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The Warsaw Voice » National Voice » June 29, 2012
America in Poland
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Shale Gas Revolution
June 29, 2012   
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Grażyna Piotrowska-Oliwa, CEO of the Polish Gas and Oil Company (PGNiG):

Shale gas production has triggered off major changes in global markets. In Poland, we can clearly see them today and we believe that they are just the beginning of the shale gas revolution. First of all, the amount of proven and available global oil and gas resources is higher than it was estimated 10-15 years ago, which puts off the threat of fossil fuel supply shortage for decades. Secondly, the decline in prices caused by a large supply of gas from unconventional deposits in the U.S., sooner or later, through the LNG market, will translate into lower prices on all markets. Thirdly, the gas import map will inevitably change. These processes will not be stopped by any lobby. Gas-fired power generation enables a decrease of CO2 emissions by half in comparison to coal. I have no doubt that the ongoing economic turmoil will improve the competitiveness of gas in relation to other energy sources, including renewables.

For PGNiG, shale gas production in Poland is a priority. PGNiG holds most of the unconventional natural gas exploration licenses in Poland (15). Publicly announced volumes of Polish shale gas resources are based on estimates. Determining their actual size will be possible thanks to intensive drilling and tests carried out in the licensed areas. Today, I can assure you that Poland has shale gas. This is confirmed by the results of our previous tests. The most promising is the Wejherowo license area in Pomerania. In September 2011, technical shale gas production was launched there. Currently, we are drilling the Lubycza Królewska-1 well in the Tomaszów Lubelski area, the region we consider to be very attractive in terms of shale gas resources. We are also preparing for further drilling in order to be able to launch commercial shale gas production in 2014/2015.

The Polish National Geological Institute report on shale gas has identified the potential shale gas resources at 346 to 768 billion cubic meters, which some may find disappointing. We believe that even if these resources turn out to be 300 billion cubic meters, Poland still stands a chance to become a major energy producer and shale gas exploration and production are worth investing in.

Exploration and mining works are associated with large costs. In Poland, the cost of one well is about 45-50 million zlotys now. Although we have significant funds for this purpose, our strategic approach is to diversify risks. That is why we are negotiating joint financing of exploration works with our partners. We are pleased that the Management Boards of PGE, KGHM, Tauron and Enea declared readiness to co-finance unconventional gas exploration projects in return for future profits. Currently, we are discussing the details of our cooperation.

We are also looking for partners who will contribute know-how that would advance our efforts aimed at commercially viable shale gas production.

I hope that my recent visit to Canada and the talks held during the Polish-American Economic Dialogue will allow us to establish cooperation with companies that already have experience in shale gas exploration and production on the American continent.
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