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.

ExxonMobil ends prospecting in Poland

US oil and gas giant ExxonMobil is set to leave Poland, after prospecting for shale gas deposits but not finding enough for commercial use at its test wells, according to company officials.

"The end of shale gas exploration in Poland means a withdrawal from further prospecting in Poland," said ExxonMobil exploration and production spokesman Adam Kopysc, cited in Polish centre-left daily Gazeta Wyborcza Saturday.

"We did not find constant, commercial hydrocarbons flow rates at our two drilling sites in the Lublin Basin near Krasnystaw and the Podlasie Basin near Siennica" in southeastern Poland, he added.

It was not immediately possible to confirm the information.

Poland has up to 1.92 trillion cubic metres (67.8 trillion cubic feet) of exploitable shale gas deposits, according to an official report from Poland's State Geological Institute (PIG) published in March.

The Institute said its findings suggest Poland ranks third among European countries in terms of shale gas deposits, behind Norway and the Netherlands.

Tapping the deposits could assure Poland energy independence from Russia.

Poland, a European Union nation of 38.2 million people, consumes about 14 billion cubic metres of gas per year, two-thirds of which comes from Russia.

The Polish government has said the country plans to begin commercial shale gas production in 2014.

Little-known even five years ago, gas trapped in sedimentary shale rock is seen as having the potential to change global energy markets.

But moves to tap it have sown deep divisions in Europe amid concerns that the hydraulic fracturing process used to extract it is environmentally risky.

Poland's fellow EU members France and Bulgaria have imposed bans on the extraction method, commonly known as "fracking".