Moratorium on Shale Gas Exploration Not in the Picture.
“Do not let us get emotional, let’s take a pragmatic view”, argued Jacek Henryk Jezierski, Chief National Geologist, addressing the Energy Congress at Sopot. ”The exploring companies know there will be no short-cuts; we have the EU legislation, which is more restrictive than the U.S.’s, and we have watchdog institutions to see to it that the work is performed properly”.
The outlook for shale gas exploration and extraction in Poland and other European countries and the hopes and apprehensions that accompany the work were the central subject of debates on the second day of the Congress. In Poland exploration for shale gas has progressed the furthest and it has strong political support, unlike in Germany, France or Bulgaria, which also have gas-bearing shale but which had the drilling discontinued. Ivan Hinovsky of the Bulgarian Energy Forum admitted that exploration in Bulgaria had fallen behind schedule under a very strong pressure from ecologists. “We have a special environmental protection programme [and] the ecologists are very much against this work”, he explained. “The moratorium introduced [in Bulgaria] means a ban on certain practices. The public is waiting for answers to many questions”. Ivan Hinovsky admitted that even though more than 1000 wells had been drilled earlier under exploration for natural gas, “nobody will heed” geologists’ findings. “This is because the public and the ecologists demand shale gas data based on exploration in Poland and in the U.S., so I shall appreciate this information also from Poland”. Deputy Director of the Russian Centre of Energy Diplomacy and Geopolitics Vladimir Timokhov assured that his country was not interested in the exploitation of shale gas deposits, though these are very large. “We do not expect to produce gas from shale deposits, for we have conventional gas and at $5-$10 per 1000 cu.m. its price is exceptionally attractive”, he said. However, he admitted that Russian companies were studying the feasibility of recovering oil from shale subject to the development of technology. “There could be huge reserves of shale oil in Siberia, estimated at 500 bn barrels, but the question is whether to extract this oil, and how”, he added.
During discussion, experts argued that shale gas had a future in Poland provided its production was economically viable for all. “With the cost of a single well adding up to $15m it is the economic performance of the project – that is, the selling price - that counts”, said Marek Kamiński, Deputy Director at Ernst & Young. He admitted that, given the current price of gas at home and the cost of imported gas, the price at which shale gas is selling in the U.S. is very attractive. “With gas imported from Russia at $500 per 1000 cu.m., PGNiG [gas distributor] sells gas at about $350 and in the United States the price is $150, so the calculation is simple”, added Marek Kamiński. However, he pointed out that in the future the price of gas in Poland would be the same as in the European market. Experts admitted that the profitability of shale gas extraction would depend also on a tax system in Poland.
Marcin Matyka, a partner in the DLA Piper [law] office, believes that at present Poland has the most encouraging taxation system of all countries, because the exploitation fee rates for conventional gas production are low. “Nowhere is there a system applicable only to shale gas”, he explained. “Apart from Canada, where they have special [tax] rebates for shale gas exploration companies, no country has a separate system for non-conventional gas”.
The head of ORLEN Upstream, Wiesław Prugar, argued that a new tax system the government is working on had to reconcile different interests. “Foreign investors have come here to look for gas because Poland has been stable, it has [gas] deposits and a stable tax system. If one has invested millions of dollars, one wants to be certain of obtaining a concession for production”, he added.
Source: Rzeczpospolita B, 2011-12-01, p. 10, by Agnieszka Łakoma