Results 'humble' so far for Polish shale gas, minister says

WARSAW Wed Nov 28, 2012 9:43am EST

WARSAW Nov 28 (Reuters) - Poland's efforts to develop shale gas resources to reduce its dependence on Russian supplies have so far produced only "humble" results, deputy environment minister Piotr Wozniak said on Wednesday.

An uncertain legal landscape and a lengthy testing process from exploration wells partly explain why Poland has not yet cashed in on the potential that has attracted oil majors and international exploration companies to the country.

There had been only "very humble results so far with only 33 wells completed," Deputy Environment Minister Piotr Wozniak told a shale gas conference.

Wozniak said the government expects to pick up the pace by drilling a further 270 wells over the next seven to eight years.

The former Soviet-bloc nation sees shale gas as a way to reduce its dependence on highly polluting coal, the source of around 90 percent of its power, and on Russia, supplier of most of Poland's gas at a price which Warsaw views as uncompetitive.

Poland had high hopes for domestic shale gas after a 2011 study by the U.S. Energy Information Association estimated its reserves at 5.3 trillion cubic metres, enough to cover domestic demand for around three centuries.

But the country's own study published this year slashed the estimate for recoverable shale gas reserves to between 346 billion and 768 billion cubic metres.

The country's shale future suffered another blow this year when U.S. oil major ExxonMobil announced it would pull out of exploration projects in Poland.

Wozniak said it was not yet clear what would happen with Exxon's former licences but that it was not uncommon for company's at this stage to leave concessions.

"Every single licence has been changed once over the past three years," he said. "All new investors change the plans at least once."

Wozniak underlined the importance for Poland to assure nervous foreign investors by laying out clear regulations for exploration, drilling and extraction.

"Shale gas will force energy market liberalisation in Poland and the CEE region," he said. "We need more gas than we have so far."

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