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marcin zieba


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Exploration and Production of Natural Gas From Shale Formations in Poland - Status of the Project

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marcin zieba

  1. 1. Photo: Marathon OilExploration and Production of Natural Gas From ShaleFormations in Poland - Status of the ProjectPolish Exploration and Production Industry OrganizationBrussels, 22nd of January 2013
  2. 2. OPPPW at a Glance• Established in June 2010• Brings together and represents companies exploring and/or producing hydrocarbons in Poland• Promotes understanding of legal, economic, political, social and environmental factors affecting the exploration and production industry in Poland15 Members6 Observers
  3. 3. Scope of ActivitiesOPPPW supports its members and observers at the local, national andEuropean levels by: • maintaining dialogue with representatives of Polish Government and both national and European Parliament in terms of exploration and production industry related issues • developing the best industry practices (e.g. in terms of local communities relations or natural environment protection) • public appearances (conferences, seminars, meetings with authorities) • media relations and public statements in terms of oil and gas exploration and production
  4. 4. Poland: Over 150 Years of Tradition in Natural GasExploration and Production Yesterday Today Tomorrow• Poland 150 years ago: • 84 oil and 271 natural gas • Rising role of Oil Superpower with fields (incl. 68 undeveloped) unconventional oil & gas 2 million tons of oil • 140,6 billion m3: produced in 1906 recoverable deposits • Liberalisation of natural of natural gas gas market• 1956-1989: hundreds of hydraulic fracturing • Annual domestic • In 2020 the demand for operations in consumption (estimated): natural gas in domestic conventional gas 14 billion m3 market may reach the wellbores volume of about 25 • Annual domestic production: billion m3 5,1 billion m3
  5. 5. Shale Gas Development in Poland: Current Situation• 112 exploration concessions for unconventional resources granted so far• 39 testing wells already drilled, 3 wells in progress• 10 hydraulic fracturing operations completed (in 2 horizontal and 8 vertical wellbores)• c.a. 270 testing wells to be drilled before 2020 Source: Ministry of Environment
  6. 6. Unconventional Resources Still To Be Evaluated• Extensive but still not verified production potential – credible assessment of Polish shale gas resources and its productivity will be possible after drilling and completion of several dozen exploration wells• Favorable economic environment (though the proposed changes in legislation increase investment risk)• Unfavorable legal framework resulting in extensive and complicated procedures Photos: Marathon Oil, ORLEN Upstream
  7. 7. Potential Barriers to Intensity and Pace of Work LEGAL FRAMEWORK BUREAUCRACY • Lack of specific hydrocarbon law • Bureaucratic barriers to the greatest extent slow down the process • Uncertainty and fears of instability in terms of current and future regulations and tax solutions • Extensive number and unnecessary time burdens for administrative • Proposed law changes seem not to commensurate with procedures (incl. environmental ones) specifics of Polish geology and business operations reality • Central and local civil services are not • Extensive freedom of interpretation of some of the regulations prepared enough to deal with and in the new geology and mining law supervise the enterprise • Lack of basic analysis and detailed data in terms of • Lack of professionals who understand implementation of announced directions for hydrocarbons law the specifics of upstream sector • Rigid environmental and concessive obligations system • Dispersion of competence • Incompatibility of upstream related regulations to the specifics of upstream businessDelay in accurate estimation of the Polish upstream oil and gas deposits
  8. 8. Canada : Lessons Learned for PolandInvestor friendly regulatory approach• Limit the bureaucratic barriers• Streamline the administrative operations• Clear regulatory structure and interfaces• Set up clear and appropriate requirements• Ability to adapt to changing circumstances• Acknowledge and mitigate risks Photo: ORLEN Upstream
  9. 9. Canada : Lessons Learned for Poland (cont.)Tax regime must attract investments• Outcome-based perspective• Encourage innovations• Thorough analysis of new regulatory framework is a must – identifying and addressing issues before approval• Taking care of incentives pattern for exploration sector Photo: Marathon Oil
  10. 10. Canada : Lessons Learned for Poland (cont.)High importance of public education and mutual understanding • Exemplary model of public relations whereby scientists and other third parties are enlisted to explain the process to a potentially wary public • Strong relations between government and industry (different objectives but good understanding) • Effective industry-community consultation • Strive for mandatory frack fluid disclosure