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Polish shale gas programme ends after last two operators withdraw

18 October 2016

Poland's drive to exploit shale gas has come to an end with the last two companies involved, state-run gas firm PGNiG and oil refiner PKN Orlen, announcing they will withdraw from the sector. Miroslaw Kochalski, deputy head of PKN, told a news conference on October 12 that shale gas projects had been terminated, which was later echoed by Piotr Wozniak, the chief executive officer at PGNiG.

Stock image
Stock image

Wozniak said that although valuable experience had been gained by using the techniques associated with unconventional gas exploration, the search for shale gas in the country had failed.

The country's quest to explore for shale gas began five years ago, when the then prime minister Donald Tusk raised hopes with a forecast of production sites coming on stream in 2014. In 2012, the US Government’s Energy Information Administration predicted that Poland’s shale gas reserves were abundant enough to fuel the country for the next three centuries.

Alongside the UK, Poland was touted as one of the best hopes for a successful European shale gas industry. Many other countries in the EU, including France and Germany, have banned some of the techniques used in unconventional gas exploitation, such as hydraulic fracturing (fracking).

The Polish Government had been keen to develop domestic gas resources to reduce dependence on imports from Russia, seen by many as an untrustworthy supplier. This attracted global energy majors, including Chevron, Exxon Mobil, ConocoPhillips, Talisman, Marathon and Total, but one by one they pulled out after disappointing results and the slump in oil prices.

Issues included permit delays, regulatory confusion, competition from cheap coal and EU pressure to increase cost-competitive renewable power generation, as well as the fall in gas prices. But the main problem was the depth and complexity of underground shale structures, far deeper than the shale formations that have been exploited in the USA, where over a million wells have been drilled and fracked.

PGNiG had already shut seven of its 11 shale gas concessions by the end of 2014, citing geological and technological problems, as well as cost over-runs.

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