Mr. Poprawa says, a definitely lower but more re-alistic estimate of recoverable gas in place. The report will also take into account the actual net acreage that could be developed, instead of the total area that the EIA report consid-ered.

“We’re adopting a more conserva-tive approach and the result will show the minimum that Poland might have. Looking at research projects done by USGS in the US that em-

ployed the same methodology, we can clearly see that several basins were estimated to have recoverable shale gas reserves a few times smaller than what the EIA report calculated using the volumetric method,” Mr. Poprawa said.

According to Mr. Poprawa, small scale shale gas operations carried out so far in Poland, even if not viable commercially, have helped to estab-lish that there is gas indeed in the Polish shale.

“Early on, these gas shows were sometimes analyzed as gas seeping from conventional resources, but now we know it’s gas shows from Silurian shales. That means there are geo-logical reserves of gas. The question is whether or not it is commercially recoverable,” Mr. Poprawa said.

It will be some time before opera-tors unfold acreage development pro-grams on a larger scale, but, according to Mr. Poprawa, rushing them to do


that makes little sense. “There’s a lot of interest from the

public, which says: we need to know how much gas there is - and fast. From the business point of view, how-ever, operators want to prove their acreage in a step-by-step process so that in the case there’s nothing to prove they will not have risked too much,” Mr. Poprawa said.

REAL RISKS ARE ELSEWHEREBusiness risk is there, of course, but the public would also like to know about environmental risks due to shale gas development. Mr. Poprawa said that a lot of energy and time have been wasted to look for risks where they hardly exist.

“There are no risks involved in seismic research. In most locations where people are currently afraid of seismic research, such research was already done years ago. The probabil-ity of anything happening is close to zero,” Mr. Poprawa said.

Drilling and fracking, especially the aspects that are routinely dis-cussed as potentially problematic are not problematic at all. “The concen-tration of chemicals used in fracking is minute. At 100 percent concentra-tion, even oxygen is poisonous, so if one is talking about fracking chemi-cals, they have to talk their concen-tration, otherwise the discussion is pointless,” Mr. Poprawa said.

Mr. Poprawa says that the real risks are elsewhere: like in the quality of cementing of the well bore.

“The majority of problems with drilling in the US were due to poor quality of cementing, which is a pro-

cess that should be supervised closely and subject to regulations,” Mr. Po-prawa said.

The other risk is in flow-back wa-ter, or rather the sheer volume of it once operations increase in scale, the Polish geologist added.

“You can assume that on average there’s 3,000-5,000 cubic meters of flow-back water per each frack, coming back up with material from underground: brine, mud, rock bits, or heavy metals. We must prepare to treat large amounts of different kinds of waste coming from thousands of wells in Poland,” Mr. Poprawa said.

These risks will occur only if the production does get underway “In order to get the real picture of produc-

tion potential, you need to carry out several more fracks,” Mr Poprawa said, referring to the unsuccessful hydraulic stimulation from 3Legs Re-sources’ well.

The well drilled by 3Legs he looked at with a personal interest as well, having invested some capital in the company’s stock.

“3Legs’ shares have fallen dramati-cally in price. It’s true that their two fracks were not impressive but the more fracks will be carried out, the less impact on stock price the non-performing wells will have. Right now, it’s two out of two, so it’s not a suprise that shares took a hit,” Mr. Poprawa said.

“The public says: we need to know how much gas there is and fast. but operators want to prove their acreage in a step-by-step process so that if there’s

nothing to prove they will not have risked too much.” – Paweł Poprawa, Polish geological institute

PAweŁ PoPrAwA


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Shale gas basins and the wells drilled in Poland until February 2012 on top of the ecological network.

Polish law requires an environmental impact study for each geological concession, which makes an analysis of the spatial constraints an indispensable part of the planning process.

mapping the Baltic Basin

SourCe: uneP/grid-wArSAw on The bASiS oF The PoliSh geologiCAl inSTiTuTe And The generAl direCTorATe For environmenTAl ProTeCTion.


on 27 january 2012, the european Commission announced there’s no immediate need to change eu legislation on shale gas exploration. Sounds encouraging, especially for those investors who were concerned that the eC could follow a more conservative approach which led to banning shale gas exploration in France. in the light of the Commission’s findings, one could say Polish environmental legislation is sufficient to prevent or mitigate possible environmental threats, especially those perceived to have a significant impact.

balticBasin

SourCe: uneP/grid-wArSAw own dATA And inFormATion From The generAl direCTorATe For environmenTAl ProTeCTion.


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The northern part of the baltic basin, the most promising of three pro-spective basins, and its mosaic pattern of protected areas and forests.

The mandatory screening of potential environmental impacts includes an assessment of effects on natura 2000 sites and other protected areas. moreover, forestry areas, agricultural land and water sources for fracturing (both surface and aquifer) are also granted certain legal protection. Thus, investors need to prove that their planned shale gas developments can proceed in an environmentally responsible manner, leaving almost no footprint on the landscape of the region.


Population density in the northern baltic basin.

Fortunately, the general public attitude in Poland is much less sceptical towards shale gas activi-ties than in France. however, due to the spatial distribution of shale gas resources - each proj-ect would bring drilling and production to regions that have seen little or no activity in the past. moreover, exploration and production may come into conflict with the local zoning/spatial plan, if there is one. Therefore, a pre-requisite for success is an analysis of socio-economic and legal features, such as land ownership and population density.

balticBasin

SourCe: uneP/grid-wArSAw geoPAnel APPliCATion.

legowo well drilling pad, surveying and presentation of spatial data by geopanel application (thematic layers: areas threatened by water inundation, topographic map, physical planning, orthophotomap).

SourCe: uneP/grid-wArSAw, STATiSTiCAl dATA From The CenTrAl STATiSTiCAl oFFiCe oF PolAnd AS oF deC. 31, 2010.


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legowo well drilling pad, surveying and presentation of spatial data by geopanel application (thematic layers: satellite image, open Street map, land records data).

The use of the giS (geographic information System) and geo-information techniques al-lows an operator to acquire, analyze, process and disseminate spatial information in digital form, for the purposes of spatial management planning and decision-making. The techniques shown here help to compile and analyze overlapping ‘information layers. Sophisticated? Complicated? not really. it’s just a simple tool for decision making.

SourCe: uneP/grid-wArSAw geoPAnel APPliCATion.

environmentAl informAtion centre uneP/Grid-WArsAW est. 1991, is part of the Global Resource Information Database network, an UN-affiliated agency collecting, processing, and disseminating en-vironmental information. Areas of our expertise include computer-assisted thematic cartography and mapping, spatial data analyses, remote sensing and mobile GIS-

mARiA ANDRzEjEwskA Director UNEP/GRID- Warsaw Centre ul. 8 Sobieszyƒska 00-764 Warsaw

[email protected]

based tools and techniques for data acquisition and rapid mapping, de-velopment of web-GIS applications and geoportals. Our activities cover a wide range of topics, including nature protection, agriculture, and spatial planning. We cooperate with the European Environment Agency (EEA) and other foreign and nation-al partners.

while graduates in geology and oil & gas eP are now seeing their competences in big demand, companies are on the lookout for fresh blood. internships, stipends, job offers are available for the best Polish students.

Picking

Brains


it could be that the future of the Polish shale gas rests not on well pads, but in the corridors of the Polish uni-versities, where oil and gas companies are trying to fish out the best students.

“The gas sector is suffering from lack of fresh blood. Your typical gas professional has aged considerably,” said Joanna Dłu˝niewska of Polish Oil and Gas Company (PGNiG), where she heads a stipend program aimed at top students in Polish universities. PGNiG is offering a sum of money - usually a few thousand Polish złoty - in a one-off payment to 10 students, singled out from candidates sug-gested by profes-sors at a few top universities.

One such stu-dent is Dawid Wojaczek who won the PG-NiG’s stipend in the 2011/2012 edition. He’s only 22 and while still more than two years before graduation from the Kraków-based University of Science and Technology (AGH), he has already been gaining experience at internships in companies like Lotos Petrobaltic for example. At AGH, he’s a member of a scientific club, whose members discuss subjects like the potential of shale gas in Poland, technologies of coal gasification or geothermal energy.

ONLY THE BEST“The students must have excellent re-sults, and a proven record of research and development interests, for exam-ple, that they demonstrated at confer-

tech Poland.Of recently, Orlen Upstream has

been looking to fill positions like drill-ing engineer, reservoir engineer, geolo-gist, geophysicist or HSE specialist.

NOT FISHING YETOrlen Upstream and PGNiG have a longtime presence in Poland with rather sophisticated structures and large employment figures. The pres-sure to reach out to Poland’s student hopefuls however is not felt as strong-ly by independent operators, like San Leon Energy.

Despite hav-ing produced some promising well results, San Leon’s head of public relations Karolina Ro-manek says that there currently is no rationale for the company to spend time

and resources to fish out students from the Polish universities. “What we rather need here and now are trained professionals who are hard to come across in Poland, or even Europe,” Ms Romanek said.

But shale gas might only flow in commercial quantities in 2014, ac-cording to PGNiG, or even around 2018-2020, according to Orlen Up-stream. By that time, current stu-dents, like Mr. Wojaczek, should be in demand. “I’m definitely going into hydrocarbons and unconvention-als will be a strong option once shale gas or shale oil sectors move on,” Mr Wojaczek said.

ences. A stipend from PGNiG doesn’t guarantee a job with us but is certain-ly a help,” said Ms Dłu˝niewska.

Another Polish operator, Orlen Up-stream, part of PKN Orlen, has been extending the potential benefit of working in exploration and production as well. Particularly in focus for the Orlen Upstream are the Departments of Drilling, Oil and Gas as well as Ge-ology, Geophysics and Environment Protection at AGH. Orlen Upstream is also cooperating with the Institute of Geology at the Jagiellonian University in Kraków.

Orlen Upstream’s cooperation with the Kraków universities has only had a scientific character until recently, in-volving researchers in consulting work regarding drilling or the environmen-tal aspects of exploration and produc-tion.

As shale gas development began in earnest in Poland in 2011, the com-pany decided to roll out an internship program called “A Step to Career”, directed to students of AGH. “On completion of the program, selected students were offered jobs at Orlen Upstream. The 2012 edition should result in more jobs for graduates,” Or-len Upstream’s press office told Clean-

“i’m definitely going into hydrocarbons and unconventionals will be a strong option once shale gas or shale oil sectors move on.” – dawid wojaczek, Pgnig’s stipend winner

B y W o j c i e c h K o s c p h o t o g r a p h y B y M a t e u s z s W i D e r


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United oilfield ServicescorPorAte hse mAnAGer

“United Oilfield Services is now looking for a corporate HSE manager to help de-velop and implement top tier HSE practices in one of the newest international service companies based in Poland. United Oilfield Services is building a strong culture for the priority of its employee’s safety and the en-vironment in which they work. The Corpo-rate HSE Manager will take on responsibil-ity for implementing a strong HS&E culture throughout all three product lines which include Drilling, Hydraulic Fracturing, and Geophysical. The corporate HSE manager will also manage HS&E supervisors for each product line.” More UOS Jobs in Poland:

Corporate Maintenance SupervisorFracturing SupervisorFracturing EngineerFracturing Operations Supervisor

Schlumberger mAnAGer: schlumberGer business consultinG

“An SBC manager is an experienced con-sultant who manages one or two consulting engagement teams, under the supervision of a Principal or Vice President. Managers will also be asked to participate in business development and intellectual contribution initiatives. A manager will quickly become a member of one or more practices and will be expected to develop a junior leadership role in the development of points of view, experi-ence capitalization, and internal and exter-nal communication of knowledge.”

More Schlumberger jobs in multiplelocations:

PrincipalVice PresidentCompletion and Workover EngineerDrilling Engineer (or Well Engineer)


JobsWith investments in shale, come the jobs.

Cleantech Poland surveyed the labor market to capture a few of the descrip-tions for past and present appointments. write to us at [email protected] to have your jobs posted in the next issue or scan the qr code for the job link online.

Jobs info current as of 17.02.2012

chevrondrill site mAnAGer (comPAny rePresentAtive)

“DSM positions are part of our pool of em-ployees working expatriate assignments outside of their home country. Typical work schedules are 28 days on/28 days off, with travel time on the employee’s days off. De-pending on local laws and regulations, an expatriate employee can expect assignments to typically last 3 – 4 years, longer in some cases. [The DSM] manages on site day to day operations on drilling, completion, interven-tion and workovers in a safe and efficient manner. Works in a team environment to ensure the safety of all personnel on location and compliance with all applicable govern-ment regulations.”

More Chevron jobs:

Drilling Engineer Completion Engineer

cDM Smith“At CDM Smith, we are committed to build-ing strong and lasting relationships with our clients and each other. Together, we are solv-ing the world’s water, environment, trans-portation, energy and facilities challenges with smart, integrated solutions. As your trusted partner, we are shaping tomorrow while delivering the services you need today. Proving every day—in every way—we’re bet-ter together.”

CDM Smith has recently recruited in Poland:

Construction ManagerNoise SpecialistGeologist


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Upcomingshalegasevents marchthroughjune

shAle GAs environmentAl summit 2012

dAte: May 22-24, 2012lAnGuAGe: The event will be held in English.locAtion: London, UK, Copthorne Tara Hotel

info in enGlish:

detAils: The two day conference and one day workshop takes up environmental protection as a departure point. The program covers a range of topics including environ-mental risk assessments, groundwater impact studies, and shale in the context of UK climate policy. The speaker list is predominantly UK-based, including a politician from the House of Commons, but the day-one workshop has a Polish angle. Cleantech Poland present an hour-long training in cooperation with CEE Consulting Group who will speak on FCPA compliance and political risk.

unconventionAl GAs forum 2012

dAte: May 13-14, 2012lAnGuAGe: The event will be held in English.locAtion: Barcelona, Spain, Hotel Rey Juan Carlos I info in enGlish:

detAils: Go there to hear Polish geologist Paweł Poprawa, John Buggenhagen, Exploration Director for San Leon Energy, or Nick Grealy of NoHotAir.uk, one of the longest running portals covering the development of shale gas in Europe. Held in sunny Barcelona on the southeast coast of Spain, it’s a two day event with a strong focus on operator issues, and also includes a session on unconventionals in Turkey and North Africa.

unconventionAl GAs & oil summit 2012 (uGos)

dAte: March 26-29, 2012lAnGuAGe: The event will be held in English.locAtion: Warsaw, Poland, Sheraton Hotel

info in enGlish:

detAils: Probably the most international of unconven-tional gas events held in Warsaw, Cleantech Poland has partnered with UGOS to be the moderator of the invest-ment panel titled: Shale Acreage and Joint Ventures. Mr. Marc Partridge of Gazprom and Dr. John Buggenhagen of San Leon couldn’t possibly have any views in common, or could they? Go there to learn Gazprom’s view on Polish shale. What’s more, volume 2 of our Shale Gas Investment Guide will be given away at our booth.

shAle GAs World 2012

dAte: November 27-29, 2012lAnGuAGe: The event will be held in English.locAtion: Warsaw, Poland, Hyatt Hotel

info in enGlish:

detAils: The Terrapinn event, held annually in War-saw, is by far the best attended of all the shale gas events in Poland. Now in it’s third year, you can go there to net-work with pretty much all the service companies on the market, including Schlumberger, Weatherford, Hallibur-ton, Baker, Viking, Acoustic, Global Geophysical and the startup United Oilfield Services. Even the operators come out for this one; expect to bump into the country manager for Lane Energy and the general manager of ExxonMobil. Cleantech Poland will have a booth, and free copies of the Shale Gas Investment Guide will be given away.



List of bmPs

ComPleTion SeleCTion For eFFeCTive STimulATion

– PAckers Plus

how To loCATe A well PAd – cdm smith

ShAle FArmerS hArveST

in PolAnd – PWc

wATer eConomiCS

in ShAle ProduCTion – PAcWest

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Turn To PAge 141 For bmPS in

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Regardless of the completion type, the last five bullet points are critical to any good stimulation job, and ul-timately the production performance of the well. The primary method for stimulation in Poland utilizes pump down guns inside a cased and ce-mented liner.

Regarding the first two bullets, stimulation of any reservoir type using a cased and cemented liner is likely to induce fracture tortuosity. This is because the fracture may not occur at the perforations, forcing the fluid and proppant to take a tortuous

WhAt chArActeristics should the perfect fracture stimulation have, and ultimately the fractures it pro-duces? If you asked anyone involved in fracturing the answers should be as follows:

• Minimal fracture tortuosity• Low breakdown pressures• Under displacement of proppant• High near wellbore proppant density• Enhanced inflow conductivity • Quick flowback• Minimal fluid loading

in contrast to plug and perf, open hole completions mitigate tortuosity, reduce breakdown pressures and minimize the chance of a screen out. This is achieved by allowing the formation to fracture at the point of least resistance and giving stimulation fluid and proppant a direct flow path to the induced fracture.

p a u l h i g g i n s o n

completionselectionforeffectivestimulation,–packersplus

path between the casing/wellbore and the cement. When this occurs, and seismic has shown that it fre-quently does, breakdown pressures increase as does the chance of prema-ture screen-out.

OPEN HOLE COMPLETIONSIn contrast, open hole completions mitigate tortuosity, reduce break-down pressures and minimize the chance of a screen-out. This is achieved by allowing the formation to fracture at the point of least resis-tance and giving stimulation fluid and proppant a direct flow path to the induced fracture. This contributes to the ability of open hole comple-tions to maximize production in new fields and increase production in aging fields compared to cemented liner plug and perf methodology.

Regarding the next three bul-lets, displacement refers to where the proppant lies in reference to the wellbore. Over displacement means there is no near wellbore proppant because pressurized fluid has forced it deep into the fracture. Initially, an un-propped fracture may remain open and allow production, but in time the fracture will close negating the value of the rest of the propped fracture. Under displacement means that some of the proppant remains near wellbore to hold the fracture open. This is the ideal case and en-sures that the fracture remains open to enhance conductivity and allow hydrocarbons to flow into the well-bore and liner.


Cemented liner plug and perf completion showing fracture tortuosity and proppant over displacement


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In Europe, coiled tubing is typi-cally used to run perforating guns or abrasive jets, which allow the fractures to remain under dis-placed. However, using coiled tubing in this manner makes for lengthy stimulation times with a minimum of three days per fracture; therefore, an alternative method has been used in Poland. Perforating guns suspended on electric line are lowered into the well and pumped down after prop-pant has been placed in the previ-ous stage. This requires at least one full tubing volume, which in Pol-ish horizontal well architecture is approximately 200 bbl. This fluid over displaces the proppant from the previous stage into the fracture reducing the near wellbore prop-pant density to zero. This process is repeated for all remaining stages.

RESERVOIR DAMAGERegarding the last two bullets, suc-cessful fracturing and proppant placement is not enough to ensure a productive well. Production can also be drastically affected by stim-ulation-induced reservoir damage. Stimulation fluids used to create the fracture, particularly water-based fluids, can cause reservoir damage. It is critical that the time between the first fracture stimula-tion to when the well is flowed for cleanup is minimized. Although traditional water-based fluids can be replaced with less damaging media such as N2, CO2, foams or propane, these may not be readily available. Cemented liner methods require post-stimulation mill out

of bridge plugs resulting in prolonged fluid contact with the reservoir; whereas, open hole completions al-low for immediate flowback reducing induced reservoir damage.

The above discussion demon-strates how the completion method selected can affect the success of a fracture stimulation program. In most cases, open hole multi-stage ball-drop systems not only provide the ability to perform multiple stimu-lation treatments in a single day, but inherently promote good fracturing practices. Reduced breakdown pres-sures minimize the risk of screen-out, a major source of non-productive time in stimulation operations. Frac-

tures are under displaced, resulting in high near wellbore proppant densi-ty that is critical to enhancing inflow conductivity. Formation damage is reduced because less fluid is required between fracture treatments so there is less fluid to recover, and because the system allows for immediate flowback.

This not only enhances production and minimizes completion time, but reduces environmental impact. Additionally, these systems have the ability to perform water shut-off, re-stimulation and pre-stimulation pro-duction testing, a huge benefit in the appraisal phase of a reservoir where results can be unpredictable.


open hole multi-stage ball-drop systems not only provide the ability to perform multiple stimulation treatments in a single day, but inherently promote good fracturing practices.

Open hole multi-stage system completion showing high near wellbore proppant density

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natural resources to define areas with the highest probability in iden-tifying the most efficient permitting environment for well pad and rig placement. Such an analysis can be done early to recognize seismic line locations that lead to site selection

or can be done during scouting to predefined areas within the larger concession block.

A constraint analysis allows the operator to create a ranking of areas as ideal, less than ideal and, just as importantly, areas where permitting will be time consuming. Taking such a map overlaid on aerial im-agery out to the field allows for field checking and investigating criteria such as road and site conditions,

locAtinG And PermittinG explo-ratory wells in Poland challenges traditional site selection techniques. Operators are in a predicament be-tween choices based on site selec-tion and efficient permitting.

Although it may not appear to be a dichotomy, decisions driv-ing site selection, technical feasibility and accessible permit locations are some-times at odds.

Operators may base their site selection on various criteria: where seismic data is most accurate or where two seismic lines cross. Others may choose a site based on relationships with the local communities in conjunction with read-ily available seismic data. Although each approach is valid in locating an exploratory well, permitting in Poland continues to challenge traditional site selection techniques.

An approach worth considering during site selection is a land-use suitability analysis, also called a constraint analysis. This ap-proach takes into account appropri-ate, complex spatial information through GIS such as land uses, regulatory setbacks, road types and

A constraint analysis allows the operator to create a ranking of areas as ideal, less than ideal and, just as importantly, areas where permitting will be time consuming.

K r z y s z t o F K a M i n s K i , a D a M l o c K e , M a g D a l e n a p a v l a K - c h i a r a D i a

howdoyoulocateawellpad?–cdmsmith

ownership or other determining factors identified by the operator. This narrows down site selection and takes the guesswork out of po-tentially time-consuming permits or negotiations, helping to facilitate meeting the spud date and helping

to reduce location costs. Specifically, CDM

Smith’s customized con-straint analysis approach for Poland has saved op-erators an estimated av-erage of about $300,000 per location and at least two months in permitting time alone.

These GIS-based maps facilitate an under-standing of permitting complexity and act as communication tools. A properly developed map

can, in simple graphic terms, let communities understand why a certain site has been selected and communicate the careful consid-eration an operator has taken in selecting a site to limit impacts to the environment and the commu-nity’s way of life. Since a constraint analysis is based on pre-defined unbiased criteria from maps, aerials and regulations, such a useful tool is transparent and open for the public

Cdm Smith’s customized constraint analysis approach for Poland has saved opera-tors an estimated average of about $300,000 per location and at least two months in permitting time alone.


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to educate them and obtain their acceptance of the site selection.Use of GIS technology upfront brings together planners, scien-tists and engineers creating a high

level of cooperation and involve-ment for a broad-based approach to efficient site selection. CDM Smith’s GIS specialists, coupled with our experienced environmen-

tal permitting and engineering staff, offer solutions to efficiently and effectively minimize impacts to schedules.


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CdM Smith Constraint analysis

A map can, in simple graphic terms, let communities understand why a certain site has been selected and communicate the careful consideration an operator

has taken in selecting a site to limit impacts to the environment and the community’s way of life.


WATCHING OUTMost investors are aware of techni-cal issues related to the project such as exploration and extraction costs, probability of success, volume of gas, access to the market, etc.

What is often of their concern is external, country-specific condi-tions such as the tax structure of the transaction, legal possibilities, social responsibility and sustainability strategies. Moreover, both parties of a transaction should convince their stakeholders that the transaction is fair from the financial standpoint (fairness opinion).

In general Polish law including tax regulations is not adjusted to various forms of joint ventures, either in form of JOA or limited liability

FARMING INIn practice the most common forms of farm-in cooperation in Poland in shale gas are: • contractual joint ventures based on joint operations agreements (JOA)• establishing of a special purpose vehicle (SPV) in a form of limited li-ability partnership (spółka komandy-towa in Polish).

In that field, Polish practice is simi-lar to that observed in the United States where contractual joint ven-tures based on JOA are the most common form of cooperation in the shale gas industry. However stake-holders should also be aware that all of the above mentioned solutions meet significant legal and tax conse-quences.

while exploration concessions for the most attractive shale gas prospects in Poland have already been granted, and the shale gas market gets into a more mature stage, we look forward to seeing the business activity patterns of inves-tors develop along the lines of developed shale gas markets in the u.S. and Canada.

t o M a s z B a r a n c z y K , j a r o s l a W g r z y W i n s K i , g r z e g o r z K u s , K o n r a D M i c h a l a K

shalefarmersharvestinpoland,–pwc

partnerships SPV. Therefore, each of these scenarios of cooperation may bring about certain concerns.

A LEGAL LOOKFrom the legal perspective all min-erals deposits in Poland constitute the sole property of State Treasury. One of the most crucial issues is to execute a valid and fully enforceable mining usufruct agreement with State Treasury.

According to this agreement the shale gas investor shall have the right to use a specific mineral deposit owned by State Treasury. The min-ing usufruct agreement shall precise-ly determine all conditions and uses of such minerals. The investor may prospect for exploration or/and pro-duction of designated mineral. The concession shall be granted for defi-nite period of time, not shorter than 3 years and not longer than 50 years.

The Polish Geological and Mining Law, which covers the procedure of granting concessions for prospect-ing, recognition and exploitation of hydrocarbons (including shale oil & gas), provides that the conces-sion as well as mining usufruct may be granted only to one single entity. Simultaneously, transfer of conces-sion is permitted only as a whole i.e. it is not possible to sell an interest in concession. Another case to solve is the ownership of exploited gas or po-tential necessity to perform antitrust clearance in case of creation of SPV.


Observing the market, we expect the following forms of business activity to be predominant:

AcqUisitiONs:Investors stepping into the place of entrepreneurs which already hold the relevant mining usufruct and concession, by e.g. or taking a corporate control over this entre-preneur. From the seller’s point, such transactions are motivated by a wish to cash out the benefits from early application for concession;

FARm-iN FARm-OUts:Players conclude an agreement whereby one party acquires the right to a share in the production profits in return for financial and technological support of the ex-ploration and the production of minerals. Farm-outs can be diverse in terms of compensation, such as granting access to other prospective fields, exchange of technology, cash payments etc. The main rationale of farming out is to diversify proj-ects, share the risk of failure and acquire know-how.


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PWc’s enerGy GrouP was found-ed in 2000 in response to the grow-ing demand for advisory services from Polish and foreign energy companies. Over the last 12 years together with our clients we were engaged in the transformation of the energy, oil & gas and the min-ing sector in Poland.

TAXES DO MATTEROn the tax side, a foreign entity be-ing a partner of a limited liability partnership might be perceived by tax authorities as having a Pol-ish permanent establishment and in consequence be obliged to pay income taxes in Poland as well as comply with certain reporting obli-gations.

The farmer usually expects re-muneration for the possibility to enter the concession from the far-mee as well as some kind of reim-bursement of costs so far incurred on exploration. As a result, joint ventures might lead to co-own-ership of fixed assets, which may imply real estate tax obligations. Therefore tax issues should be care-fully analyzed and planned at the level of choosing of cooperation method because it may turn out that the Polish tax law leads to tax effects substantially different to the intentions of parties of JOA or part-ners of SPV.

Further tax questions might arise with respect to the VAT issues con-nected with settlements between parties, especially if one of them is assigned the operator role and is fi-nancing the operations through so-called “cash calls” or is recharging the remaining parties with costs. The VAT issues of future sales of exploited resources should also be considered at the early stage of ne-gotiating of JOA or SPV partners’ agreement.

However advanced tax planning and application of existing optimi-zation opportunities could secure the tax position of joint venture parties as well as efficiently struc-

ture their tax burdens. Tax rulings, special clauses in JOA or SPV part-ners agreements regarding tax settle-ments and agreements on precise


in general Polish law, including tax regulations, is not adjusted to various forms of joint ventures, ei-ther in the form of joint operations agreements or limited liability partnerships (SPvs).

PwC - Energy advisor

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Among our clients are Ciech, Enea, Energa, Gaz-System, JSW, KGHM, KHW, Kompania We-glowa, Kulczyk Holding, Lotos, PGE, PGNiG, PKN Orlen and Tau-ron, as well as global players Au-relian, Chevron, ConocoPhillips, ENI, E.ON, ExxonMobil, Fortum, Marathon Oil, RWE, Talisman.

Tomasz Baraƒczyk, Partner, Tax and Legal department, [email protected], +48 502 184 852

Article PrePAred by PWc enerGy teAm exPerts:

scope of administrative activities of each party are few examples of how this could be achieved.

Konrad Michalak, Senior Manager, Business Advisory department,[email protected], +48 502 184 364

Jaroslaw Grzywiƒski, Counsel, Tax and Legal department,[email protected], +48 519 506 961

Grzegorz Kus, Senior Consultant, Tax and Legal department,[email protected], +48 519 507 208


more than is typical in the develop-ment and production of a conven-tional field.

WATER MANAGEMENTManaging all of the water going into and flowing out of a shale well is complex and costly. Water used for hydraulic fracturing must be sourced, transported, and stored, often with many intermediate steps in between. The water coming out of the shale well (both high volume flowback water and lower volume produced water) must be stored, transported, and treated for reuse or surface discharge.

WAter mAnAGement has always been an important activity in the development and production of oil/gas resources. However, water’s im-portance in the oilfield has increased dramatically with the wide-scale development of shale resources and the importance of hydraulic fractur-ing (“fracing”), a process which con-sumes millions of gallons of water.

As Poland’s operators develop their shale resources, they will want to consider how various water manage-ment choices will affect their capital and operational expenditures and long-term implications for compa-nies, the oil/gas industry, and local communities.

Fracing requires large volumes of water as an input into the well (typical volumes range from 10,000 barrels to 200,000 barrels per well). Roughly 10-40% of the water pumped into the well during hydrau-lic fracturing returns to the surface (“flowback water”) in the first 30-60 days of the life of the well.

In order to maintain production rates over the life of a well, it is ex-pected that it will be necessary to re-frac wells one or more times, likely at 3- to 5-year intervals. Finally, a larg-er numbers of wells must be drilled to effectively drain a shale field than a conventional oil/gas field. These factors amount to a massive volume of water that must be managed over the life of a shale field, significantly

Pacwest developed a multi-factor economic model to forecast long-term (20-year) lifecycle water management costs. The model serves as a critical tool to quickly understanding the costs and implications of e&P long-term water management operations.

a l e x a n D e r r o B a r t

watereconomicsinshaleproduction,–pacwest

Additionally, the water coming out of a well varies widely in quality, but none can be considered clean with-out significant treatment to remove salt, hydrocarbons, bacteria, and other minerals.The problem of how to manage water in the context of shale development and production can most aptly be referred to as a “lo-gistical nightmare.”

Figure 1 below provides an over-view of the segments in the water lifecycle in the development and production of shale resources, along with the most common approaches to managing water in each segment.


Water Management Segments in the development and Production of Shale Resources


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A major challenge with water man-agement in the context of shale development is that the long-term costs are not well understood. An-other problem in understanding wa-ter management costs is that water-related expenditures are generally not comprehensively grouped into a single accounting category, so many companies are not aware of their true long-term lifecycle water man-agement costs.Given this multitude of challenges in oilfield water management, an E&P client with acreage in the Eagle Ford play in South Texas asked PacWest for help in developing a comprehensive picture of their true lifecycle water management costs under a variety of scenarios. PacWest developed a multi-factor economic model to forecast long-term (20-year) lifecycle water management costs under various water treatment sce-narios and help optimize water op-erations. When combined with a bet-ter understanding of existing water management operations and costs, the model serves as a critical tool to quickly understanding the costs and implications of E&P long-term water management operations.

The results of our economic analy-sis showed that, over the long-term, the large volumes of water managed in the development and production of shale resources justify invest-ments in water treatment infrastruc-ture. The results assume a relatively large scale of activity, but even at


The problem of how to manage water in the con-text of shale development and production can most aptly be referred to as a ‘logistical nightmare’.

PacWest Consulting Partners, global intelligence

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PAcWest consultinG Partners is a boutique strategy consultancy and market intelligence firm that specializes in the energy, industri-al, and resources sectors. Much of our work is focused around the oil-field and the many industries that supply critical products and ser-

vices to it. With the explosion of unconventional resources in North America, the energy landscape is changing quickly and PacWest is at the forefront of that change, help-ing companies develop and imple-ment new strategies to position themselves for growth.

reduced levels, economic results re-mained stable. Given those conclu-sions, lifecycle water management in the development and production of shale resources presents a signifi-cant opportunity for cost savings. If operators are willing to take a longer-term view by committing invest-ments to up-front capital expendi-tures to reduce long-term operating expenditures, then the economics are compelling.

WATER ISSUES IN POLANDWhile water is not a particularly scarce resource in Poland, its use and discharge are heavily regulated. Deep injection of flowback and pro-duced water is not an option in Po-land, due to a lack of suitable wells and legislation that restricts deep well injection, considered an envi-ronmental discharge.

The management of stormwater

runoff is a challenge, as regulations dictate that water that falls on-site cannot be drained to surface water bodies, requiring the use of detain-ment ponds to store runoff. This runoff cannot however be taken to municipal treatment facilities as it is not considered “dirty” enough to warrant energy-intensive treatment.Currently, the majority of water produced by oil/gas wells in Poland is handled by industrial water treat-ment plants, adding to operational costs. Given the small number of active wells in Poland currently, this is feasible; however, as well counts increase, operators will have to de-velop more suitable industry-specific solutions. the meantime, operators in Poland should closely study the various technologies being employed in North America and evaluate them in the context of their own unique situation.


WyBÓr sPosoBu uDosT¢Pniania

Do eFeKTyWneJ sTymulaCJi meToDÑ Packers Plus

JaK WyBieraå loKaliZaCJ¢

PlaCu oDWierTu? – cDM sMith

„FarmerZy” ZŁÓ˚ ŁuPKoWyCH W

PolsCe ZBieraJÑ „Plony” – Pwc

gosPoDarKa WoDna PrZy

WyDoByCiu gaZu i roPy Z ŁuPKÓW – Pacwest


bmPsPo Polsku

WyBÓr sPosoBu uDosT¢Pniania

Do eFeKTyWneJ sTymulaCJi meToDÑ Packers Plus

JaK WyBieraå loKaliZaCJ¢

PlaCu oDWierTu? – cDM sMith

„FarmerZy” ZŁÓ˚ ŁuPKoWyCH W

PolsCe ZBieraJÑ „Plony” – Pwc

gosPoDarKa WoDna PrZy

WyDoByCiu gaZu i roPy Z ŁuPKÓW – Pacwest

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Bez wzgl´du na rodzaj udost´-pnienia, pi´ç ostatnich podpunktów jest kluczowe dla ka˝dej dobrej stymulacji i ostatecznie wyników produkcyjnych z odwiertu. Główna metoda stymulacji w Polsce wykorzystuje perforatory wprow-adzane poprzez pompowanie do rur traconych zacementowanych w rurach okładzinowych.

Co si´ tyczy pierwszych dwóch podpunktów, stymulacja ka˝dego rodzaju zło˝a z zastosowaniem rur tra-conych zacementowanych w rurach okładzinowych prawdopodobnie wywoła kr´toÊç szczelin. A to na skutek tego, ˝e szczelinowanie mo˝e nie nastàpiç w miejscach perforacji, zmuszajàc płyn zabiegowy i podsadzk´ do obrania kr´tej

JAkie cechy powinna posiadaç dosko-nała stymulacja szczelinowaniem i os-tatecznie szczeliny, które sà jej efektem? Gdyby zapytaç kogoÊ, kto miał do czynie-nia ze szczelinowaniem, odpowiedzi byłyby nast´pujàce:

•Minimalna kr´toÊç szczelin•Niskie ciÊnienia przełamania otworu•Podsadzka nie jest nadmiernie przem-ieszczona (overdisplacement)•Wysoka g´stoÊç przyodwiertowa pod-sadzki•Poprawiona przewodnoÊç przypływu•Szybki zwrotny przepływ płynu za-biegowego•Minimalne obcià˝enie płynem za-biegowym

W przeciwieƒstwie do metody plug and perf udost´pnianie otworów bez orurowania łagodzi efekt kr´toÊci (tortuosity), zmniejsza ciÊnienia przełamania i minimalizuje mo˝liwoÊç niekon-trolowanego wytràcenia podsadzki (screen out). osiàga si´ to poprzez umo˝liwienie szcz-elinowania formacji w punkcie najmniejszego oporu oraz wyznaczenie płynowi zabiegowemu i materiałowi podsadzkowemu bezpoÊredniej Êcie˝ki przepływu do wywoływanej szczeliny.

p a u l h i g g i n s o n

wybór sposobu udost´pniania do efektywnej stymulacji metodà Packers Plus

drogi pomi´dzy rurami okładzinowymi/odwiertem, a cementem. Kiedy coÊ takiego nastàpi, a badania sejsmiczne wykazały, ˝e cz´sto to ma miejsce, ciÊnienia przełamania si´ zwi´kszajà, jak równie˝ wzrasta prawdopodobiestwo przedwczesnego wytràcenia podsadzki (screen-out).

UDOST¢PNIANIE OTWORÓW BEZ ORUROWANIAW przeciwieƒstwie do tego, udost´-pnianie odwiertów bez orurowania łagodzi zjawisko kr´toÊci (tortuos-ity), zmniejsza ciÊnienia przełamania i minimalizuje mo˝liwoÊç niekon-trolowanego wytràcenia podsadzki (screen out). Osiàga si´ to poprzez umo˝liwienie szczelinowania formacji w punkcie na-jmniejszego oporu oraz wyznaczenie płynowi stymulujàcemu i materiałowi podsadzki bezpoÊredniej Êcie˝ki prze-pływu do wywoływanej szczeliny.

Przyczynia si´ to do tego, ˝e udost´pnianie odwiertów bez oruro-wania mo˝e maksymalizowaç produkcj´ na nowych polach i zwi´kszaç produkcj´ na polach starzejàcych si´, w porównaniu z metodà ‘plug and perf’ z cementowanà traconà kolumnà rur okładzinowych.

Je˝li chodzi o trzy kolejne podpunkty, przemieszczenie odnosi si´ do miejsca, w którym znajduje si´ podsadzka wzgl´dem odwiertu. Nadmierne przemieszczenie (overdisplacement) oznacza, ˝e w strefie przyodwiertowej nie ma podsadzki, po-niewa˝ płyn pod ciÊnieniem wtłoczył jà głeboko do szczeliny. Poczàtkowo, szcz-elina bez podsadzki mo˝e pozostawaç otwarta i umo˝liwiaç wydobycie, ale z czasem zaciÊnie si´, negujàc wartoÊç pozostałej cz´Êci szczeliny podpartej pod-sadzkà. Nienadmierne przemieszczenie (underdisplacement) oznacza, ˝e cz´Êç podsadzki pozostaje w strefie przyodwier-towej podtrzymujàc rozwarcie szczeliny.

èrÓDŁo: ComPany DaTa

Udost´pnienie metodà ‘plug and perf ’ z cementowanà traconàkolumnà rur okładzinowych wykazujàce kr´toÊç szczeliny

i nadmierne przemieszczenie podsadzki (overdisplacement)


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Jest to przypadek idealny i zapewnia on, ˝e szczelina pozostaje otwarta po-prawiajàc przewodnoÊç i umo˝liwiajàc w´glowodorom napływ do odwiertu i rur okładzinowych.

W Europie, zwykle stosuje si´ urzàdzenie z przewodem zwijanym (coiled tubing) w celu zastosowania perforatorów lub hydroperforatorów, które umo˝liwiajà utrzymanie szcze-lin bez nadmiernego przemieszczenia podsadzki. Jednak˝e stosowanie prze-wodu zwijanego w taki sposób powoduje długie okresy stymulacji, minimum 3 dni na wykonanie szczelinowania; zatem w Polsce stosowana była metoda alternatywna. Perforatory zawieszone na kablu strzałowym sà zapuszczane do odwiertu i wtłaczane poprzez pom-powanie za podsadzkà, która została wprowadzona na poprzednim etapie. Wymaga to zu˝ycia płynu zabiegowego w iloÊci równej co najmniej jednej pełnej obj´toÊci przewodu wydobywczego, która w architekturze polskiego otworu poziomego wynosi około 200 bbl. Ten płyn nadmiernie przemieszcza pod-sadzkà z poprzedniego etapu w głàb szc-zeliny, zmniejszajàc g´stoÊç podsadzki w strefie przyodwiertowej do zera. Pro-ces ten jest powtarzany dla wszystkich pozostałych etapów.

USZKODZENIE ZŁO˚ACo si´ tyczy ostatnich dwóch podpunk-tów, udane szczelinowanie i wprowa-dzenie podsadzki nie wystarcza, by za-pewniç, ˝e otwór b´dzie produktywny. Na produktywnoÊç radykalnie mo˝e wpłynàç równie˝ uszkodzenie zło˝a to-warzyszàce stymulacji. Płyny do stymu-lacji, stosowane by utworzyç szczelin´, w szczególnoÊci płyny na bazie wody, mogà spowodowaç uszkodzenie zło˝a. Krytycznà kwestià jest, by zminimali-zowaç czas pomi´dzy pierwszà stymu-lacjà szczelinowaniem, a momentem, kiedy otwór wiertniczy jest płukany w celu oczyszczenia. Chocia˝ trady-cyjne płyny na bazie wody mogà byç

zastàpione mniej szkodliwymi Êrodkami, takimi jak N2, CO2, piany lub propan, to mogà one nie byç łatwo dost´pne. Metody wykorzystujàce zacementowanà w rurach okładzinowych rur´ traconà wymagajà zwiercenia korków zamykajàcych po stymulacji, co skutkuje wydłu˝onym kontaktem płynu ze zło˝em; podczas, gdy otwory nieorurowane umo˝liwiajà naty-chmiastowy przepływ zwrotny, minima-li-zujàc wywoływane uszkodzenie zło˝a.

Powy˝sza dyskusja pokazuje, jak wybrana metoda udost´pnienia mo˝e wpłynàç na powodzenie programu sty-mulacji szczelinowaniem. W wi´kszoÊci przypadków, systemy wielostopniowe nieorurowane typu ‘ball-drop’ nie tylko zapewniajà mo˝liwoÊç wykonania wielokrotnych zabiegów stymulacji w jednym dniu, ale promujà te˝ dobre metody wyk-onywania szczelinowania. Zmniejszone ciÊnienia szczelinowania minimalizujà ryzyko niekontrolowanego wytràcenia

podsadzki (screen out), co jest głównym êródłem czasu nieproduktywnego w za-biegach stymulacyjnych. Podsadzka nie jest nadmiernie przemieszczana do szcze-lin, co skutkuje wysokà przyodwiertowà g´stocià podsadzki, bardzo wa˝nà dla po-prawy przewodnoÊci przypływu. Uszkodzenia formacji sà minimali-zowane, poniewa˝ mniej płynu wyma-gane jest pomi´dzy zabiegami szczeli-nowania i stàd te˝ jest mniej płynu, który nale˝y odzyskaç, jak równie˝ ze wzgl´du na fakt, ˝e system umo˝liwia natychmia-stowy przepływ zwrotny.

To nie tylko usprawnia produkcj´ i minimalizuje czas udost´pnienia, ale zmniejsza równie˝ oddziaływanie na Êrodowisko. Na dodatek te systemy umo˝liwiajà wykonanie odci´cia wody i testów produkcyjnych po ponownej i wst´pnej stymulacji, co stanowi du˝à korzyÊç w fazie oszacowania zło˝a, gdzie wyniki mogà byç nieprzewidywalne.


systemy wielostopniowe nieorurowane ‘ball-drop’ nie tylko zapewniajà mo˝liwoÊç wykonania wielokrotnych zabiegów stymulacji w jednym dniu, ale promujà te˝ dobre metody wykonywania szczelinowania.

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Udost´pnienie otworu bez orurowania w systemie wielostopniowym wykazujàce wysokà g´stoÊç

przyodwiertowà podsadzki


iednie, kompleksowe informacje przestrzenne uzyskane poprzez Sys-tem Informacji Geograficznej (GIS) takie jak zagospodarowanie terenu, zahamowania wynikajàce z prze-pisów, rodzaj dróg oraz zasoby natu-ralne, w celu okreÊlenia obszarów o najwi´kszym prawdopodobieƒstwie wskazania najbardziej efektywnego otoczenia dla uzyskania pozwole-nia na lokalizacj´ placu odwiertu i umieszczenia platformy. Taka analiza

mo˝e byç wykonana wczeÊnie, aby rozpoznaç lokalizacje profili sejsmicz- nych, które prowadzà do wyboru miejsca lub mo˝e byç przeprowad-zona podczas wyszukiwania w odnie-sieniu do zdefiniowanych wczeÊniej obszarów w wi´kszym bloku konce-syjnym.

Analiza ograniczeƒ pozwala operatorowi tworzyç ranking ob-szarów stopniujàc je jako idealne, nieidealne i, co równie istotne, jako obszary, gdzie uzyskanie pozwoleƒ b´dzie czasochłonne. Zabranie takiej

lokoWAnie i udzielanie pozwoleƒ na odwierty poszukiwawcze w Polsce stawia pod znakiem zapytania trady-cyjne metody wyboru miejsca. Ope-ratorzy sà w kłopotliwym poło˝eniu pomi´dzy decyzjami zwiàzanymi z wyborem miejsca i skutecznym procesem uzyskiwania pozwoleƒ.Choê nie zawsze musi wystàpiç rozdêwi´k, decyzje wpływajàce na wybór miejsca, techniczna wykonal-noÊç i dost´pne lokalizacje z poz-woleniami czasami nie współgrajà ze sobà. Jedni opera-torzy mogà opieraç swój wybór miejsca o ró˝ne kryteria: patrzàc, gdzie dane sejsmicz-ne sà najbardziej dokładne, czy te˝ gdzie krzy˝ujà si´ dwa profile sejsmiczne. Inni mogà wybieraç miejsce w oparciu o relacje z lokalnymi społecznoÊciami w połàczeniu z szybko dost´pnymi danymi sejsmicznymi. I choç ka˝de powy˝sze podejÊcie jest uzasadnione, w przypadku lokowania otworów poszukiwawczych, proces pozwoleƒ w Polsce wcià˝ kwestionuje te trady-cyjne metody selekcji.

Pojćiem, które warto rozwa˝yç w trakcie wyboru miejsca jest analiza zagospodarowania terenu, nazywana równie˝ analizà ograniczeƒ. Takie podejÊcie bierze pod uwag´ odpow-

analiza ograniczeƒ pozwala opera-torowi tworzyç ranking obszarów stopniujàc je jako idealne, nieidealne i, co równie istotne, obszary, gdzie uzyskanie pozwoleƒ b´dzie czasochłonne.

K r z y s z t o F K a M i n s K i , a D a M l o c K e , M a g D a l e n a p a v l a K - c h i a r a D i a

jak wybieraç lokalizacj´ placu odwiertu? – cDm smith

mapy, naniesionej na zdjćia lot-nicze, w teren umo˝liwia sprawdze-nie terenu i dostarcza kryteriów badania, takich jak stan dróg oraz terenu, stan własnoÊci lub inne decydujàce czynniki okreÊlone przez operatora. Zaw´˝a to sele-kcj´ i eliminuje zgadywank´ z poten-cjalnie czasochłonnego procesu zezwoleƒ czy negocjacji ułatwiajàc spełnienie terminu rozpoczćia wierceƒ i zmniejszenie kosztów lo-

kalizacji. W szcz-ególnoÊci, analiza ograniczeƒ dla Polski, na potr-zeby CDM Smith, zaoszcz´dziła operatorom sza-cunkowo 300 000 USD na lokali-zacji i co najm-niej o 2 miesiàce zmniejszyła czas uzyskiwania

pozwolenia.Mapy oparte o GIS ułatwiajà

zrozumienie zło˝onoÊci procesu zezwoleƒ i stanowiç narz´dzie ko-munikacji. Odpowiednio sporzàd-zona mapa mo˝e w prostych kate-goriach graficznych umo˝liwiç społecznoÊciom zrozumienie, dlaczego dana lokalizacja została wybrana i poinformowaç o Êrodkach ostro˝noÊci, które operator zachował wybierajàc lokalizacje, aby ograni- czyç wpływ na Êrodowisko i tryb ˝ycia społecznoÊci. Poniewa˝ analiza

Analiza ograniczeƒ dla Polski, na potrzeby CDM Smith, zaoszcz´dziła operatorom szacunkowo 300 000 USD na lokalizacji i co najmniej o 2 miesiàce zmniejszyła czas uzyskiwania pozwolenia.


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ograniczeƒ jest oparta o wczeÊniej zdefiniowane bezstronne kryteria z map, zdj´ç lotniczych oraz prze-pisów, takie u˝yteczne narz´dzie jest transparentne i otwarte dla opinii publicznej, aby mo˝na było jà informowaç i uzyskiwaç jej zgod´

na lokalizacj´. BezpoÊrednie zastosowanie tech-

nologii GIS skutkuje wysokim pozio-mem współpracy pomi´dzy planista-mi, naukowcami oraz in˝ynierami i ich zaanga˝owaniem na rzecz kompleksowego podejÊcia do skutecz-

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CDM Smith analiza ograniczeƒ

nego wyboru lokalizacji. SpecjaliÊci GIS z CDM Smith, we współpracy z naszym doÊwiadczonym persone-lem ds. pozwoleƒ Êrodowiskowych i in˝ynierami, oferujà rozwiàzania sprawnie i skutecznie minimalizu-jàce kolizj´ z harmonogramami.

odpowiednio sporzàdzona mapa mo˝e w prostych kategoriach graficznych umo˝liwiç społecznoÊciom

zrozumienie, dlaczego dana lokalizacja została wybra-na i poinformowaç o Êrodkach ostro˝noÊci, które

operator zachował wybierajàc lokalizacje.


OSTRO˚NOÂåWi´kszoÊç inwestorów jest Êwia-doma kwestii technicznych zwià-zanych z projektem, takich jak koszty poszukiwania i wydobycia, prawdopodobieƒstwo powodzenia, iloÊç gazu, dost´p do rynku, itd.

To, co jest przedmiotem ich obaw, to zewn´trzne, właÊciwe dla danego kraju warunki, takie jak struktura podatków dla transakcji, mo˝liwoÊci prawne, odpowiedzialnoÊç społeczna oraz strategie zrównowa˝onego rozwoju. Ponadto, ka˝da ze stron transakcji po-winna przekonaç swoich udziałowców, ˝e transakcja jest uczciwa od strony finansowej (opinia o godziwoÊci ceny).

Polskie prawo, ogólnie rzecz bioràc, wliczajàc przepisy podatkowe, nie jest przystosowane do ró˝nych form joint venture, czy to w postaci umów

FARMING INW praktyce najbardziej powszechne formy współpracy farm-in w Polsce w sektorze gazu łupkowego to:• kontraktowe joint venture (CJV) oparte o umowy o współdziałaniu (JOA)• powołanie spółki celowej (SPV) w formie spółki komandytowej.

W tym obszarze, praktyka pol-ska przypomina tà zaobserwowanà w Stanach Zjednoczonych, gdzie umowne joint venture oparte o JOA sà najbardziej powszechnym rodza-jem współpracy w sektorze gazu łupkowego. Jednak˝e, udziałowcy po-winni byç równie˝ Êwiadomi, ˝e ka˝de z powy˝ej wymienionych rozwiàzaƒ ma swoje znaczàce konsekwencje prawne i podatkowe.

Podczas, gdy koncesje poszukiwawcze obejmujàce tereny z najlepszà perspe-ktywà w Polsce zostały ju˝ przyznane, a rynek gazu łupkowego wchodzi w bardziej dojrzałà faz´, oczekujemy wyłonienia si´ wzorców działaƒ bizne-sowych inwestorów, podobnie jak na dojrzałych rynkach gazu łupkowego w usa i Kanadzie.

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„Farmerzy” złó˝ łupkowych w Polsce zbierajà „plony” – Pwc

o współdziałaniu (JOA) czy te˝ spółek komandytowych (SPV). Zatem, ka˝dy z tych scenariuszy współpracy mo˝e si´ wiàzaç z pewnymi obawami.

PRAWNY PUNKT WIDZENIAZ perspektywy prawa, wszystkie zło˝a w Polsce stanowià wyłàcznÊ własnoÊç Skarbu Paƒstwa. Jednà z najbardziej kluczowych kwestii jest zawarcie wa˝nej i w pełni egzekwowalnej umowy u˝ytkowania górniczego ze Skarbem Paƒstwa.

Zgodnia z takà umowà inwestor z sektora gazu łupkowego b´dzie miał prawo do wykorzystania okreÊl-onych złó˝ surowcowych, których właÊcicielem jest Skarb Paƒstwa. Umowa o u˝ytkowanie górnicze b´dzie precyzyjnie okreÊlała wszystkie wa-runki i zastosowania takich złó˝. In-westor mo˝e planowaç poszukiwanie i/lub wydobycie wyznaczonego surowca. Koncesja b´dzie przyznana na czas okreÊlony, nie krócej ni˝ na 3 i nie dłu˝ej ni˝ na 50 lat.

Polskie prawo górnicze i geologiczne, które obejmuje proces przyznawania koncesji na poszukiwanie, rozpozna-nie i wydobywanie w´glowodorów (w tym ropy i gazu z łupków), stanowi, ˝e koncesja, jak równie˝ u˝ytkowanie górnicze mogà byç przyznawane tylko pojedynczemu podmiotowi. Jednocz-eÊnie, przeniesienie koncesji jest doz-wolone jedynie w całoÊci tj. nie jest mo˝liwa sprzeda˝ udziału w koncesji. Kolejnà kwestià do rozwiàzania jest własnoÊç wydobywanego gazu lub potencjalna koniecznoÊç uzyskania zgody z Urz´du Antymonopolowego w przypadku utworzenia SPV.


Obserwujàc rynek, oczekujemy, ˝e przewa˝ajàce b´dà nast´pujàce formy działalnoÊci gospodarczych:

PRzEj¢ciA:

Inwestorzy zajmujàcy miejsce przedsi´biorcy, który ju˝ posiada sto-sowne prawa u˝ytkowania górniczego i koncesje, lub przejmujàcy kontrol´ nad takim przedsi´biorcà. Z punktu widzenia sprzedajàcego, takie transa-kcje motywowane sà ch´cià realizacji zysku z wczeÊniejszego skutecznego wniosku o uzyskanie koncesji;

UmOwY tYPU FARm-iN FARm-OUt:

Uczestnicy zawierajà umow´, na mocy której jedna strona przejmuje prawo do udziału w zyskach produkcyjnych w zamian za finansowe i technologiczne wsparcie poszukiwania i wydobycia złó˝. Umowy typu farm-out mogà byç ró˝norodne pod wzgl´dem wynagrodze-nia, jak np. przyznanie dost´pu do in-nych obiecujàcych pól, wymiana tech-nologii, wpłaty pieni´˝ne itd. Głównà przesłankà za umow´ farm out jest dy-wersyfikacja projektów, rozło˝enie ryzy-ka niepowodzenia i zdobycie know-how.


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PWc’s enerGy GrouP zało˝ona została w 2000 roku w odpowiedzi na rosnàce zapotrzebowanie na usługi doradztwa ze strony polskich i za-granicznych firm energetycznych. Przez ostatnie 12 lat wraz z naszymi klientami byliÊmy zaanga˝owani w przekształcenie sektorów energii, ropy i gazu oraz górniczego w Polsce.

PODATKI MAJÑ ZNACZENIEPatrzàc od strony podatków, podmiot zagraniczny b´dàcy partnerem spółki komandytowej mo˝e byç postrzegany przez organy podatkowe jako posia-dajàcy stałà siedzib´ w Polsce i w kon-sekwencji zobowiàzany do płacenia podatku dochodowego w Polsce, jak równie˝ spełnienia pewnych obo-wiàzków sprawozdawczych.

“Farmer” zwykle oczekuje wyna-grodzenia od dysponujcego koncesjà za mo˝liwoÊç wejÊcia na koncesjà, jak równie˝ pewnego rodzaju zwrotu kosztów poniesionych dotychczas na poszukiwania. W wyniku tego, joint venture mogà prowadziç do współwłasnoÊci Êrodków trwałych, co mo˝e skutkowaç obowiàzkiem zapłaty podatku od nieruchomoÊci. Zatem, kwestie podatkowe powin-ny byç starannie analizowane i planowane na etapie wyboru formy współpracy, poniewa˝ moe si´ oka-zaç, ˝e polskie prawo podatkowe prowadzi do skutków podatkowych znaczàco ró˝niàcych si´ od zamia-rów stron umowy o współdziałaniu (JOA) lub partnerów spółki koman-dytowej SPV.

Dalsze kwestie podatkowe mogà wyniknà w odniesieniu do podatku VAT, zwiàzane z ustaleniami pomi´dzy stronami, zwłaszcza, je˝eli jednej z nich przyznana została rola operatora i finansuje ona operacje poprzez tzw. “cash calls” lub obcià˝a kosztami pozostałe strony. Kwe-stie VAT dla przyszłych sprzeda˝y eksploatowanych zasobów powinny byç równie˝ wzi´te pod uwag´ na wczesnym etapie negocjacji umowy o współdziałaniu (JOA) czy umowy pomi´dzy partnerami spółki koman-dytowej (SPV).

Jednak˝e, poprzez zaawansowane planowanie podatków i wykorzysta-nie istniejcych mo˝liwoÊci optymal-

izacji mo˝na zabezpieczyç sytuacj´ podatkowà stron joint venture jak równie˝ sprawnie kształtowaç ich obcià˝enia podatkowe. Decyzje podat-kowe, specjalne klauzule w umowach JOA i SPV odnoÊnie rozliczeƒ podat-


Polskie prawo, ogólnie rzecz bioràc, wliczajàc przepisy podatkowe, nie jest przystosowane do ró˝nych form joint venture, czy to w postaci umów o współdziałaniu (joint operations agreements) czy te˝ spółek partner-skich lub spółek komandytowych (sPV).

PwC - doradca energetyczny

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W gronie naszych klientów sà: Enea, Energa, Gaz-System, JSW, KGHM, KHW, Kompania We-glowa, Kulczyk Holding, Lotos, PGE, PGNiG, PKN Orlen i Tauron, jak równie˝ Êwiatowi gracze: Aure-lian, Chevron, ConocoPhillips, ENI, E.ON, ExxonMobil, Fortum, Mara-thon Oil, RWE, Talisman.

Tomasz Baraƒczyk, Partner, Tax and Legal department, [email protected], +48 502 184 852

Artykuł PrzyGotoWAny Przez zesPół eksPertóW PWc enerGy:

kowych i ustalenia co do dokładnego zakresu działaƒ administracyjnych ka˝dej ze stron to kilka przykładów tego, jak mo˝na to osiàgnàç.

Konrad Michalak, Senior Manager, Business Advisory department,[email protected], +48 502 184 364

Jaroslaw Grzywiƒski, Counsel, Tax and Legal department,[email protected], +48 519 506 961

Grzegorz Kus, Senior Consultant, Tax and Legal department,[email protected], +48 519 507 208


nale˝y gospodarowaç przez okres cyklu ˝ycia pola łupkowego, znacz-nie wi´kszych ni˝ to ma miejsce przy rozwoju i wydobyciu ze zło˝a konwencjonalnego.

GOSPODAROWANIE WODÑ Gospodarowanie całà iloÊcià wody wpływajàcej i wypływajàcej z odwiertu jest zło˝onà i kosztownà sprawà. Woda wykorzystywana do szczelinowania hydraulicznego musi byç pozyskiwana, transpor-towana i magazynowana, cz´sto z wieloma poÊrednimi krokami. Woda wypływajàca z otworu (zarówno woda powracajàca o du˝ej obj´toÊci oraz mniejsze obj´toÊci wody pozostałej po wydobyciu) musi byç magazynowana, transportowana i uzdatniana do ponownego u˝ycia

GosPodAroWAnie wodà zawsze stanowiło stanowiła wa˝ny ob-szar przy przygotowaniu terenu i wydobywaniu zasobów ropy i gazu. Jednak˝e, znaczenie wody w sektorze naftowym dramatycznie wzrosło wraz z szerokim rozwojem sektora łupkowego oraz ze wzrostem znacze-nia szczelinowania hydraulicznego, procesu, który pochłania miliony litrów wody.

Wraz z post´pem prac polskich operatorów przy zło˝ach łupkowych, b´dà oni potrzebowaç wiedzy, jak ró˝ne decyzje dotyczàce gospodarki wodà wpłynà na ich wydatki CAPEX i OPEX i jakie b´dà długoterminowe implikacje dla firm, sektora ropy i gazu oraz społecznoÊci lokalnych.

Szczelinowanie wymaga du˝ych iloÊci wody jako wkładu do otworu (zwykle obj´toÊci wahajà si´ w przed-ziale od 10 000 do 200 000 baryłek na otwór). Mniej wi´cej 10-40% wody wpompowanej do otworu w trakcie szczelinowania hydraulicznego wraca na powierzchni´ w postaci przypływu zwrotnego (“flow-back water”) w cigu 30-60 dni cyklu ˝ycia otworu.

Szacuje si´, ˝e aby utrzymaç tem-po wydobycia przez cały cykl ˝ycia otworu, b´dzie konieczne ponowne szczelinowanie otworów, mo˝liwie w odst´pach 3 do 5 lat. Wreszcie, nale˝y wywierciç wi´kszà iloÊç ot-worów ni˝ w przypadku konwencjo-nalnego pola naftowego/gazowego, by efektywnie eksploatowaç pole łupkowe. Te czynniki przyczyniajà si´ do ogromnych iloÊci wody, którà

PacWest sporzàdził wieloczynnikowy model ekonomiczny, by przewidzieç koszty gospoda-rowania wodà dla długoterminowego (20-let-niego) cyklu ˝ycia. model słu˝y jako krytyczne narz´dzie do szybkiego zrozumienia kosztów i implikacji przy poszukiwaniach i wydobyciu (e&P) w długoterminowym gospodarowaniu wodà.

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Gospodarowanie wodà przy wydobyciu gazu i ropy z łupków, – Pacwest

lub odprowadzenia na powierzchni´.Dodatkowo, woda wypływajàca z

odwiertu jest bardzo zró˝nicowana pod wzgl´dem jakoÊci, ale ˝adna woda nie mo˝e byç okreÊlona jako czysta bez powa˝nego uzdatnie-nia polegajàcego na usuni´ciu soli, w´glowodorów, bakterii i in-nych minerałów. Problem gospo-darowania wodà w kontekÊcie przy-gotowania infrastruktury i samego wydobycia ze zło˝a łupkowego mo˝na najtrafniej okreÊliç jako „lo-gistyczny koszmar.”

Rysunek 1 poni˝ej daje przeglàd etapów cyklu ˝ycia wody dla przy-gotowania infrastruktury i eksp-loatacji złó˝ łupkowych, wraz z na-jbardziej powszechnymi podejÊciami do gospodarowania wodà na ka˝dym etapie.


Etapy gospodarowania wodà w przygotowaniu infrastruktury i eksploatacji złó˝ łupkowych


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EKSPLOATACJA ZŁÓ˚ ŁUPKOWYCHGłównym wyzwaniem przy gos-podarowaniu wod w kontekÊcie łupków jest niewielkie rozeznanie w długoterminowych kosztach. Kole-jnym problemem w zrozumieniu kosztów gospodarowania wodà jest fakt, ˝e wydatki zwiàzane z wodà nie sà generalnie pogrupowane w pojedynczà kategori´ ksi´gowà, wi´c wiele firm nie jest Êwiadomych ich prawdziwych kosztów gospoda-rowania wodà dla długoterminowego cyklu ycia.

Bioràc pod uwag´ ten ogrom wyzwaƒ przy gospodarowaniu wodà na polu naftowym, klient (E&P) z koncesj´ w basenie Eagle Ford w Południowym Teksasie poprosił Pac-West o pomoc w nakreÊleniu kom-pleksowego obrazu rzeczywistych kosztów gospodarowania wodà dla cyklu ˝ycia w ró˝nych scenari-uszach. PacWest sporzàdził wielocz-ynnikowy model ekonomiczny, by przewidzieç koszty gospodarowania wodà dla długoterminowego (20-let-niego) cyklu ˝ycia w szeregu scenari-uszy uzdatniania wody i wspomóc optymalizacj´ działaƒ w zakresie wody. Je˝li si´ go połàczy z lepszym zrozumieniem obecnych działaƒ w zakresie gospodarki wodnej i ko-sztów, model słu˝y jako krytyczne narz´dzie do szybkiego zrozumi-enia kosztów i implikacji (E&P) w długoterminowym gospodarowaniu wodà.

Wyniki naszej analizy ekonomicz-nej pokazały, ˝e w dłu˝szym okresie, du˝e iloÊci wody wykorzystywanej przy przygotowaniu terenu i wydoby-waniu zasobów łupkowych uzasa-dniajà inwestycj´ w infrastruktur´ oczyszczania wody. Wyniki prze-

Problem gospodarowania wodà w kontekÊcie przygotowania infrastruktury i samego wydobycia ze zło˝a łupkowego mo˝na najtrafniej okreÊliç jako ‘logistyczny koszmar.

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PacWest Consulting Partners, rozpoznanie globalne

PAcWest consultinG PacWest Consulting Partners to wyspecjal-izowana firma doradztwa strate-gicznego i rozpoznania rynkowego, która specjalizuje si´ w sektorze energetycznym, przemysłowym oraz zasobów naturalnych. Spora cz´Êç naszej pracy koncentruje si´ wokół przemysłu naftowego oraz wielu innych sektorów, które

dostarczajà kluczowe produkty oraz usługi z nim zwiàzane. Wraz z gwałtownym rozwojem sek-tora niekonwencjonalnych złó˝ w Ameryce Pn., krajobraz energetycz-ny zmienia si´ szybko, a PacWest stoi na czele tych zmian, pomaga-jàc firmom rozwinàç i wdro˝yç nowe strategie, aby mogły nastawiç si´ na wzrost.

widziane były dla wzgl´dnie du˝ej skali działania, ale nawet przy obni˝onych poziomach, wyniki pozostawały niezmienne. Przy tych wnioskach, gospodarowanie wodà w trakcie cyklu ˝ycia przy przy-gotowaniu terenu i wydobyciu ze złó˝ łupkowych daje du˝à szans´ na oszcz´dnoÊci. Je˝eli operatorzy chcà przyjàç długoterminowy punkt widzenia inwestujàc bezpoÊrednie Êrodki kapitałowe w celu redukcji długoterminowych wydatków opera-cyjnych, wówczas liczy si´ dla nich ekonomia.

PROBLEMY Z WODÑ W POLSCE Podczas, gdy woda nie jest szczegól-nie rzadkim zasobem w Polsce, jej wykorzystanie oraz odprowadzanie sà obwarowane licznymi przepisami. Gł´bokie zatłaczanie wody powraca-jàcej oraz wody po wydobyciu nie jest mo˝liwe w Polsce, ze wzgl´du na brak odpowiednich odwiertów i usta-wodawstwo, które ogranicza gł´bokie zatłaczanie, bioràc pod uwag´ odprowadzanie wody do otoczenia.

Wyzwanie stanowi równie˝ zarzàdzanie spływem wód deszc-

zowych, poniewa˝ przepisy okreÊ-lajà, ˝e woda, która spada na teren odwiertu, nie mo˝e byç odprowadz-ana do wód powierzchniowych, i wymagajà zastosowania zbiorników retencyjnych wody odpływowej. Taka woda odpływowa nie mo˝e byç jednak zabierana do miejskich oczyszczalni, poniewa˝ nie jest uznawana za dostatecznie brudnà, by energochłonne oczyszczanie było zasadne.

Obecnie, wi´kszoÊç wody przetworzonej przez odwierty ropy/gazu w Polsce przechodzi przez instalacje uzdatniania wody przemysłowej, co zwi´ksza koszty operacyjne. Bioràc pod uwag´ niew-ielkà obecnie iloÊç aktywnych ot-worów w Polsce jest to wykonalne, jednak˝e, wraz ze wzrostem iloÊci otworów, operatorzy b´dà musieli stworzyç bardziej odpowiednie dla tej bran˝y rozwiàzania. W mi´dzyczasie, operatorzy w Polsce powinni dokładnie studiowaç ró˝ne technologie stosowane w Ameryce Pn. i oceniaç je w kontekÊcie ich własnej unikalnej sytuacji.

shale gas investment guide vol. 2

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