Poland ahead of itself

Share on facebook
Share on twitter
Share on linkedin
Share on email

I was invited to speak at the Shale Gas World Europe 2010 Conference in Warsaw, Poland about lessons from North America. It was a great conference but an open question as to whether Poland is a great shale play.

On the positive side, there is a real interest in energy independence from Russia, for obvious historical reasons. The countryside is small towns and farms and is conducive to development. Local gas prices are high and based on the price of oil. Royalties are under 2.5 percent and profit tax only 19 percent.

As far as the potential for exploitation goes, they don’t know much yet. There are no more than four or five modern tests of the shale core samples and the full analysis is not yet complete. Conference attendees worried the rock could be a bit too soft to frac. Best guess is initial horizontal wells will be $15 to over $20 million euros each with frac equipment availability an open question.

They have legislation based on the mining act and authority to drill wells is distributed through many ministries. There is also worry about directives from the French and German-dominated EU government in Brussels. As potential opposition they have the usual suspects of subsidized wind mills and a very strong coal industry. Can anyone say Solidarity? Gazprom also comes to mind as no slouches when it comes to protecting their interests.

Other than the low royalties and taxes it sounds a lot like Quebec in 2008.

What could possibly go wrong?