Poland sees at least 41 more shale gas wells in 2012

WARSAW, July 6 Fri Jul 6, 2012 7:07am EDT

WARSAW, July 6 (Reuters) - Poland, Europe's shale gas pioneer, expects companies to drill at least 41 more wells this year to shed more light on the country's gas potential.

The environment ministry, which has granted 111 rights to drill for shale gas to companies including Chevron and Exxon Mobil, also said on Friday there were "a few tens" of new requests for exploration licences awaiting approval.

"The more wells we make in a short period of time, the faster we will get a confirmation of our forecasts regarding shale gas resources," it said. Analysts have said that to get a clear picture of the size and quality of shale gas reserves in Poland at least 100 wells must be drilled.

Poland has pegged its recoverable shale gas reserves at 346-768 billion cubic metres, below an earlier estimate of 5.3 trillion by the U.S. Energy Information Association, dashing hopes the country could become one of Europe's largest gas producers.

So far, 23 shale gas wells have been drilled in Poland with a further six are in the works. Licence holders are obliged to drill at least 122 wells by 2021, a number that could grow by a further 186 wells, the ministry said.

The European Union member is making a large bet on shale gas as it could help the country's coal-reliant economy meet the challenges of the EU's climate policy, even while some countries have banned shale exploration pending environmental studies.

It could also help gas monopoly PGNiG in talks with Russian group Gazprom over prices in its long-term contract, which the Polish side sees as being uncompetitive.

Last month, Exxon pulled out of exploration projects because it did not deem them economically viable, increasing pressure on Poland to rely more on state companies to fund the costly projects.

On Wednesday, a consortium of five state-controlled Polish companies agreed to spend 1.7 billion zlotys ($500 million) on joint shale gas exploration and extraction, partly as a result of government pressure to intensify shale gas efforts.

The partners agreed to search for gas in three locations on PGNiG licences near Wejherowo, a town in the north of Poland, by running one vertical and around 12 horizontal wells on each. PGNiG wants to start production as soon as 2016.

"The scale of investments planned on this licence will become a template for other licences," the ministry said.

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