The first scientific report on estimated shale gas reserves in Poland confirms over five times more natural gas and 10 times more crude oil than the country has found to date.

And, Poland is out to capitalize on those reserves. In 2012, according to Poland’s Minister of the Environment, 49 new shale gas exploration wells are going to be drilled. Of those, foreign companies will spud 38 wells while domestic firms with the participation of the state treasury will drill the remaining 11 wells.

Since the beginning of 2012, 10 wells have been spudded with nine of those wells being operated by foreign companies.

Those companies are looking for natural gas reserves estimated at 346-768 billion cubic meters (Bcm) [12.2-27.1 trillion cubic feet {Tcf}] and oil reserves of 1.6-2.0 billion barrels, the ministry noted.

The report was prepared by the Polish Geological Institute (PGI) in collaboration with the U.S. Geological Survey (USGS). Data from the years 1950 to 1990 was analyzed in order to estimate the expected amounts of natural gas and crude oil in Polish shale rocks. There was one condition: the reserves needed to be technically extractable, stated Piotr Wozniak, vice minister of the environment.

"With these results, we are the third country in Europe behind Norway and the Netherlands in terms of the reserves of this resource and prospective benefits from its extraction,” Wozniak said.

"With the current annual demand for natural gas in Poland around 14.5 Bcm (0.5 Tcf), this is enough to satisfy the demand for natural gas of the Polish market for almost 65 years. The experts calculated that it is also equivalent to 200 years of natural gas production in Poland at the current level,” he added.

The research refers only to shale gas and not tight gas, for example. With data from the most recent wells drilled since 2010 and the estimated reserves from unconventional deposits in such regions as Wielkopolska or Dolny ?l?sk, these estimates are going to rise, Wozniak pointed out.

Wozniak, who is also the chief national geologist, said, "I confirm that there is a lot of natural gas in Poland - it is worth investing in its exploration. The joint gas reserves from conventional deposits and the estimated gas reserves from unconventional deposits, that is from shales, make us the third country in terms of extractable gas reserves in Europe.

"Poland is the leader of shale-gas exploration among European countries and also the most advanced country in terms of monitoring the environmental aspects of geological work related to shales,” he emphasized.

Polish researchers intend to publish updated reports data every two years.

One necessary condition for the efficient and beneficial use of shale gas, according to Wo?niak, is the acceleration of exploration. "It is only by means of subsequent drilling that we are going to obtain detailed information on our deposits."

The 49 new shale gas wells scheduled for 2012 are in accordance with licensing requirements. By 2017, a total of 121 obligatory and 127 "optional" wells will be drilled. About $625 million has been invested in Poland in the search for gas in unconventional deposits, the ministry stated.

By the end of 2011, 18 wells had been completed and another four wells were being drilled.

Companies envisage further investments at a similar level until the end of the exploration process. The Minister of the Environment has received requests submitted by concessionaires to extend the scope of exploration.

"The last report of the Polish Geological Institute estimating natural gas reserves in shale formations revealed that Poland is a strategic area for the search for shale gas in Europe. The requirements on exploration licenses are monitored and are proceeding in accordance with the plans defined in those licenses,” he explained.

The government is expected to present a draft bill in the second half of April that would provide new mechanisms for taxation and state management of hydrocarbons' extraction.

The announced changes in the hydrocarbons law, including shale gas, are going to be presented following the completion of conceptual work in April 2012. The change of regulations is necessary for the improvement of investment conditions and the limitation of risk to the state related to long-term mining activity carried out at a large scale in the country, he continued.

The rules of division and the amount of the joint, national-resource-rent tax payable to the state are going to be changed. A long-term investment cycle in the mining industry is going to be taken into account.

All changes to taxes and fees only concern the extraction of hydrocarbons. "The burden is not expected to be too heavy since it takes into account the capital-consuming nature and risk of investments in the hydrocarbon extraction sector,” Wozniak said.

The revenue from the national-resource-rent tax is going to be payable to the state treasury and local governments, especially municipalities.

Contact the author, Scott Weeden, at sweeden@hartenergy.com.

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