ExxonMobil scared or smart?

Is ExxonMobil scared or smart?

That’s the question Polish shale gas enthusiasts are asking themselves after the US energy giant announced that it was halting work on looking for shale gas on its Polish concessions.

“There have been no demonstrated sustained commercial hydrocarbon flow rates” in two test wells in eastern Poland, said an ExxonMobil spokesman, in a statement issued over the weekend which said the US energy major had “completed its exploration operations in Poland”.

The doubters point to the rapidly shrinking estimates for Poland’s shale gas deposits as geologists get a firmer grasp of exactly what may lie several kilometres below Poland’s flat green fields.

Just a year ago, the Polish government was brimming with enthusiasm over the prospect of the country becoming a new Norway after the US Energy Information Administration said Poland might have 5.3tn cubic metres of shale gas – the largest reserves in Europe.

Then, earlier this year, the Polish government’s geological institute used newer data to come up with an estimate of reserves of 346-768bn cubic metres, only about 10 per cent of the earlier guess.
In its two test wells, ExxonMobil found little of interest. Drilling by other firms has also been inconclusive – finding gas but with flow rates that left investors disappointed.

However, it’s still early days in looking for gas in Poland. Although the government has granted 109 concessions covering much of the country, only just over two-dozen test wells have been drilled so far.

While ExxonMobil is scampering for the exits (a similar course to what it did in Hungary in 2009 after disappointing test results there) the other big oil companies like Chevron and ConocoPhillips are hanging tough.

John Buggenhagen, exportation director for San Leon Energy, which has concessions scattered around Poland, told beyondbrics that it will take a lot more testing to see if Poland really does have the gas reserves to wean itself off Russian imports.

“Exploration is about drilling wells and testing them – something that the majors have largely quit doing long ago,” he said – suggesting that if smaller companies like San Leon do hit interesting deposits ExxonMobil may well be back to help exploit them.