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nortonrose.com

Norton Rose Group is a leading international legal practice. We offer a full business law service from our offices in Europe, the Middle East and Asia Pacific.

Knowing how our clients’ businesses work and understanding what drives their industries is fundamental to us. Our lawyers share industry knowledge and sector expertise across borders, enabling us to support our clients anywhere in the world. We are strong in:

• financial institutions• energy• infrastructure and commodities• transport• technology

Norton Rose Group comprises Norton Rose LLP, Norton Rose Australia and their respective affiliates. The Group has more than 1800 lawyers worldwide.

On 1 June 2011, two leading law firms – Ogilvy Renault in Canada and Deneys Reitz in South Africa with its pan-African division, Africa Legal – will join Norton Rose Group. The enlarged Group will have 2500 lawyers, and offices in Montréal, Ottawa, Québec, Toronto, Calgary, Johannesburg, Durban and Cape Town, with an associate office in Tanzania.

Warsaw officeNorton Rose Piotr Strawa and Parters, LPMetropolitan BuildingPlacPiłsudskiego200-073 WarsawPolandTel +48 22 581 4900

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W W W.CLE ANTECHPOL AND.COM | 45

has exclusive exploration and exploitation rights, subject to certain regulations and according to the mining usufruct agree-ment.

The mining usufruct is established for consideration. The amount of consider-ation is subject to the mining usufruct agreement and is not predefi ned by any regulations. Additionally, exploration and exploitation activities are subject to sepa-rate fees.

A concessionaire may be required to establish collateral, securing any claims resulting from activities performed under a concession (such as a bank or insurance guarantee). The amount of the collateral not is predetermined but caulclated on a case-by-case basis.

A concession is transferrable, subject to specifi c requirements of the mining regu-lations. The mining regulations allow for cancellation or limitation of the scope of a concession without any compensation, subject to certain conditions.

A concession expires within a certain

CONCESSIONS FOR EXPLORATION of unconventional gas have been obtained by over 20 companies.

The concessions cover an area of approxi-mately 50,000 km2, mainly from the Baltic seaside south-east to Lublin, but also in the western part of Poland (Wielkopolskie and Silesia).

This article explores general mining and mining-related regulations with respect to the exploration and exploitation of uncon-ventional gas.

Unconventional gas, just like other natu-ral resources on Polish terrain, is owned by the State Treasury. The State Treasury is authorised to grant a “mining usufruct” to third parties.

The mining usufruct is generally grant-ed after completion of a tender, pursuant to an agreement.

Execution of the mining usufruct agree-ment is directly connected with obtaining a concession. If a concession expires or is revoked, the mining usufruct expires.

A benefi ciary of the mining usufruct

time limit, or if it becomes obsolete, as in the case of a concessionaire liquidation or in case of a waiver of a concession by the concessionaire.

If a bankruptcy of a concessionaire is announced, a concession may be but does not have to be cancelled without compensation. Cancellation or expiration of a concession does not release a conces-sionaire from its obligations relating to environmental protection or obligations connected with the liquidation of mining activities.

Considering the large interest in explo-ration and exploitation of unconventional gas the government claims that it shall be directly engaged in optimising exploration terms and conditions. Simultaneously, par-liamentary works on draft mining regula-tions are ongoing.

The new, proposed mining regulations deal with fees and payments for explora-tion and exploitation, planning and real estate issues, compensation and indemni-fi cation for damages, as well as tax issues.

Forthcoming changes to mining regulations require complex and continuous observation. The new laws may have signifi cant eff ects on current and future operations.

R. Adam Kozłowski is a lawyer with Norton Rose Piotr Strawa and Partners, LP

Shale GasLegal

Challenges

and unnecessary making of mis-takes,” says Prugar.

“We’re also looking for fi nancial partners. Not fi nancial institutions but rather well-capitalized North American oil and gas companies. Financing has to come from them because they understand the risks involved,” he says.

So with the technology now all but coming to Poland and fi rst encouraging signs coming from explorations of their concessions by Lane Energy or BNK Petroleum, concession holders are only look-ing forward for more.

“At the moment we’re fi nishing seismic research that will help us fi ne tune where to start drilling so that we know where the Silurian and Ordovician formations are exactly. We should fi nish that by mid-2011. We think that the fi rst

two wells will be drilled towards October or November 2011, by early 2012 latest. Generally, we’re plan-ning to drill six wells by 2013, two wells per each of the concessions that we have,” says Prugar.

“We want to fi nish the seismic research and carry out 2-3 verti-cal drills by end of 2011. Once we have fi nished them, we will start fracking, in early 2012. If we’re successful, we will then carry out horizontal drilling and fracking. Production can start anytime, however, but it’s a process that will increase in scale. I think it will take about fi ve years for the Polish economy to feel the impact of shale gas,” says Maj.

NEED FOR SERVICESThe impact has a chance to be rath-er profound. It’s enough to take

a look at the scale of services that companies like Talisman Energy or Orlen Upstream are going to need.

“Apart from fracking services that only a few companies in the world, like Schlumberger or Halliburton, can offer, we’re going to need drill-ing services, seismic research ser-vices, fi rms that can treat produced water, fi rms that will buy gas from us, so that means gas networks or fi rms offering gas tanks,” says Maj.

“Then come all the ‘soft’ services: security, catering, transport, accom-modation, and so on. Where there will be no roads for the equipment to go to the drilling site, the roads will have to be built. Finally come le-gal services, for example we’re using law fi rms that specialize in working out who owns the land that we’re going to drill and the best ways to secure our access to this land,” he

adds.Assuming there’s indeed gas

where companies are looking for it, a market will emerge. The Pol-ish gas market isn’t big today, with gas making about 13 percent of the mix. Coal is dominant. “Once there’s more gas, perhaps coming from shales, a market will be estab-lished. It’s not going to happen in a day, of course. It’s a very infrastruc-ture-dependent sector,” says Prugar.

“The shape of the market isn’t all up to companies like us. There is al-ready a lot of talk about energy com-panies interested in development of gas power plants, for example. It’s going to be a process on both sides: information from producers will come over a period of time, so will the business environment be shaped,” Prugar adds.

“We’re going to need drilling companies, seismic services, fi rms that will treat produced water, fi rms selling gas tanks and fi rms that will buy our gas.”

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to be completed in Q2 2012. Weath-erford is now firmly established in Poland.

We offer all the services to deploy strategies for Reservoir Quality – “Geographic Sweet Spot” (Core labs,

unconventionAl resources Are an extension of Weatherford’s exist-ing core capabilities. Weatherford has recently opened a brand new 400 sq meter office in downtown Warsaw as well as a new 5,000 m² base due

weatherford’s commitment to its Polish part-ners and clients was recently show cased at an event near zielona góra , where, on the 14th of September 2011, weatherford co-organized the diament open day outdoor event together with the Poszukiwania naftowe diament Company.

r a F a Ł F r y z o W i c z , B u s i n e s s D e v e l o p M e n t M a n a g e r p o l a n D

weatherfordinpoland

lab for unconventional and seismic interpretation) increasing Drill-ing Quality – “Vertical Sweet spot” (surface logging, directional drilling, LWD/MWD, logging and interpre-tation) and deploying Completion Quality – “Lateral Sweep Spot” (stimulation, flow back, micro seis-mic, completion tools and water and solid management).

FULL RANGE Today we are creating a new bench-mark by answering Poland’s call for high-quality products, services and efficiency in conjunction with a fo-cus on advanced technology. We are taking the opportunity to round out our core service offerings to provide integrated solutions from reservoir to wellhead; from core sampling and analysis in our lab in Hannover, to integrated completions with our 20,000 HHP frac fleet; micro seis-mic and Zone SelectTM multistage tool; from our assure conveyance options for logging to the GC Trac-erTM for productivity prediction, and from our MotarySteerableTM and cementing services to flow back testing and water management equipment, all are available in Po-land in 2012.

On the evaluation side of the equa-tion, Weatherford, has amassed a complete tool kit for meeting the highly data intensive exploration and evaluation needs in the mar-ket. From Microseismic, Compact logging, LWD, Mud Logging, and RockWise, Weatherford offers a com-prehensive package of high end tech-nology custom fit for unconventional

SourCe: weATherFord

logging uniT during diAmenT oPen dAy evenT neAr zielonA górA.

54 | shale ga s inve s tm ent guide | spring 2012

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plays. Those high end services are supported with extensive 24 hour expertise in unconventional formation evaluation and interpre-tation products add tremendous value to any project.

Furthermore, the Weatherford value added package, also includes two important points during the design phase: reduce foot print and minimize environmental impact. Specifically, Weatherford has im-plemented a specific methodology within Continental Europe by in-troducing low emissions, low noise pollution, and small footprint equipment.

With these and other initiatives, Weatherford keeps evolving within the market where the sole objective is to deliver the highest quality ser-vices while offering the most flex-ible options to our client base.

The drilling, completion and lo-gistic challenges are great but the rewards will be greater and Weath-

erford will participate in all the stages to meet and exceed expecta-tions. All with the same endurance, persistence and hard work that have shaped the country’s own identity, Weatherford has come to stay in Po-land.

OPEN DAYWeatherford’s commitment to its Polish partners and clients was re-cently show cased at an event near Zielona Góra , where, on the 14th of September 2011, Weatherford co-organized the Diament Open Day outdoor event together with the Po-szukiwania Naftowe Diament Com-pany.

Several of Weatherford’s product lines were invited to show their equipment and services in a large outdoor opening in the polish coun-try side. The following Weatherford product lines participated in the show and presented their equipment: Directional Drilling, Liner Hang-

ers, Completions, Wireline Logging including 2 Wireline Trucks, Frac-turing Equipment including Blender and Hydration Unit.

During the event Diament also displayed their complementary equipment. All our equipment was accompanied by skilled personnel and experts providing explanations to interested customers with regards to the benefits and features of our equipment as well as the operations in question.

Our well versed experts provided power point presentations to the attending audience, presenting ap-proximately 5 hours of high tech knowledge to the satisfaction of our customers. Some of topics presented including a comprehensive intro-duction to Weatherford, Directional Drilling, Shale Completions, Wire-line Logging & Microseismic, Frac-turing, Frac Water Management and Project Management.

SourCe: weATherFord

hydrATion uniT during diAmenT oPen dAy evenT neAr zielonA górA.

w w w.cle antechpol and.com | 55

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