Eni joins shale gas exodus from Poland by Jan Cienski, January 15, 2014, Financial Times
A person familiar with the industry said Eni was retreating from its three Polish exploration concessions because the geology was much more unfavourable than had been earlier thought. The decision was confirmed by Poland’s environment ministry. … The US Energy Information Administration set off Poland’s shale frenzy in 2011 when it estimated possible reserves of 5.3tn cubic metres, the largest in Europe. Recent Polish estimates have been more conservative, in the range of 346bn to 768bn cubic metres. … The initial excitement has dissipated as the government has struggled to come up with a new energy law, annoying an industry that wants clarity before investing. As a result exploration efforts have been lacklustre. So far only about 50 test wells have been drilled, and only a handful of those have been hydraulically fractured. Geologists estimate that as many as 300 wells have to be drilled and fracked – with each costing $10m-$15m – before there could be a good estimate of Poland’s commercially viable reserves. [Emphasis added]
Eni ‘looks for Polish shale exit’ by upstreamonline, January 14, 2014
Italy’s Eni is set to deal Poland’s fledgling shale gas industry a further blow by joining other large oil players in pulling out, according to a report. The major is set to let its three concessions in the north of the country expire, according to a report in Polish newspaper Pulz Biznesu, citing unidentified sources. … Nobody was immediately available for comment at Eni on Tuesday. Companies have begun an exodus from Poland amid unclear regulations and mixed well results. Last year independents Marathon Oil and Talisman Energy followed US supermajor ExxonMobil in quitting the Polish shale arena, which was once seen as Europe’s best shale prospect with substantial reserves and a friendly government. [Emphasis added]
Eni Is Said to Abandon Polish Shale Aspirations by Stanley Reedjan, January 14, 2014, The New York Times
Eni, the Italian oil giant, is giving up on producing natural gas from shale rock in Poland, not long ago considered the most promising country in Europe for the new fuel source. Eni has allowed two of its three shale gas exploration licenses in Poland to expire and is likely to allow the third to lapse, according to a person with knowledge of the matter who spoke only on the condition of anonymity. The acreage, acquired in 2010, had not produced enough gas to be commercially viable, the person said. Other companies have made similar comments about their initial drilling efforts. Exxon Mobil ended its Polish shale gas exploration efforts in 2012; Marathon Oil said it was leaving last year. Chevron is one of the few major players still interested in Poland. “The geology has not worked out,” said Paul Stevens, an oil analyst at Chatham House, a research institute based in London.
The experience in Poland shows how difficult it will be to replicate the United States shale gas boom in Europe or elsewhere. Mr. Stevens said European governments had not been willing to make the necessary investment in research and development that helped companies figure out how to extract natural gas and oil from impermeable rock formations in the United States. … In Europe, the commitments were relatively small compared with the tens of billions of dollars that major oil companies spend each year. As initial results proved disappointing, oil companies have swiftly shifted their focus to places like Russia, where Royal Dutch Shell and Exxon Mobil have shale prospects with state partners.
The hot country for shale gas exploration in Eastern Europe is now Ukraine; Chevron, Eni and Shell have all acquired acreage there. In Western Europe, Britain is now in the forefront; Total just agreed to explore for shale gas there. But little, if any, shale gas is being produced in these countries so far.
Three years ago, Poland was considered among the most promising of European countries outside Russia for replicating the American shale gas boom. A study in 2011 by the United States Energy Information Administration ranked Poland first among European countries in terms of technically recoverable reserves, with enough to cover domestic demand for about three hundred years.A subsequent paper by the Polish Geological Institute, a research organization in Warsaw, cut the estimate of recoverable gas but still said there could be enough to supply 35 to 65 years of domestic consumption at current levels. [Emphasis added]