Shale Gas Investment Guide vol. 7

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Guide

Shale GaS investment

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LICENCE TODRILL

UK FocUs

sUmmer 2014

KAmLesh PArmArGuest column

chINA WINs dash for Gas

Exalo Drilling S.A.

ExperienceSynergyQuality

Exalo Drilling S.A. is one of the largest providers of drilling and oilfield services in Central and Eastern Europe(CEE). The strategic goal of the company is to offer top quality services and maintain the leading position on the onshore drilling market.

Exalo Drilling S.A. continues the rich tradition of Polish exploration as it arose from five upstream companies of PGNiG Group: PNiG Krakow S.A.,PNiG Jaslo S.A., PNiG NAFTA S.A., PN Diament Sp. z o.o., and ZRG Krosno Sp. z o.o., which have unique experience in running drilling and service operations. The companies greatly contributed to the development of extraction of petroleum, gas and other natural resources in the territory of Poland and many countries all over the world .

The joint potential of five companies means a strong team of highly competent and experienced specialists as well as comprehensive technological base that allow to meet customer expectations and fulfill the growing demand of international markets.

www.exalo.pl

[email protected]

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w w w.cle antechpol and.com | 3

Bez nazwy-1 1 2013-11-04 12:47:22

4 | Shale Ga S Inve S tm ent GuIde | Winter 2013

6 | Shale Ga S Inve S tm ent GuIde | SUMMER 2014

26


24Contents p / 1 3

INDICATORS

p / 1 8 TRENDING

p / 2 4 UKFOCUS• Licence to Drill• Is Shale Gas Viable?• Cuadrilla Resources• Call to Action• Caroline Lucas Interviewed

p / 3 8 UKRAIne CRIsIs

p / 4 0SanLeonandBNK

p / 4 8UOS: Dennis McKee

p / 5 0Zoom on concessions

p / 5 6 GLOBALUPDATE

p / 7 0Accidents don’t happen

p / 7 2Best technoloigies

p / 7 7WHO’SWHO • UK• Poland

p / 9 2SERVICES DIRECTORY

p / 1 1 2Wellhead:KamleshParmar

CO

NT

EN

TS

106

46

PolandShaleCoalition

PhelimMcAleer


Spawn a New Dawn

B y w o j c i e c h k o ś ć

The Ukraine crisis has provided Poland with a strong political argument for shale gas, which Warsaw says should be central element of Europe’s new union for energy.

opinion

When We placed a picture of Yulia Tymosh-enko on the cover of the previous SGIG, little did we know that Ukraine would become the focus of international attention.

Instability in Ukraine is having a ripple effect on Europe. Russia is using the gas that it supplies to several countries in Europe, non-EU members among them as well, as a tool of pressure.

This has been evident ever since the fall of the Soviet Union and Soviet-backed regimes in Central and Eastern Europe. Until Crimea, however, Russia was seen as a difficult yet man-ageable partner.

Today, Moscow’s military activity in Ukraine is tar-nishing Russia’s credibility as a gas supplier. The EU’s response, while it could have been stronger and more federalist, is wel-come. What the EU could and should do was well drafted by a Financial Times article by the Polish Prime Minister Donald Tusk in April.

“I propose an energy union. It will return the

European project to its roots. Herman Van Rompuy, president of the European Council, has likened today’s energy challenge to the problems faced 60 years ago – problems that spawned the European Coal and Steel Com-munity,” Mr. Tusk wrote.

According to the Polish Prime Minister, the energy union would rest on six pillars, three of them having to do directly with Russia and

natural gas. Mr. Tusk proposes that the EU negotiates gas contracts with Russia as a block, with the European Commission active in the process, just like it is active in all other aspects of the EU energy policy.

Secondly, the EU should guarantee its mem-ber states an effective response in the event of Russia’s reaching out to disruption of gas sup-plies as a political weapon. Thirdly, “in coun-tries where the security of supply is weakest, storage capacity and gas links should be built with the help of the EU,” Mr. Tusk also wrote.

A logical consequence of this approach to the chief supplier of gas to several EU member states is the development of indigenous gas resources, including unconventional gas. Al-though Mr. Tusk’s call to max out the use of fossil fuels, coal and shale gas in particular, to increase energy security in the EU, still requires some work as the world braces itself for a global climate change agreement to be de-cided in 2015, the energy union idea makes sense and is doable.

Shale gas has a dual and important role to play in Europe’s new situation. On one hand, it could be a resource to alter the structure of several member states’ gas imports. On the other hand, it could reduce the use of coal and therefore help Europe move along toward a low-emissions economy.

Mr. Tusk’s tour of Poland’s key EU allies about the energy union was well received. It could be that Poland’s pushing for shale gas will not be Warsaw’s sole effort that other member states would see as extravagant - as was the case in 2011 - but an element of a new momentum for the EU.

Prime Minister Tusk’s idea of

energy union, with gas as a central

element, makes sense and is

doable


Dear Colleague,

Andrew Moorfield, a banker, gave a presentation in Vienna in January that showed how London investors are severely undervaluing global exploration.

On average the NAV, or net asset value, of a hundred or so explorers is around 60 percent. Investors are saying, we won’t pay a dime more than your book value, and most often, we won’t even pay this. Depressed valuations are making exploring for oil and gas onshore all the more challenging because operators are having trouble raising exploration capital.

Until TransAtlantic announced a non-binding commitment to fund exploration in tight gas and carboniferous formations in southwest Poland, it looked to be a painful year for independents. Should the deal go through, the parties to the JV will receive $5 million outright to pay existing expenses.

Liquidity is in short supply. The TransAtlantic deal is more of what the market needs.

But who else wants to take on Poland’s exploration risk?

Regards,Parker

Guide

Shale GaS investmentnot a dime

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TT

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editor in chiefwojcIech KoSc

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hays.pl

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To become a partner for the magazine, please contact the publisherpartners

the american chamber of commerce (amcham) is a business organization that serves and promotes its member companies. AmCham fosters positive relationships with the government and promotes the free market spirit for the benefit of business. Ul. Emilii Plater 53, 00-113 Warsawwww.amcham.com.pl

cleantech poland is a consultancy for oil and gas and cleantech industries providing representation services. Cleantech Poland publishes the Shale Gas Investment Guide and the magazine Cleantech.ul. Krucza 51/31, 00-022 Warsaw [email protected]

poland shale coalition is an industry organization open to anyone. The Poland Shale Coalition, founded in 2013, aims at education and outreach. Founding members of the Poland Shale Coalition receive priority outreach in their concession areas.ul. Rzymowskiego 53, Warszawa, 02-697 [email protected]

dtZ is a property services company, providing occupiers and investors with end-to-end property solutions, global and local market knowledge, forecasting and trend analysis.ul. Złota 59, 00-120 Warsaw [email protected]

pwcPwC provides oil and gas companies with services in assurance, advisory and tax & legal. A global services company, PwC has been in Poland for 20 years and counts many of the largest oil and gas companies as clients. Al. Armii Ludowej 14, 00-638 Warsawwww.pwc.pl

ssWSSW provides comprehensive tax and legal advisory services. SSW, whose main practice areas are energy and natural resources, advises investors on the business implications of the government’s proposed changes to oil and gas laws. Rondo OnZ 1, 00-124 Warsawwww.ssw.pl

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www.pwc.pl

PwC Your trusted oil & gas and chemical advisor

Business Advisory

Wojciech Słowiński – Partnerphone: +48 502 184 [email protected]

For years, we support our clients with knowledge and market experience by providingbusiness advisory, tax and legal advisory, audit and accounting consultancy. We are happy to talk with you about the needs of your business.

© 2013 PwC. All rights reserved. PwC refers to the companies associated in the PricewaterhouseCoopers International Limited (PwCIL), each member of which is a separate legal entity and does not act on behalf of PwCIL or other member firms.

Tax and Legal Advisory

Tomasz Barańczyk – Partnerphone: +48 502 184 [email protected]

pwc_210x297_Eng 13-9-24 17:32 Strona 1


I Ind c a t r soGuide


-1-

J A C E K C I B O R S K I V I C E - d I R E C tO R , E n E R g y g R O u p, p w C

E X P E R T V I E W

� More than three years have passed since Poland began exploration of uncon-ventional natural gas resources, following the publication of reports by Advanced Research International and the Energy Information Administration that esti-mated recoverable shale gas resources in Poland at 3 billion cubic meters (bcm) and 5.3bcm, respectively. In this period, oil and gas companies have drilled 57 exploratory wells in Po-land and performed 25 operations of hydraulic fracturing. Poland leads Europe in the number of wells aimed at determin-ing unconventional gas resources. This work is still insufficient to confirm the country’s shale gas reserves, let alone to evaluate the potential for their com-mercial use. The number of wells drilled in Poland, or even the whole of Europe, pales in comparison to the number of wells drilled during the initial explor-atory period in the Marcellus play in the United States. At this pace, there’s no chance to document Poland’s resources in the next few years. Unstable environmental regulation and lack of support for the industry on both the national and EU level are to blame for the slow pace of exploration. Some investors have given up. The num-ber of exploratory concessions granted in Poland dropped to 92 as of early March this year from 115 in 2012. The government has since accelerated work on regulation of the legal environ-ment (see interview, p. 12), prompted by the withdrawal of a few operators and by the conflict over Crimea, close to Poland’s eastern border.

www.pwc.pl

PwC Your trusted oil & gas and chemical advisor

Business Advisory

Wojciech Słowiński – Partnerphone: +48 502 184 [email protected]

For years, we support our clients with knowledge and market experience by providingbusiness advisory, tax and legal advisory, audit and accounting consultancy. We are happy to talk with you about the needs of your business.

© 2013 PwC. All rights reserved. PwC refers to the companies associated in the PricewaterhouseCoopers International Limited (PwCIL), each member of which is a separate legal entity and does not act on behalf of PwCIL or other member firms.

Tax and Legal Advisory

Tomasz Barańczyk – Partnerphone: +48 502 184 [email protected]

pwc_210x297_Eng 13-9-24 17:32 Strona 1


Source: Pwc, MiniStry of environMent

* as of March 1, 2014

** includes Liesa energy, Gora energy , talisman energy Polska and vabush energia

*** includes indiana investments and Saponis investments

Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

KatowiceKrakówWells completed

Wells under development

dIsTRIbuTIon of shalE gas WElls In Poland

Source: Pwc, MiniStry of environMent data

0

500

1,000

1,500

2,000

2,500

Year 1 Year 2 Year 3 Year 4 Year 5

PolandMarcellus (PA)

PacE of dRIllIng In Poland and ThE maRcEllus Play, us

Source: ShaLe coaLition

W h o ' s d o n E W h aTunCOnVEntIOnAl gAS OpERAtIOnS

in Poland to date

� It only has taken 57 wells (as of March 1, 2014) for the Polish shale gas opera-tions to move close to flowing gas at commercial volumes. San leon energy appears closes to achieve the feat on their lewino-1G2 well in the Baltic Basin, but others may not be far behind, for example BnK Petroleum, which got on with a frac job on its Gapowo B-1 well, following "excellent gas readings".

Company no. of licences* no. of wells Fracs (microfracs/dFIt)

pgnig 15 12 3 (0)

ORlEn upstream 9 11 4 (0)

San leon Energy ** 15 8 2 (1)

Marathon Oil poland 4 6 3 (1)

lane Energy poland 3 5 4 (0)

BnK petroleum*** 5 5 1 (0)

Chevron polska 4 4 1 (1)

Eni polska 1 3 1 (0)

wisent Oil&gas 4 2 2 (0)

lane Energy 3 1 0 (1)

Others 29 0 0 (0)

� Operators' drilling activity has been distributed equally between the Baltic Basin and the Podlasie Basin (see map on the left), but industry insiders are saying that it's the Baltic Basin that looks most promising in terms of yielding gas at commercial quantities. Fracs performed by the likes of orlen Upstream in the Podlasie Basin proved unsuccessful, even if the company says that they would be useful for further work in the basin. Meanwhile, a couple promising fracs cannot obscure the fact that the pace of drilling has been slow (see chart) in comparison to one that gave the US shale gas industry its momentum.

14 | shale Ga s Inve s tm ent GuIde | WInTER 2013 | shale Ga s Inve s tm ent GuIde | summER 2013



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14 | shale Ga s Inve s tm ent GuIde | summER 2014

� In your conversations with the industry, what are oil and gas stake-holders saying about the govern-ment’s ideas?I think that the general reception is that these changes are definitely for the bet-ter. Since the leadership of the ministry changed, there have been meetings with industry that discussed what needs changed and changes have come. First of all, the key change is getting rid of NOKE [the proposed state operator]. It’s a relief for the industry because no one had any idea how NOKE would work. They suspected that NOKE would be a superior office that would slow down the exploration process. Changes in how concessions will func-

tion, first of all that there will be one concession for exploration and produc-tion, are also perceived as positive by the industry and investors. Whether they will turn out good for the state’s strategy to use mineral resources most effectively, we don’t know that yet.

� how can Poland make sure that concession operators are indeed doing their job?The key thing here is that there will exist a mechanism to relinquish conces-sions in case operators don’t do any-thing on them. Concession are for real work: seismic, drilling, possibly pro-duction. They’re not financial assets that companies apply for only to sell them on. Also, in the case of future concessions, there will be a mechanism to pre-qualify companies for their fi-nancial strength and competence in oil and gas so that no speculators do get concessions to “operate”.

� since there’s not good enough data, are the government tax pro-posals coming too early?The industry shouldn’t be surprised at all that the government wants to tax shale gas. It’s standard in many gas markets across the world. You might say that it’s premature as there’s no production yet, but on the other hand investors need something to plan their activities so that they can apply a tax and cost regime to their financial mod-els. There are problematic issues, for example, the cost of financing opera-tions won’t be recognized as a cost to lessen your tax, which is a rather radi-cal approach. It’s a philosophy that

prefers financing of operation with capital, not debt. The ministry of en-vironment [responsible for conces-sions] is already asking some compa-nies about capital to carry out opera-tions.

� operators will have to pay taxes from 2020, but production may not begin until 2016-2018. so the win-dow of favorable tax environment will be really short. does it matter to oil and gas companies?In theory, companies should now speed up exploration in order to max out the time during which they won’t have to pay these taxes. But the government

idea for the new taxation to enter into force from 2020 is also to shield Polish Oil and Gas Company (PGNiG, Po-land’s state own oil and gas firm) from paying them right away, because they produce oil and gas already.

E X P E R T I n T E R V I E W

SgIg speaks to grzegorz Kuś, tax advisor at pwC about the government proposals to change geology and mining law and the tax law in poland. In short, the gov-ernment proposes to simplify the pro-cess of granting concessions and to make concessions cover both explora-tion as well as production. Concession operators will come under a greater scru-tiny in terms of the real work they do on their acreage. Once and if gas from shales does flow, its producers will be taxed with a special hydrocarbons tax and new increased royalty fees that - to-gether with the standard CIt - will con-struct a tax rate of about 40 percent.

g R z E g O R z K u ś

Attorney-at-law, tax advisor, PWC.

“concessions are for real work: seismic, drilling, possibly production. they’re not

financial assets that companies apply for only to trade them on”

“the government's idea for the new

taxation to enter into force from 2020 is

also to shield PGniG from paying them

right away, because they produce oil and

gas already”

w w w.cle antechpol and.com | 15w w w.cle antechpol and.com | 15



� As a result of the strained situation caused by the Crimea conflict, the Euro-pean Union is paying increased attention to the need for energy source diversifica-tion of its individual member states. Poland has proposed joint purchases of natural gas by EU member countries. Spain has suggested wider use of its re-gasification terminals by other member states. EU’s ally, the United States, is working to change the law so that it can export LNG overseas. The capacity of LNG terminals in Europe is not sufficient to replace sup-plies from Russia. Changing the direction of gas supplies for the whole Europe would require multi-billion dollar invest-ments in expanding and redeveloping network infrastructure. The US’s first liquefaction terminal that could be used for exporting gas will come onstream in 2016 at the earliest. For this reason, the EU has turned its attention to energy sources like un-conventional oil and gas that could be a real alternative to hydrocarbons sup-plied from Russia. Great Britain, which introduced a moratorium on hydraulic fracturing just a few years ago, is now declaring support for shale gas explora-tion, including tax preferences and leaving part of the revenue from the resource’s production with local com-munities. The tension between Russia and Western Europe and the United States may breathe second life into Europe’s extractive industry.

E X P E R T V I E W

w O J C I E C H S Ł O w I Ń S K I p A R t n E R , E n E R g y g R O u p, p w C

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location Country Regasification capacity (bcm)

Sines Portugal 7,9

Huelva Spain 11,8

Cartagena Spain 11,8

Sagunto Spain 8,8

Barcelona Spain 17,1

Bilbao Spain 7

Mugardos Spain 3,6

Fos tonkin France 5,5

Fos Cavaou France 8,25

Montoir de Bretagne France 10

zeebrugge Belgium 9

Rotterdam netherlands 12

panigaglia italy 3,4

porto levante italy 7,56

Revithoussa Greece 5,3

Milford Haven (South Hook ) United Kingdom 21

Milford Haven (dragon lng) United Kingdom 6

teesside United Kingdom 4,6

Isle of grain United Kingdom 19,5

gijon (Musel) * Spain 7

dunkerque * France 13

toscana Offshore * italy 3,75

Klaipeda * lithuania 4

świnoujście * Poland 5

> 90%

51-89%

< 10%

11-50%

existingunder construction

LNG Terminalsin ContinentalEurope:

Algeria, Libya9%

Russia

24%

Norway

22%

12%

LNG:Qatar, AlgeriaEgypt, Nigeria, Peru, Trinidad and Tobago

Sou

rce: Pw

c eLabo

ration

baSed o

n eu

roG

aS StatiSticaL rePo

rt 2013, GaS in

fraStruc

ture eu

roPe, en

i wo

rLd o

iL and

GaS review

2013

Source: Pwc eLaboration baSed on GaS infraStructure euroPe

l n g ' s E n T Ry P o I n T sEXIStIng And undER COnStRuCtIOn (*)

lnG terMinalS in eUroPe

� Most european countries are dependent on imported russian gas in at least 11%. Several coun-tries, mainly in Central and eastern europe, are getting close to 100% of their gas from russia, which is creating a strategic disadvantage and a political problem. Poland has recently proposed that the eU negotiates gas purchases from russia as a bloc, develops domes-tic production and works to in-crease supplies from Middle east and north africa.

TIEd To ThE EasT

� the polish lng terminal is scheduled for delivery at the end of 2014. its initial regasification capacity will be 5 billion cubic metres (bcm) annually, to be expanded to 7.5 bcm, which would cover some 50% of the annual Polish gas demand.

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16 | shale Ga s Inve s tm ent GuIde | summER 2014

E X P E R T V I E W

� At a relatively stable level of domes-tic extraction, and with the growth of domestic demand for natural gas, the

J A C E K C I B O R S K I V I C E - d I R E C tO R , E n E R g y g R O u p, p w C

country’s dependence on imports is set to grow. In 2013, more than 72 percent of gas supply to the domestic market came from imports, 77 percent of which from Russia. Just a few years ago, Poland had a single intersystem con-nection in Lasów that enabled gas sup-plies from alternative directions in the annual amount of mere 1 billion cubic meters (bcm). In recent years investments in gas infrastructure in Poland have stepped up, however (see map below). The re-sult was launching new connection with the Czech system and expansion of the Lasów node – each providing for a possibility to import additional 0.5 bcm of gas per year. But the real difference was creation of so-called reverse on the Yamal gas pipeline. The reverse can secure sup-plies from Germany at the level of 5.5 bcm per year initially, and, once the

Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

KatowiceKraków

PL-SK

PL-DE Lasów

PL-DE Mallnow(revers)

PL-CZ

LNG Świnoujście

gEogRaPhy of nEW gas ImPoRT InfRasTRucTuRE

entry points are expanded, even up to 7 bcm per year. Besides, completion of LNG regasif icat ion terminal in Świnoujście will allow import of ad-ditional 5 bcm gas from overseas, with the option to expand up to 7.5 bcm. Nevertheless, no matter the extent to which gas system in Poland and Central and Eastern Europe will be expanded, we need to consider that Russia is, and will long remain, the main natural gas supplier in the regionRegardless of the direction of supply, gas flowing to Poland from Germany as well from the south will, for the most part, originate from Russia and Central Asia. The only viable alternative to in crease energy independence - of Poland and other countries in the Central and Eastern European region is searching for additional energy sources, including unconventional gas.

Source: Pwc baSed on PubLic data

direction Current capacity

target capacity Operational from

lng świnoujście global 0.0 5.0 (7.5) 2015 (2020)

Mallnow (reverse flow) Germany 5.5 7.0 2015

lasów Germany 1.5 1.6 2015

pl-Cz Czech rep. 0.5 7.0 2019

pl-SK Slovakia 0.0 5.8 2020

nEW Ways InnEw gAS IMpORt InFRAStRuCtuRE

CaPaCity (BCM)

CuRREnt pARAMEtERS tARgEt pARAMEtERS

Active capacity[mcm]

Injection[mcm/d]

withdraw [mcm/d]

target capacity[mcm]

Injection [mcm/d]

withdraw [mcm/d] Operational from

1 Mogilno 412 9.6 18 800 9.6 28.8 2023

2 wierzchowice 1,200 6.0 9.6 1,200 6.0 14.4 2015

3 Husów 350 2.8 5.76 500 3.68 5.76 2014

4 Strachocina 330 2.4 3.36 330 2.4 3.36 n/a

5 Swarzów 90 1.0 1.0 90 1.0 1.0 n/a

6 Brzeźnica 65 1.1 0.93 100 1.44 1.44 2016

7 Kosakowo - - - 100/250 2.4 9.6 2014/2021

total 2,447 22.9 38.65 3,270 26.52 64.36Source: Pwc baSed on PubLic data

cuRREnT & fuTuRE sToRagECApACIty (MCM, MCM/dAy)

GaS StoraGe FaCilitieS

� After years of discussion, Poland is finally getting on to create new infrastruc-ture to import gas from directions other than russia. this should, in theory, give Warsaw some leverage in negotiating future contracts with Gazprom.

� Another part of poland's strategy to boost security of gas supplies is to expand or develop storage capacity. Plans are in place to increase gas storage capacity by 33% by 2021, mostly by expanding existing facilities, with an exception of a new project in Kosakowo.

In March 2014, the Council of Min-isters accepted a draft of an amendment to the polish geo-

logical and Mining Act.

the text of the draft may still change as it will proceed through the parlia-ment. Some of the proposed changes are disputable and will probably be still subject to public and parliamen-tary discussions. in general, however, these changes can be viewed as pos-itive for investors, helping to stream-line oil and gas investment.

First of all, the proposed amend-ments plan to introduce a preliminary qualifying procedure for licensing, designed to evaluate the financial and technical ability of oil and gas operators to explore, appraise and produce. only once an operator has been qualified, will they be able to apply for a concession.

the draft amendment proposes a single concession to cover search, ap-praisal and production. this means the current distinction between ex-ploration and production concessions

could be eliminated. operators will be able to convert the currently issued concessions into a single joint conces-sion, and seismic work done way of a simplified notification procedure.

the current challenges with Joint operating agreements (Joas) could get easier for investors. Hydrocar-bon concessions shall be granted by way of tender, as is the current prac-tice, but it will become possible for several entities to submit a joint ten-der which, if successful, would lead to the signing of a statutorily-regu-lated cooperation agreement. this is in contrast to the current system which entitled a single licence hold-er (ie. the SPV) to legal ownership of the concession.

a procedure for granting conces-sions upon request will also be pos-sible in respect to geographical areas that were already the subject of ten-der proceedings, where the tender was concluded without a concession having been awarded. all conces-sions will be granted for a period of 10 to 30 years.

the government has withdrawn from the idea of utilizing the national operator of energy Minerals (noKe), which was originally intended to acquire shares in every production licence.

other changes designed to stream-line oil and gas investment include the possibility to produce oil and gas after only partially appraising the asset. this will allow the remaining search and appraisal activities to be conducted simultaneously.

environmental cards for individual wells will be required instead of an environmental impact assessment (eia). Finally, the duty to submit geo-logical information shall be modified so as to require the mere submission of geological data, without any ac-companying interpretation.

the government has also accepted a draft proposal for a new tax on the exploitation of Hydrocarbons act. However, such a tax shall only become payable from 2020 when the target joint taxation of shale gas production will reach approximately 40 percent. www.ssw.pl

Investors should smile at the new oil and gas law. It makes everything easier, from licensing to appraisal to production.

welcome Amendments to the geological and Mining Act

a d V E R T o R I a l


p I Ot R S pAC z yŃ S K I , S S w A n n A p I Ot R O w S K A , S S w

18 | Shale Ga S Inve S tm ent GuIde | summer 2014

March 12/14

Poland ProPoses new shale gas rules

Poland’s government released draft rules on the taxation of hydrocarbon production and on geology and mining in an attempt to increase pace of shale gas exploration. The draft geology and mining law simplifies the process of obtaining concessions. Companies will be granted only one concession to explore, prove and ultimately produce gas. The government also scrapped the controversial provision to establish NOKE, a state-run operator with obligatory stake in each concession, to execute state control over “rational use of mineral resources”. The draft taxation law sets a cap of around 40 percent on shale gas operators, including CIT, a tax of maximum 25 percent on income and a special hydro-carbons tax of 1.5 percent of the value of extracted gas. According to the Polish Prime Minister Donald Tusk, the proposal was supposed to go to the first reading in the parliament in April.

DZI

ENN

IK.P

LThey like me better

dec 2/13

Chevron resumes shale program in Romania

Jan 14/14

Eni quits Poland,

focuses on Ukraine

dec 19/13

Poland’s chief geologist Woźniak fired; replaced by

Sławomir Brodziński

Feb 14/14

FrackNation premieres in Poland

t nr e d I nG

March 5/14

Cuadrilla’s shale gas in NW of UK

estimated at 330 tcf; bigger

than thought


March 20/14

Poland shale Coalition in the sejm

KM R

aTsc

hK

a

Is anyone listening?

March 25/14

Aberdeen Unconventional Gas: next 12 months critical

for UK shale gas

March 31/14

PGNiG, Chevron team up to develop shale acreage in SE PolandMarch 13/14

Shell cuts spending on US shales

March 27/14

transatlantiC FarMs into san leon

WIN

TERs

ha

LL.c

OM

What we hope for someday

tr

en

di

ng

although challenges in communication between industry and government are common in most countries, Poland’s oil and gas operators have had particular cause to complain. The March meeting in the Polish parliament, the Sejm, of the Polish Shale Coalition (PSC) with members of the parliamentary committee on energy provided an opportunity for a frank discussion between members of the industry and parliamentarians. The meeting was initiated by Prof. Mariusz Orion-Jędrysek MP, former chief geologist, and organised by the PSC, an industry organization focused on education and advocacy. During the meeting, PSC member representatives spoke about obstacles that they face in getting shale gas exploration off the ground so that commercial scale production does take place by 2016. Key problems at the moment remain the amount of time required to gain necessary permissions, which raises the costs of exploration programs.

Poland-oPerating unconventional gas company San Leon Energy signed an agreement with North American independent TransAtlantic Petroleum Limited to farm-in to the San Leon’s acreage position in the Permian/SW Carboniferous Basin of Poland. Under the terms of the agreement, TransAtlantic would fund 100 percent of a six well work program focused on achieving commercial production in the Permian Main Dolomite and Rotliegendes formations while further proving the upside potential of the Car-boniferous tight gas play. TransAtlantic would earn an undivided 50 percent working interest in the Nowa Sól, Wschowa, Góra, Rawicz, Prusice, Kotlarka, Oleśnica, Praszka and Wieluń concessions totaling more than 1.9 million gross acres. The carried work program is sched-uled for completion by December 2015. Hutton Energy is also participating in the joint venture through its interests in the Oleśnica and Wieluń concessions.


april 1/14

Poland gains option to import gas

german oPerator of gas pipeline network GAS-CADE Gastransport finished an upgrade of its Mallnow station located at the Polish-German border that will allow gas to flow in reverse, from Germany to Poland.

According to Gaz-System, Poland’s operator of gas transmission network, the upgraded Mallnow station will increase the safety of gas supplies to Poland. Poland currently imports about 11 billion cubic meters of gas, most of it from Russia. The potential to import gas from other directions, mainly the Czech Republic and Germany, is about 7.5 billion cubic meters.

The issue of security of gas supplies has risen to political prominence in Poland recently, following Russia’s annexation of Crimea and a dent in Moscow’s credibility as European partner that ensued. Poland is also going to renegotiate price of gas imported from Russia, according to deputy Prime Minister Janusz Piechociński.

Ma

ch

baR.

DE

he can crawl either direction

april 2/14

Segolene Royal becomes France’s energy minister

april 19/14

Caroline Lucas Green MP cleared over fracking pro-

test (see also p. 34)april 11/14

Ohio regulators link seismic activity to fracking

t nr e d I nG

april 1/14

PM tusk ProPoses eu energy union

PREM

IER.

gO

v.PL

Just waiting for a chance to say this

in aPril, Poland’s prime minister Donald Tusk toured Brussels (the seat of the EU key institutions) and Po-land’s allies France and Germany in order to gain sup-port for his Energy Union concept that Poland consid-ers essential for the EU in the wake of Russia’s dented credibility as a supplier, following the Crimea crisis.

The pillars of Tusk’s proposal are: • negotiation of gas prices by the EU as whole, • intensified investment in the European energy infrastructure, • better use of Europe’s own energy resources, including fossil fuel, • better solidarity in case of embargos or disruptions to gas supply, and • openness for new energy suppliers, like the US or Australia.

The EU faces having to import up to to 80 percent of its oil and gas by 2035, EU leaders acknowledged at a high-level meeting in March. Mr. Tusk said that “sign-ing agreements with emerging suppliers could transform the situation on the European energy market.


april 22/14

UK government plans changing trespass law to

boost fracking

april 24/14

E&Y: shale industry worth GBP33 billion

to British economy

april 19/14

Caroline Lucas Green MP cleared over fracking pro-

test (see also p. 34)

tr

en

di

ng

april 25/14

Egdon Resources UK acreage estimate: 18 tcf of gas initially in-place

april 23/14

Cuadrilla rolls out lancashire consultations

cUa

DRI

LLa

REs

OU

RcEs

I’d believe me

Following consultations with local com-munities of Roseacre Wood and Preston New Road in Lancashire, northwestern England, Cuadrilla Re-sources plans to drill, frac and test the gas flow from up to four wells in each community. The company has been carrying out a programme of public consultation for the two sites that involved over 9,000 households. As part of the process, planning and environmental consultants at Arup have produced two new brochures detailing the emerging findings of the Environmental Impact Assessments (EIA). A programme is also underway to restore the exploration sites at Anna’s Road and Preese Hall, also in Lancashire, plans for which were approved by the local county council earlier this year. Cuadrilla also intends to get a planning permission to make seismic and pressure monitoring at the Grange Hill site.

ENER

JIg

UN

LUN

gU

.NET

back another day

april 14/14

san leon ditChes turkey to focus on poland shalesan leon energy decided not to proceed with acquisition of Turkish energy company Alpay Enerji, following recent improvement of the company’s cash flow position.

“[The decision] has been made following a new round of successful deal making in Poland where Baker Hughes will be developing the Siekierki gas field and TransAt-lantic will be developing the Rawicz gas field and con-tinuing to appraise the upside of the Carboniferous Basin,” San Leon said in a release.

San Leon’s executive chairman Oisin Fanning added that the Baker Hughes and TransAtlantic deals “have positioned Poland to deliver cash flow and production more efficiently, enabling [San Leon] to reach its target of becoming at least break-even on a cash flow basis during 2014.”


april 26/14

us to helP shale development in ukraine

us has Pledged to help Ukraine develop its shale gas resources so that the eastern European country lessens its dependence on gas imports from Russia. “With the right investments and the right choices, Ukraine can reduce its energy dependence and increase its energy security,” US Vice President Joe Biden said at a press conference in Kiev in April. “We will stand with you to help in every way we can for you to accomplish that goal,” Mr. Biden added. The US has already approved of a $50 million aid package to Ukraine to help move toward greater energy security. According to the White House, the package would also include U.S. helping Ukraine gain a reverse gas flow from its western neighbors or assist with inten-sification of gas production from existing conventional gas and oil fields. Secretary of the US Department of Energy (DOE) Ernest Moniz also stated that the DOE plans to work with American private companies to help Ukraine develop its shale gas industry.

IPIc

K.ca

a kiss on the other cheek

april 25/14

UK and Poland to fund shale gas opportunities study

t nr e d I nG

May 5/14

Baker & MCkenzie: uk has 26 tcf shale gas

cU

aD

RILL

a R

EsO

URc

Es

Lots of gas out there

Baker & mckenzie, a consultancy, released a report about potential and challenges to shale gas exploration and production in the UK. Although UK’s unconventional gas resources, es-timated at 26 trillion cubic feet (tcf) are dwarfed by those potentially found in countries like Algeria (707 tcf) or Argentina (802 tcf), they could be enough for the coun-try to undergo a US-type shale gas revolution, if chal-lenges are overcome. Typical challenges, such as lack of public support for drilling, are still to be overcome and the UK government is hoping that throwing its political weight behind shale gas will help UK’s shale gas cause. Following Russia’s takeover of Crimea, the UK government has also been playing the energy indepen-dence card. At the moment, however, the political support doesn’t seem to be working, as hardly any IOCs have decided to start exploration and UK companies are yet to roll out exploration effort on any significant scale.

april 28/14

San Leon to develop Siekierki gas field with

Baker Hughes

april 29/14

Bakken oil fields mark billionth barrel of oil

May 4/14

Violence erupts at Dart Energy drilling site in UK


tr

en

di

ngMay 6/14

iran oFFers europe gas

TRIb

UIN

E.cO

M.P

K

axis of evil exports

iranian dePuty oil minister for Interna-tional Affairs, Ali Majedi, told FNA newswire, “Iran can export natural gas to Europe three different ways, including via the Turkish pipeline [linking Iran to Europe through Turkey] which is considered the most cost-effective route under current circumstances.” According to Mr. Majedi, Iranian exports to Eu-rope would come right at a time when Europe is look-ing for new sources of gas supplies and production from South Pars gas field is expected to begin soon. Foreign Policy magazine noted in March 2014 that if international sanctions against Iran were lifted “and Europe was able to invest in Iran’s gas sector, not only would Iran’s battered economy reap the benefits of trillions of dollars of energy revenues over time, Europe would gain a new, major energy partner that its com-panies can invest in. Iran needs European technology and Europe needs to find a way to release itself from Russian energy reliance.”

WIK

IPED

Ia

The reason why I’m king of my castle

May 6/14

PoMerania gets anti-shale

Poland’s Baltic Basin in the northern Gdańsk region of Pomerania has enjoyed little opposition to shale gas exploration so far. However, in early May, the local government of the Parchowo commune unanimously adopted a resolution against exploratory work in two villages on BNK Petroleum’s Bytowo concession. According to BNK, the local council’s opposition smacks of NIMBY, not in my backyard, attitude. “Shale gas exploration does not concern only a few of people. It’s about the energy safety of the whole country,” said Jacek Wróblewski, BNK’s development director. BNK said it would not undertake any exploration against the will of local residents and would set up a local informa-tion point to convince the local community of the positives of shale gas exploration in their area. Common ground might be hard to find, however. “We will not allow to destroy and poison the place where we live. There are other places where [BNK] can extract gas,” said Wiesław Stopa from a local NGO.

May 6/14

UK poll: 74% against fracking trespass law

May 7/14

Baltic Ceramics gets €10m for proppant factory

May 7/14

House of Lords Econ Cttee: shale gas urgent national priority

May 9/14

Poland blocks sale of RWE’s shale concessions to Russian firm

Compiled by Kacper Ciesiołkiewicz

24 | Shale Ga S Inve S tm ent GuIde | Summer 2014


l Coming oil and gas license bid to test interest in British shale p.26

l Unknowns blur the picture of UK’s shale gas viability p.30

l Cuadrilla’s execs confirm their enthusiasm for shale gas p.32

l UK producers’ association calls for action p.34

l Britain’s lead anti-shale voice Caroline Lucas interviewed p.36

CONTENTS

LICENCETODRILL

U K F O C U S

The UK largely shed its coal industry years ago. Its offshore oil and gas reserves are in decline. While the bulk of gas imports coming from stable and friendly countries like Norway, the government is looking at shale gas as a resource that could reduce a growing dependency on foreign fuels.


The UniTed Kingdom will offer shale gas exploration permits for the first time this summer, as the coun-

try tries to develop an attractive invest-ment framework for an industry with huge potential. How successful its 14th Onshore Oil and Gas Licensing Round is going to be will depend on whether energy companies are willing to invest in an unproven play, while also winning over the public.

The UK government hopes that de-velopment of the country’s shale gas reserves will cut the gas-import bill and boost the economy through new jobs and tax revenue.

The government asked the public to express any concerns during a three-month consultation process on the li-censing round which ended in March. Once the government’s Department of Energy and Climate Change (DECC) analyses the public’s responses, it plans to outline which licenses will be on of-fer in mid-summer, according to a DECC spokesperson.

DECC will then offer the licenses in rounds in which applicants compete

for exclusive rights over geographical areas, rather than auction the licenses off. The process is intended to attract the investors who are most likely to develop the hydrocarbons, rather than those who pay the most for the acre-age, but then just sit on it.

“Licensing rounds yield better quality bids,” DECC said. “Unlike auctions, li-censing rounds do not divert significant sums of money from exploration work.”

The department expects a number of companies to bid. DECC has forecast that it will award between 50 and 150 li-censes, each spanning between 4,000 km and 20,000 km, for unconventional oil and gas exploration drilling. The licens-ing round may create between 30 and 120 well pad sites.

BASINSDECC has not specified where these licenses would be, but has identified areas it considers promising for shale gas exploration.

The Bowland Basin in northern Eng-land, where industry frontrunner Cua-drilla Resources has drilled test wells, is

The UK government is hoping to make a decisive step this summer towards exploration and production of shale gas by offering exploration permits, to result in 30-120 new well pad sites in the next few years.

B y S a r a L i C h w a i n L O n d O n

Licence to Drill

d E V E L O P i n G S h a L E

a promising area, according to the British Geological Survey (BGS).

The basin could hold 2,281 trillion cubic feet (tcf) of gas from shale, the BGS has estimated. The UK’s conventional gas reserves are just 8.7 tcf.

Cuadrilla Resources, the original pioneer of UK shale gas exploration, estimates there could be 200 tcf of gas within its Bowland licence alone. The company is owned by Anglo-American equity firm Riverstone Holdings and Australian engineering company A J Lucas

In September 2011, Cuadrilla said it was sitting on vast shale gas resources in Lancashire, northern England and hoped to start commercial development in 2012. But the government placed an 18-month moratorium on drilling in May 2011 after Cuadrilla’s exploratory activities caused two minor earth tremors.

Unlike Cuadrilla, the government is tempering shale gas expectations, say-ing it is not yet possible “to make meaningful estimates of how much shale gas may be practically and com-mercially recoverable”.


UK

FO

CU

S

The Midland Valley in Scotland, the West Lothian Oil-Shale basins, as well as the Kimmeridge and Lias Jurassic shale intervals in the Weald and Wessex basins in southern England are also thought to harbor unconventional potential.

Only when more test wells are drilled and the DECC has awarded the licenses will we know how much shale gas the UK is recoverable. It could take another decade before any of the gas is commer-cially produced.

DANGEROUS MOMENTProtests against shale gas have popped up in Europe - in Romania, where Chevron has faced stiff opposition to its plans to drill for shale gas, as well as in Germany. But governments, es-pecially in countries dependent on imports of Russian gas, have been keen to tap this resource.

Production from shale rocks could help to cut the UK’s gas import bill, Dan Byles, a UK Member of Parliament (MP) and chair of the All Party Parliamentary Group on Unconventional Oil & Gas, told an industry conference. Unless shale gas

production takes off, he expects 80 per-cent of the UK’s gas will be imported at a cost of up to £15 billion per year by 2030.

The licensing round could be “a danger-ous political moment” for an industry not yet off the ground, Mr. Byles said.

Members of Parliament, who realize companies have been awarded shale gas exploration licenses in their constituen-cies, could find themselves unprepared, scrambling to placate to angry voters.

In fact, public support for shale gas in the UK is declining, according to a Uni-versity of Nottingham study.

Two groups, No Dash for Gas and Greenpeace, have organised anti-shale anti-fracking demonstrations, notably No Dash for Gas’s six-week protest at Cuadrilla Resources’ drilling site in Bal-combe, southern England, last summer (see interview with one of the protest’s leaders, Caroline Lucas MP, p. 30).

IGas, another UK-based indepen-dent company, has had protestors camped near one of its sites, at Barton Moss near Manchester, since Decem-ber last year. The company’s license areas between Liverpool and Manches-ter could contain 172 trillion cf of shale gas, IGas said in June 2013.

“Unless we get the public onside we won’t get to find out if the gas is there or not,” said Andrew Austin, IGas’ chief executive. “Southern England

PHO

TOPI

N

Existing Onshore licences

Area Under Consideration

acreage companieS could bid for in 2014

� Balcombe in the north, Weald and Wessex in the south are deemed promising

SoUrce: Decc


1975. This is compared to Germany, which relies on imports from Russia for around 40 percent of its oil and gas needs.

LURING OPERATORSLast year the government announced a series of tax breaks for shale gas development aimed at luring operators into the sector. George Osborne, the UK chancellor, said in March 2013 the government will increase the period during which companies can offset expenditures against losses for tax purposes, to 10 years from 6 years, for shale-gas projects. The UK also plans to trim its corporate tax to 20 percent from 21 percent in 2015.

New shale-gas projects could be eligible for taxpayer-sourced infra-structure funding of up to £3 billion starting in 2015.

By announcing these tax cuts, the government has given energy com-panies negotiating power - too

is a pretty sensitive area for NIMBY-ism (“not in my back yard”). That’s the difference between operating offshore and onshore.”

SECURITY OF SUPPLYTensions between Russia and Ukraine “have redoubled politicians’ views on the importance of indigenous supply,” and will boost support for shale gas, Mr. Austin said.

Shale gas could be a new source of energy supply for the UK as its conven-tional oil and gas reserves dwindle. The UK’s total energy production fell 7 peer-cent last year, to 114 million tonnes of oil equivalent, according figures released by DECC in March.

Onshore coal production fell to a his-toric low in 2013, while oil and gas output from the UK Continental Shelf continues to decline. As a result the UK’s net ener-gy-import dependency soared to 47 percent in 2013, the highest level since

quickly, said Greg Pytel, a founding member of the Expert Advisory Panel of Shale Gas Europe.

“This government is too cozy with private companies,” Mr. Pytel charged. “The government should allow the free market to work to get the best deal for the taxpayers...to push com-panies against each other in a com-petitive process,” Mr. Pytel added.

These financial incentives have at-tracted interest from energy compa-nies. Last October GDF Suez, which is partly owned by the French govern-ment, bought a 25 percent stake in 13 of Dart Energy’s UK onshore licences in Cheshire and the East Midlands, overlying the Bowland Shale.

This was GDF Suez’s first entry into licences with shale gas potential glob-ally and its first foray into onshore exploration in the UK. The French utility company cannot explore for shale gas in France because because

Unlike auctions, licensing rounds do not divert significant sums of money from exploration work

PHO

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N


the government has banned fracking.GDF Suez agreed to pay Dart En-

ergy an upfront cash consideration of $12 million in addition to appraisal costs of $27 million. The two compa-nies plan to drill up to 4 wells target-ing shale gas in different areas of the Bowland basin in addition to wells targeting coal bed methane.

GDF Suez declined to comment on whether it plans to bid for additional licenses in the new round.

The supermajors have also shown an interest in UK shale gas exploration. In January, France’s Total bought a 40 percent stake in two of IGas’s shale gas exploration licences in Lincolnshire.

Total will pay $1.6 million in back costs and fund a work program of up to $46.5 million, with a $19.5 million minimum cash commitment.

While the financial commitments energy companies have made to UK shale gas exploration indicate interest,

legal obstacles, such as access to pri-vately-owned land, remain.

UK landowners don’t have the same incentive as their US counterparts to allow companies to drill on their land because they cannot reap the benefits. Mineral rights in the UK are owned by the Crown, the Royal Family’s Estate.

INCENTIVIZE THEM ALL To provide incentives for the UK pub-lic to support shale gas exploration the energy department has suggested operators should compensate local communities at a rate of £100,000 ($167,000) per well where fracking takes place, in addition to one percent

of revenues from production. This could raise between £3 million and £12 million for individual local com-munities, the DECC said. But buying public support will increase operators’ costs, potentially offsetting the benefits of tax cuts.

But Wood Mackenzie, a consul-tancy, is skeptical on unconven-tional gas and oil prospects outside of the US and Australia. Energy com-panies are prioritizing value over volume in their energy strategies, said Dr. Andrew Latham, Wood Mackenzie’s Vice President of Explo-ration. This has led to a renewed focus on proven, liquids-rich plays at the expense of frontier, unproven ones, such as the UK’s, or European in general, shale gas sector.

“We are seeing a trend of compa-nies adjusting course, after having been focused for several years on high impact frontier exploration,”

Mr. Latham said. “The market wants more cash returned to shareholders at a time when rising costs and taxes have eaten into companies’ free cash flow,” he said.

It’s a “buyers’ market for exploration assets,” Mr. Latham added.

UK

FO

CU

S

0

10,000

20,000

30,000

40,000

50,000

60,000

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

uK’S gaS importS by country of origin; uK’S gaS importS 2000-2013 ( million cubic meterS)

Other

Belgium

Netherlands

Qatar

Norway

27,962

8,607

7,804

3,307

575

� UK’s gas imports decreased in 2012-2013, but with domestic production in decline, the country’s dependence on imports will grow. Norway and Qatar remain key suppliers, but Egypt, Algeria, or Trinidad and Tobago have also put themselves on supplier’s map.

SoUrce: Decc


Prime Minister David Cameron’s labelling of shale gas as key to Britain’s energy future has been

selling well within the industry. But it hasn’t made the issue of determin-ing how viable UK shale gas could be any easier.

There’s no full agreement over the amount of recoverable shale gas. The Geological Society in London esti-mates a range of figures range from 822 trillion cubic feet (tcf) to 2281 tcf, with a central figure of at least 1329 tcf of gas in place onshore. Therefore, if 1329 tcf of gas is a realistic estimate, then it is likely that only around 10 percent, or about 130 tcf, could be available for extraction, sufficient to meet about 50 years of forecasted de-mand. “British consumption of gas in 2012 was 2.76 tcf, making the country one of Europe’s largest gas markets,” said Howard Rogers at Oxford Institute of Energy Studies.

According to John Williams, senior principal at Pöyry Management Con-sulting, a consultancy, shale gas op-erators in the UK could be producing

gas at around $10 per million British Thermal Units (about 28,000 cubic meters).

“This is roughly the current Euro-pean wholesale gas price,” Mr. Wil-liams said. He notes that this also is roughly double the cost of gas at the

US Henry Hub Gas Index. The Henry Hub index is the US pricing point for natural gas futures contracts traded on

Before shale gas becomes a real commodity in the UK, the country needs to see through several unknowns that will have influence on the resource’s viability. The fundamental one is that hardly anyone knows how costly the British geology will turn out to explore.

Known Unknowns

S h a L E G a S P O L i t i C S

the New York Mercantile Exchange, world’s largest physical commodity futures exchange.

The simple equation to describe eco-nomic viability of British shale gas is that shale gas companies will need to achieve a production price below that available at the UK National Balancing Point (NBP) in order for their efforts to make business sense. NBP is a vir-tual trading location for the sale, pur-chase and exchange of UK natural gas. Gas produced over NBP’s pricing will be too expensive for end users and versus imported LNG.

While it’s easy to point to the NBP as a gas price reference point, it’s difficult to assess other unknowns about shale gas economics. Arguably, the most important one is that it must be suffi-ciently easy for companies like Cua-drilla or IGas to extract commercial quantities of gas at a cost of production that is competitive with other sources.

“UK shale gas production will need to be produced at a cost that will be able to displace imported gas, most likely LNG,” Mr. Williams said. In 2012,

“I would expect government to

engage with key stakeholders, but

to do so in order to provide responsible

leadership, not pliant cheerleading”

Tom Greatrex, shadow energy minister

PHO

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By n i C h O L a S n E w m a n i n LO n d O n


UK

FO

CU

S

UK import dependency was at 43 per-cent, of which Norway provides 55 percent and Qatar 27 percent, accord-ing to DECC.

“Shale gas will be no competition to major sources of gas supply, like pipeline gas from Norway,” Mr. Williams said. “More likely is that shale producers will be able to compete with marginal sources of gas such as LNG imports from the Middle East, especially in the context of the LNG market becoming increas-ingly globalized,” he added.

Increasing demand from Asian economies such as India and China, are likely to force the price up for Middle Eastern LNG supplies. This will make UK imports of LNG from such countries as Qatar more expensive.

“We don’t expect shale gas produc-tion to have a significant impact on prices here in the UK as these are set at the UK’s NBP, which itself is set at the wider European level,” said Mr. Williams. Since shale gas is no different in market terms as natural gas, the market is unlikely to price it differ-ently from natural gas.

INFORMATION GAPThe industry, investors, as well as the government faces an information gap about current rock formations and ensuing production costs in the UK. What can be said with certainty is only the obvious fact that conditions in Brit-ain are quite unlike in the United States.

The differences are clear in terms of regulations, ownership of mineral rights or the fact that Britain lacks a well-established exploration and oil field support industry. Nevertheless, in terms of fundamentals – the geol-ogy – the scope of differences and how they could affect shale gas companies remains unknown.

It has been suggested by some indus-try insiders that UK costs could be at least double those of the US. This would

limit room for price reduction for con-sumers, according to Bloomberg New Energy Finance.

In order to determine the effect that the British geology has on the econom-ics of shale gas, companies will have to drill as many well as they can in a rela-tively short time. From the point of view of the industry, however, Britain’s regulatory and planning processes are hindering big scale drilling.

There has been an effort by Britain’s environment agency to streamline the approval process for obtaining the variously environmental, health and safety and planning permits to allow the drilling for shale gas.

Mr. Williams does not think that there is the current institutional capac-ity to cope with providing the planning permits and approvals of upwards of upwards of 100 wells per year. Cur-rently, there are only maybe five or six such applications throughout the whole country.

It could be argued that the current planning procedures are inadequate for meeting today’s needs. “There could be a risk that if the approvals process is not made efficient for the production phase, then it may not be possible to produce shale gas in commercial quan-tities to make it worthwhile for the shale developers,” Mr. Williams said.

GOLD-PLATED OR GAME OVERPolitical position of shale gas in the UK is ambiguous. The Prime Minister Da-vid Cameron actively supports shale gas development, while his deputy Nick Clegg’s is lukewarm at best.

Even so, the government established a specific unit with DECC to facilitate shale gas development called the Office of Unconventional Gas and Oil (OUGO). It is responsible for the li-censing oil and gas exploration and production. However, operators will still have to gain permission from land-

owners and various government agen-cies including the Welsh and Scottish governments and Health and Safety Executive.

Amongst the new incentives for the industry, include a new allowance for conventional and unconventional on-shore oil and gas projects is to be in-troduced. This will allow E&P compa-nies to deduct 75% of their qualifying capital expenditure in relation to a well pad from their profits for the purposes of calculating the supplementary charge. As for local councils that permit shale gas developments, the govern-ment will allow them to keep 100 per-cent of business taxes; they collect from the sites under a government move to persuade communities to accept the fracking process used to extract the gas.

A new infrastructure bill is also in the works to circumvent landowners that have not given their permission to drill.

However, given the political sensitiv-ity of shale gas in the UK, where issues of national energy security interplay with environmental concerns (see p. 34), government regulations are under a great scrutiny.

“Suspicions are high so the regula-tory regime needs to be very robust,” said Mr. Williams.

“Everything needs to be gold-plated - any slip-ups and it’s game over. This is why we haven’t really moved for-ward,” Mr. Williams said.

Shadow energy minister Tom Grea-trex says that shale gas could have a role to play in improving energy security. He cautioned, however: “I would expect government to engage with key stake-holders, including businesses, but to do so in order to provide responsible leadership, not pliant cheerleading.”

“It is increasingly concerning that Tory ministers seek to exaggerate the potential benefits of shale and dismiss genuine and legitimate concerns,” Mr. Greatrex said.

“UK shale gas production will need to be produced at a cost that will be able to displace imported gas, most likely LNG”

John Williams, Pöyry Management consulting


Cuadrilla Resources’ chairman Lord Browne and chief executive Francis Egan hope that their company will get exploration up to speed soon, meeting government expectations for domestic shale gas to reduce Britain’s growing dependency on imports.

B y P a u l G a r r e t t i n l o n d o n

Gas of one’s own

C u a d r i l l a r e S o u r C e S

The chairman of Cuadrilla Resources, one of Britain’s fracking frontrunners, doubts shale gas will

bring about a US-style fall in Euro-pean gas prices. Instead Lord Browne, former BP chief executive, sees shale gas as a transition fuel on the road to a low-carbon economy and an answer to looming questions on Britain’s se-curity of energy supply.

“The UK is part of a well-connected European gas market, and unless it is a gigantic amount of gas, it is not going to have a material impact on price,” said Lord Browne, who is also manag-ing director of Riverstone Holdings, which co-owns Cuadrilla.

Cuadrilla is a privately owned com-pany, which includes Anglo-Ameri-can equity firm Riverstone Holdings and Australian engineering company AJ Lucas as its shareholders, aiming to be the number one shale gas player in the UK.

Its managers are discreet about their strategy. Lord Browne and chief ex-ecutive Francis Egan both declined to comment on where they are going to drill apart from Lancashire in the

Bowland Basin or on how much they’re ready to spend on this. The company is looking at onshore oil.

PROTESTSFor now, in the United Kingdom, Cua-drilla is more associated with anti-fracking protests at its Balcombe site than with robust operational activity.

Minor earth tremors precipitated by Cuadrilla operations were a flashpoint for opposition to fracking in Britain. The tremors were part of the reason for the government’s moratorium on the method. The British Geological Survey has since said more tremors per year are caused by old coal mining seams than by shale gas activities. Op-position to shale gas in Britain is now focused on water contamination as well as the traffic and noise associated with exploration, which is burdensome to local people.

Fracking doesn’t cause water pollution, Lord Browne said, but concedes that “there have been some issues to do with leaking of gas into aquifers as a result of imperfect operations, mainly to do with the cementing of well casings.”

“There have been some bad prac-tices in the US in the disposal of waste water,” because the United States government failed to create appropriate regulation for fracking, Lord Browne said.

In Britain, academic organization The Royal Society recommended last year that there is no need for spe-cific regulations for fracking to be drawn up in the UK. Lord Browne echoed that sentiment when he said the current web of regulation span-ning the Department of Energy (DECC), Environment Agency, Health and Safety Executive, and lo-cal planning consents is sufficient.

DRILL ASAPCuadrilla’s acreage development pro-gram is dictated by a sense of urgency driven by UK’s increasing reliance on imported natural gas for power gen-eration and industry, as well as domes-tic use. Industrial use of gas, such as in the chemical industry is less political and gets less attention, much unlike domestic use, as most homes in Britain use gas for heating and cooking.


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“We need to drill probably 10-12 wells and test them and it needs to be done as quickly as possible,” Lord Browne said. For now, Cuadrilla does not intend to frack at Balcombe but is looking else-where, primarily in north west England.

In ten years’ time, Europe will import 90% of its gas, according to data from the International Energy Agency as well as the EU’s own policy documents, much of it from an unpredictable and aggressive Russia.

“Given planning issues and vocal, articulate and well-organised public

opposition” to shale gas exploration in the UK, development “will take time,” said Mr. Egan. “People need reassurance.”

“Drilling a test well only takes three months, but a lot of delays are likely

to stem from local opposition,” Mr. Egan said.

“The ‘circus coming to town’ pe-riod is short, after which the foot-print of a shale gas well in production mode is small.”

“The shale gas industry has more work to do to sell its story,” added Mr. Egan.

REDUCE THE GAS BILLSelling the shale gas story is going

to get help from the government. Like Lord Browne, the UK energy minister Michael Fallon said that the case for including shale gas in a lower carbon energy mix remains strong.

“We need to reduce carbon emissions from electricity generation, enhance security of supply, and make energy in Europe more affordable,” Mr. Fallon said. “Britain’s imports of gas will cost us £10 billion a year by 2025.”

To reduce the gas import bill, the UK will need to adapt the develop-ment of the shale gas industry to local conditions. In the US, the shale gas under someone’s land is their prop-erty. In the UK, it belongs to the gov-ernment, in the form of the Crown Estate agency. Similar rules apply across Europe.

Ownership of mineral rights is no panacea. Some myths persist about the speed at which shale gas industry progressed in the US, according to Mr. Egan. “The overnight success of shale gas in the US was no such thing,” he said. “It took more than a decade to establish a shale gas industry there… with a developed onshore oil and gas drilling infrastructure already in place,” he added.

In the mid-term, international law firm Bircham Dyson Bell expects 20 to 40 explorations wells will be drilled in the UK in the next five years. That’s fewer than the 57 wells that Poland has drilled since 2011.

But the industry’s potential to broaden Britain’s energy mix, boost local economies, and create thou-sands of jobs will prove irresistible to the government, the firm said in a report.

“Significant and widespread exploi-tation of shale gas in the UK now looks likely to happen,” Bircham Dy-son Bell added.

“The shale gas industry has more work to do to sell its story”

Francis Egan, CEO of Cuadrilla Resources

Will Cuadrilla deliver? It might happen on this well pad in Preese Hall

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W h e n I s ta n d h e r e 12 months from now, someone in this industry should have drilled

a vertical well, a lateral well and be on the verge of hydraulically fractur-ing. That’s what we need to gain over the next 12 months.

If we don’t, we will have let others persuade local communities that the U.S. - with its Kyoto meeting emis-sion targets, lower prices, manufac-turing industry on the rise, invest-ment in renewables increasing - have got it wrong - and that we in Europe have got it right - with our higher prices, higher coal burning, higher emissions and manufacturing mov-ing to the U.S.

If we don’t, then we will have let oth-ers persuade local communities that we don’t need gas, even though the fact is that it provides 40 percent of our electricity, 80 percent of our heat, and that it provides hundreds of every day with everyday products such as tooth-paste and cosmetics.

If we don’t, then we’ll lose the supply chain, the people living and working in our communities.

If we don’t, we will have let others persuade local communities that we don’t need the vital tax revenues or direct community benefits.

Above all, we will have let others win the argument that our industry

is not safe, despite the evidence from institutions such as the Chartered Institution of Water and Environmen-tal Management, Public Health Eng-land and a plethora of other leading academic and scientists.

The year 2013 was about getting our environment and planning regimes into a fit for purpose system. 2014 will be about personally communicating as

effectively as possible with local com-munities to make sure they understand the processes and benefits.

Studies show that the more infor-mation given to residents the more they become convinced to support what we are doing, and the more sup-port they give to shale as an indige-nous source of energy.

The other day this point was vividly underlined on BBC when Francis Egan of Cuadrilla addressed a small number of residents in Lancashire, alongside representatives of Friends of the Earth. It was interesting to see that he was able to change perceptions, moving

people from negative to positive. Our target is not the mobile, profes-

sional protesters. Our target is local communities. We as an industry need to do more local engagement. We have a system in place that allows us to engage with the public at least five times during the planning and per-mitting process.

Local regulators need to do their

bit by engaging with local residents and explaining the process and un-derlining how tightly regulated our industry is.

We cannot get into a position where we are importing the majority of our gas from countries with a worse human rights and environmental record, coun-tries which are effectively holding the UK to ransom by energy prices and supply.

The article is an edited version of Mr. Cronin’s keynote speech from the Uncon-ventional Gas Conference, held in Aber-deen in March 2014.


The importance of the next 12 months for shaping the future of the UK’s onshore unconventional oil and gas markets cannot be overestimated, says Ken Cronin, CEO of the UK producer’s association UKOOG

By K e n C r o n i n

A Call to Action

o P e r A T i o n S ’ n e X T y e A r

2014 will be about personally communicating as effectively as possible

with local communities to make sure they understand the processes and benefits


| Shale Ga S Inve S tm ent GuIde | SUMMER 201436

“The Polish shales are simply difficult

for E&P. On the other hand, there have been much bigger problems that the oil and

gas people have managed to solve”

Professor Jerzy Nawrocki

Caroline luCas, Green Mem-ber of Parliament (MP), has been acquitted of obstructing police dur-

ing last year’s demonstrations against Cuadrilla Resources’ exploratory oil drilling operations in the village of Balcombe in Sussex, southern England.

She is now free and says will con-tinue campaigning against hydraulic fracturing, strengthening the hand of opposition to shale gas drilling in the UK. Its focus has now switched to the Bowland basin in Lancashire, north west England, where Cuadrilla plans more test drilling.

“The only safe and responsible thing to do with shale gas is leave it in the ground,” Ms. Lucas told the SGIG out-side the Brighton court. “Exploiting shale gas will simply undermine the

struggle to halt carbon emissions and global warming.”

Ms. Lucas, 54, is interpreting a Unit-ed Nations’ Intergovernmental Panel on Climate Change’s recent report on global warming. She believes its mes-sage is that renewables are the ultimate aim so too much emphasis on natural gas as a bridging fuel could be a distrac-tion. This is not the view of those who see gas as a far more environmentally friendly fuel than coal or oil.

DICTATING POLICY“The government should listen to the public and stop letting oil and gas in-dustry lobbyists dictate UK energy policy,” said Ms. Lucas, who is Britain’s first and only Green MP, for the Brigh-ton Pavilion constituency. “Fracking for

shale gas will not lead to lower energy prices, will not give us security of en-ergy supply, and will not create jobs.”

The Balcombe protesters include local residents, people from other areas of the country where fracking is an issue, as well as members from environmental groups and the UK Green Party.

Ms. Lucas, a lifelong environmental activist and author with links to Oxfam and the Royal Society for the Protection of Animals, said the Sussex drilling operation and the protests around it represent bigger argument.

“MPs have underestimated the level of opposition to shale gas, Ms. Lucas said. “If we think that wind power has problems with opponents -- you haven’t seen anything yet.”

c o n c E R n E d c i t i z E n S

Just minutes after her acquittal by a court in Brighton, Britain’s top anti-shale gas activist, Caroline Lucas Green MP, spoke to the Shale Gas Investment Guide about why she thinks fracking is a cul-de-sac of Britain’s energy policy.

B y P a u l G a r r e t t i n B r i G h t o n

The summer of British discontent

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“It’s a touchstone issue across a broad group of people – even the National Farmers Union has expressed con-cerns,” she added.

The Balcombe drilling site is sand-wiched between a narrow country road and the London-to-Brighton railway line, close to a Victorian railway tunnel and not far from Ardingly water reser-voir. The city Brighton, Ms. Lucas’ political base, has a history of environ-mental awareness

Critics have said such sensitive geological formations in such a scenic rural setting is ill-suited for a 3,000 foot vertical and then horizontal well or for water-filled tankers making frequent deliveries.

Cuadrilla said it is not undertaking fracking at Balcombe and that its ac-tivities there have presented no threat to the water table.

WELLS AGAINST WINDTo extract just 10 percent of Britain’s shale gas reserves some 10,000 wells would need to be sunk, MP Alan Whitehead said at a Parliamentary debate late last year. That would suggest a big potential for protests at sites across the UK.

“Wind power needs backup,” Ms. Lucas said in Brighton. “There will need to be a transitional generation fuel to get us to a point where we can rely on renewables.”

But wind power is intermittent and needs baseload generation from nu-clear or gas-fired power plants when the wind doesn’t blow, or storage, such as from hydro-power. Onshore, wind only blows about 30% of the time. Offshore, where building wind tur-bines is more expensive, it blows about 60% of the time.

“We would rather continue with conventional gas – and if imports are required, by pipeline rather than LNG with its high carbon footprint,” Ms.

Lucas added. “It’s easier to turn the tap off with conventional gas when the time comes.”

“I see biogas [a fuel generated from human sewage methane or agricul-tural sources] as part of the transi-tional fuel mix,” she said. “Biogas has less volume potential than shale but it has greater longevity as a resource.

Shale gas has enhanced both en-ergy security and lower prices in the United States, but only because North America is a closed market, Ms. Lucas said.

“We are part of an interlinked Euro-pean gas market,” meaning local com-

munities won’t necessarily benefit from cheap gas, she added. “It will be sold on the market to the highest bidder.”

Policy certainty and scale brought about by bigger and more far-flung projects will bring down the cost of offshore wind within a decade, accord-ing to Ms. Lucas. The current govern-ment does not deliver that certainty.

Greens would prefer if fossil fuels stayed in the ground, forcing human-

ity to go full-pelt into renewables. “Britain has a leadership role [in lim-iting greenhouse gas emissions],” Ms. Lucas said. “We were the first country to industrialise and so start the climate change process.”

“Even China is investing a great deal in technologies such as hydropower and wind,” she added.

OUTSIDE MAINSTREAMLucas sees a role for gas a bridging fuel only in the short term, perhaps the next 20 years. Longer term, its role as a backup resource could be mitigated by the development of more intercon-nectivity between European countries with offshore wind farms.

“Shale gas will lock us into decades of fossil-fuel based energy generation and that is the wrong direction to take,” she said.

Ms. Lucas is not on her own in this fight, there are politicians who sup-port her views. Keith Taylor, a Mem-ber of the European Parliament for Balcombe and its environs, is cam-paigning against fracking at the EU level as well.

“I voted for measures which crack down on the dangers of fracking,” Mr. Taylor said. “I challenged the British Government over its proposals to hand tax breaks to fracking firms and incen-tives to local councils who accept shale gas extraction in their area.”

It seems, however, that shale gas has a secure position with the political mainstream. Many UK politicians, including such influential figures like Lord Lawson, arguably Britain’s biggest champion of shale gas development or Shadow Environment Secretary, the Labour MP Caroline Flint, support shale gas.

“Provided it is economically and environmentally viable, we [the La-bour Party] support shale gas explora-tion,” Ms. Flint said.

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“The only safe and responsible thing to do with shale gas is leave it in the ground”

Caroline Lucas, Green MP

The summer of British discontent

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Ms. Lucas says she will go on campaigning


For many in Western Europe, the Ukraine-Russia spat over Crimea might seem unimportant.

After all, Crimea had been “transferred” from Russia to the then Ukrainian Soviet Republic, part of the USSR, by secretary general of the Soviet Com-munist Party Nikita Khrushchev in 1954. So what’s the fuss now about Rus-sians taking it back?

The taking over of Crimea by Rus-sia is clearly a violation of Ukraine’s sovereignty and it has a number of repercussions for the Black Sea re-gion, Ukraine itself as well as the European Union.

According to an analysis of the military consequences of the annexa-tion of Crimea, published in March by Warsaw-based think tank Center for Eastern Studies (OSW), Russia is clearly a winner.

Russia won’t have to pay Ukraine for housing its Black Sea Fleet anymore in the Crimean naval bases and it has

a decidedly better position now to modernize and expand the fleet. Within a decade Russia will cement its military advantage over all of the NATO members of the Black Sea re-gion, according to OSW.

The relationships between Moscow and Kiev are at its worst, even foresee-ing open war. Having sliced off a stra-tegic region, Russia is mounting eco-nomic pressure on its neighbor as well. The price of gas supplies is the tool of choice to do so.

FREEDOM COSTSRussia has announced its gas would cost Kiev around USD 500 per 1,000 cubic meter, as compared to the cur-rent price of just USD 268 per 1,000 cubic meters. On top of that, Russian administration has suggested that Ukrainian exports to Russia might be curbed. This would prove a devastating blow to the Ukrainian economy that has been battling recession since 2012.

Ukraine has lost Crimea and its eastern regions could well gravitate - with some external help - toward Russia. For Poland and Europe, the crisis presents opportunity to revise its gas strategy, but also a risk of allowing Ukraine’s downfall.

B y W O J C I E C H K O Ś Ć

Not Exactly a Win-Win Game

A N A L y S I S

Russian economic pressure could also fuel anti-EU resentments in Ukraine quite easily.

Most likely, some diplomatic solution will be worked out that will leave Crimea with Russia, while keeping the pretence of solving the conflict for a benefit of Ukraine as well.

The crisis in Crimea is, however, one of those historic moments when the European Union could forge crisis into an important step forward, even though this would involve running some significant risks.

CRISIS TO OPPORTUNITYEnter Poland, which has been one of the most vocal advocates of quick and forceful reaction to the Crimea action. Poland has not only proposed sanctions to be imposed on Russia in retaliation - which by definition is short-term and destructive - but also table a plan to move forward, by creation a new union within the EU: a union of energy.


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Poland proposes that the EU buys gas from Russia as an entity, in line with its principles of being one market where goods flow freely. It also wants to develop capacity to buy gas from sources other than Russia - US with its cheap shale gas in particular, but also LNG from other parts of the world.

Poland also wants to step up produc-tion of gas from EU’s domestic sourc-es, a point that suggests shale gas as a solution. Finally, the EU should create infrastructure to lessen the risk of Rus-sia’s using gas supplies - or lack of them - as a tool of pressure. The EU should build gas storage as well as the political capacity to respond to a crisis situation like the one unfolding in Ukraine.

Interestingly, while the Western part of the EU, with an exception of Ger-many, is largely independent from Russian gas, the crisis in Crimea opened the eyes of nations like Britain to the fact that being dependent on any non-domestic source for energy fuels, like Britain is on Norway, is in itself a situation of strategic disadvantage.

Several EU member states in Central and Eastern Europe are tied to Russia for their gas supplies, sometimes, as in the case of Bulgaria, Slovakia or Hun-

gary, to the level of 100 percent. Most of gas coming to those countries is flowing through Ukraine, another strategic factor in the political game going on now.

Russia’s strategy has been for a while now - even before Crimea - to exert pressure on Ukraine by building gas pipelines that circumvent Poland’s east-ern neighbor. An example is Nord Stream linking Russia with Germany or South Stream, a project under devel-opment to supply Russian gas directly to Bulgaria and then to Austria. Both Nord Stream and South Stream are considered ways to circumvent Poland and Ukraine as transit countries.

The ensuing EU’s challenge in deal-ing with Russia as a major but difficult supplier is - at the same time - to re-duce demand for Russian gas but not let Ukraine’s political trajectory toward the EU lose direction. The latter could be easily instigated by Russia, which is already exerting economic pressure on Ukraine for its current EU-direct-ed political choices.

In other words, the EU has a pretty clear and practical way of disentan-gling itself from having to buy Russian gas within a reasonable timeframe and

put a pressure on Gazprom to reduce prices, but it doesn’t have such a clear way of not losing Ukraine in the pro-cess. Not least because the parties involved in the current crisis - Ukraine, Poland and the EU - are guilty of being behind the times.

Starting from roughly the same level as Poland in the 1990s, Ukraine has largely wasted 25 years that have followed since and is now very late in building a modern statehood. It’s a corrupt country, ranked 144th out of 175 countries in the Transparency International corruption perception index 2013, and a soaring Gini index measuring income inequality between the rich and the poor..

The EU is late in preparing a re-sponse in case Russia decides that its gas isn’t just commodity bringing bil-lions to the Russian budget every year, but also a weapon to intimidate coun-tries dependent on Russian supplies, some of those countries (Poland, Slo-vakia, Hungary) members of the bloc for a decade now.

For its part, Poland is late helping its neighbor in the process of building the modern statehood.

That Kiev did sign the association agreement with the EU is a welcome development, but it’s some failure of the Polish diplomacy that it was signed amidst unrest that took over 100 lives instead of being the crowning moment of a political process, much like Poland’s way to the EU membership was.

The EU can free itself from having to buy Russian gas within a reasonable timeframe, but it may lose Ukraine in the process

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Poland may see gas from shales flow in commercial quantities this year, a welcome development for the indus-try. That’s on top of other recent posi-tives, including the government’s adop-tion of new draft laws on concessions

and the taxation level of hydrocar-bons’ production. Some of the uncertainty which has dampened

investor enthusiasm for years has lifted.The mood of the industry has shifted

to cautious optimism rooted in reality, as concession holders, investors, regu-lators, local politicians, and service providers have dialed back their exor-bitant optimism of 2011, but haven’t given up entirely.

With 57 wells drilled to date along the Polish shale gas belt stretching from Gdańsk to Lublin, the pace of explora-tion remains slow.

As archival geological data and the recent findings by active operators suggested, if Polish shale yields gas on a big scale, it will happen in the Baltic Basin.

In particular, San Leon Energy’s Lewino 1G2 and BNK Petroleum’s

Gapowo-1 wells, both about an hour drive west from Gdańsk, have a chance to be bellwethers. (See page 52 for a map.)

FRAC, FLOW, DRILL, FRACLate in 2013, San Leon performed a “successful vertical frac” on the Lewino well that yielded a “sustained gas pro-duction rate of 45,000-60,000 cubic feet per day after six weeks of well clean up,” the London-listed company said.

Following analysis, this result gave the company grounds to hope for a gas flow rate estimate of 200,000-400,000 cubic feet per day.

“This would definitely be a com-mercial quantity,” Lars Hubert, San Leon’s exploration director, told the Shale Gas Investment Guide in March.

The company is planning a 1500-meter long horizontal well with

a multi-stage frac. Mr. Hubert said he will know the frac’s results in late 2014, as long as lack of drill rigs and delays in permitting don’t slow San Leon down.

Forty kilometers south of Lewino, another well is in the works. In early 2014, BNK Petroleum drilled, cased, and cemented its Gapowo B-1 hori-zontal well with “excellent gas read-ings regularly recorded throughout the lateral,” the company said.

BNK will attempt to “fracture stimulate approximately 30 percent of the available lateral length followed by an extended production test to optimize its design prior to fracture stimulating the remaining lateral,” it said in February.

The company expects to have results this summer, said Troy Wagner, BNK’s general manager in Poland.

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Eyes on the Baltic Basin

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B Y W O j c I E c h K O ś ć


DIFFERENT PHILOSOPHYThe way San Leon and BNK have gone about stimulating their Lewino and Gapowo wells could set an example for other operators.

Each operator opted for a different approach their wells, what Mr. Hubert called “two schools of thought”. San Leon fracked the vertical part of their well before attempting a horizontal well and multi-stage frac. BNK never fracked the horizontal well. Instead, the company’s engineers opted to frack the lateral as a test of the Baltic Basin’s Lower Silurian and Ordovician, geo-logical rock strata roughly 2000-3500 meters below the surface.

“Based on experience gained in our other Polish wells and the fact that the Gapowo vertical well results were good enough [without a frac], we knew immediately that we wanted to drill a horizontal lateral in order to test the capability of the shale,” said Mr. Wagner.

“As such, we decided not to case (and frac) the vertical well but to leave the well in a configuration where it could be re-entered in order to drill the lat-eral,” he added.

“We believe that our approach is more cost effective,” he said. Fracking a vertical well doesn’t provide data solid enough to draw conclusions about commercial potential. “Vertical well tests leave everyone speculating on what a horizontal well is capable of.”

Mr. Hubert of San Leon offers a dif-ferent view.

“There’s a debate going on [about] how relevant vertical fracs are for characterizing production potential,” he said. “There’s one school that says that one doesn’t really know how to upscale from a vertical frac to hori-zontal frac. We believe that we can do it,” Mr. Hubert said.

A progression can be made from a

horizontal to a vertical well, but a ver-tical frac ahead of the horizontal one enabled the operator “crack the code” of how to optimize exploration in Pol-ish conditions, Mr. Hubert said.

Too complex a structure of fractures in shale rock can pose problems in placing enough proppant to keep frac-tures open and effectively flow gas, he added. “Sometimes less is more,” Mr. Hubert said.

FOUR WELLS, TWO FRACS, NO RESULTSOther wells drilled in 2014 to date are: Lane Energy’s Lublewo LEP-1, PG-NiG’s Opalino-3 and Kościaszyn-1, and Orlen Upstream’s Stoczek OU-1.

But no stimulation has taken place this year. In the summer of 2013, Or-len Upstream fracture-stimulated its Syczyn OU2-K well. The results, which brought no commercial scale flow rates, were disappointing.

The company remained silent on the failure. In its news release, Orlen placed emphasis on how the frac was “the most complex and intensive treat-ment carried out on an unconven-tional gas reservoir in Europe.”

The PKN Orlen SA subsidiary was more positive about its November 2013 frac, on the Berejów OU2-K well in the Lublin basin. Its chief executive felt confident enough to comment on flow, something he hadn’t done to date.

“Although the inflow of hydrocar-bons was successfully induced during the production test, it has not reached commercial level yet. Most of hydro-carbons produced was light crude,” Orlen Upstream CEO Wiesław Prugar said.

Orlen Upstream is analyzing the flow achieved during the test and the well’s behaviour to better understand the reservoir.

Still, “it is too early to draw any conclusions about the possible profit-ability of crude oil and natural gas production in this region,” Mr. Prugar said.

CAUTIOUSLY ENCOURAGEDIn the capital, the Polish government has heard the industry’s pleas for a concessions law and taxation regime that encourages development. Min-i s ter of Env ironment Macie j Grabowski, who took office in No-vember 2013, said that shale gas would be his priority. To date, it ap-pears as if he has kept his word, even though it will still take some time to see to what effect.

The government has approved the draft text of a new law on geology and mining that regulates concessions, and on taxation hydrocarbon produc-tion (see Indicators, p. 14).

Operators will be subject to a new taxation regime from 2020, while the concessions system will be simplified. The government has scrapped the idea of NOKE, a state-run operator that would have a mandatory stake in new concessions.

The most recent drafts of the laws are taking into account some of the industry’s concerns.

But by creating a taxation regime now, the government has put the cart before the horse, said Mr. Wagner of BNK.

“We are still a long way from prov-ing there is a viable shale gas industry in Poland,” he said.

“The immediate focus should be on streamlining processes and approvals at the federal to local level for existing concession holders and incentivizing investment, not increased taxation of something that is yet to be proven,” Mr. Wagner said.

Jo Harper contributed to this article.

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Concession holders, investors, regulators, local politicians, and service providers have dialed back their exorbitant

optimism of 2011, but haven’t given up entirely


GROUND LEVEL

~300m Tertiary / Quaternary glacial sediments (Aquifer)

~900m Cretaceous, Jurassic, Triassic sediments

~275m Permian Zechstein Salts, Anhydrites, Dolomites

~300m

~1200m

~1475m

~4000 m Silurian and Ordovician Gas Shales

~5200m

~275m Cambrian Quartzites~5500m

Pre Cambrian Quartzites

3515m

3535m

3545m

Upper Ordovician

Lower Ordovician

4300m

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3535m

3545m

Longest horizontally drilled well in Poland.

MAY 2014

OPERATOR: San Leon EnergyKEY STAKEHOLDERS: Quantum Partners, Toscafund Asset Management, The Capital Group Companies, Kulczyk InvestmentsWELL LOCATION: Lewino, Linia commune, Wejherowo county, Pomorskie provinceTOTAL WATER VOLUME: 4685.8 m3PROPPANT VOLUME (KILOGRAMS): 209,802WELL DEPTH: 3600mDRILLING CONTRACTOR: KCA DeutagHYDRAULIC FRACTURING: United Oil�eld Services

WELL FACT SHEET

Sustained gas production rate of 45,000–60,000 standard cubic feet per day (scf/d) after 6 weeks of well clean-up.

Potential rate of 200,000–400,000 scf/d, based upon full clean-up of frac �uid. In the US, horizontal wells typically

yield 7-30 times the production rate and recovery of vertical wells in the same formation, especially after optimization

and learning, according to San Leon Energy.

The lower Ordovician net pay has higher e�ective porosity and gas saturation than

the upper Ordovician, although slightly lower net pay thickness. The per-frac potential for the Lewino Ordovician

formation could be materially higher than measured and inferred from the �owback

data and post-clean up extrapolation.

The company now plans a 1500m horizontal well with multi-staged frac, subject to permitting,

rig availability and planning with technical partners. “Quote about timing,” said Lars Hubert,

unconventional exploration manager at San Leon Energy.

The conclusions of the log and core data analysis and sustained elevated gas shows in the lateral validate the belief that the Lower Silurian and

Ordovician shales are highly prospective for shale gas. The analysis indicated the shales have good

total organic carbon, porosity and permeability.

The vertical Gapowo B-1 well had encountered

over-pressured, gas charged, organic-rich

shales in the Lower Silurian and

Ordovician intervals.

High gas readings recorded during the drilling of the lateral. BNK plans to fracture stimulate approx

30% of the available lateral, followed by an extended production test to pptimize its design

before fracture stimulating the remaining lateral.

WELL FACT SHEET

OPERATOR: BNK PetroleumKEY STAKEHOLDERS: Soros Fund Management, BlackRock, Capital Research and Manage-ment Company, American Funds Smallcap World AWELL LOCATION: Gapowo, Stężyca commune, Kartuzy county, Pomorskie provinceDRILLING CONTRACTOR: MND Drilling & ServicesWELL DEPTH: 4300mWELL LATERAL: 1800m

This way to shale

SAN LEON ENERGY:

FRAc 3, NOvEMbER 2013, TARGET: UppER ORdOviciAN

LEwiNO

This simplified drawing shows state of play on what seems to two of Poland’s most promising shale gas wells: Lewino-1G2 from San Leon Energy (below) and BNK Petroleum’s Gapowo-1 well. Both wells are situated about an hour drive west from Gdańsk.


GROUND LEVEL

~300m Tertiary / Quaternary glacial sediments (Aquifer)

~900m Cretaceous, Jurassic, Triassic sediments

~275m Permian Zechstein Salts, Anhydrites, Dolomites

~300m

~1200m

~1475m

~4000 m Silurian and Ordovician Gas Shales

~5200m

~275m Cambrian Quartzites~5500m

Pre Cambrian Quartzites

3515m

3535m

3545m

Upper Ordovician

Lower Ordovician

4300m

3515m

3535m

3545m

Longest horizontally drilled well in Poland.

MAY 2014

OPERATOR: San Leon EnergyKEY STAKEHOLDERS: Quantum Partners, Toscafund Asset Management, The Capital Group Companies, Kulczyk InvestmentsWELL LOCATION: Lewino, Linia commune, Wejherowo county, Pomorskie provinceTOTAL WATER VOLUME: 4685.8 m3PROPPANT VOLUME (KILOGRAMS): 209,802WELL DEPTH: 3600mDRILLING CONTRACTOR: KCA DeutagHYDRAULIC FRACTURING: United Oil�eld Services

WELL FACT SHEET

Sustained gas production rate of 45,000–60,000 standard cubic feet per day (scf/d) after 6 weeks of well clean-up.

Potential rate of 200,000–400,000 scf/d, based upon full clean-up of frac �uid. In the US, horizontal wells typically

yield 7-30 times the production rate and recovery of vertical wells in the same formation, especially after optimization

and learning, according to San Leon Energy.

The lower Ordovician net pay has higher e�ective porosity and gas saturation than

the upper Ordovician, although slightly lower net pay thickness. The per-frac potential for the Lewino Ordovician

formation could be materially higher than measured and inferred from the �owback

data and post-clean up extrapolation.

The company now plans a 1500m horizontal well with multi-staged frac, subject to permitting,

rig availability and planning with technical partners. “Quote about timing,” said Lars Hubert,

unconventional exploration manager at San Leon Energy.

The conclusions of the log and core data analysis and sustained elevated gas shows in the lateral validate the belief that the Lower Silurian and

Ordovician shales are highly prospective for shale gas. The analysis indicated the shales have good

total organic carbon, porosity and permeability.

The vertical Gapowo B-1 well had encountered

over-pressured, gas charged, organic-rich

shales in the Lower Silurian and

Ordovician intervals.

High gas readings recorded during the drilling of the lateral. BNK plans to fracture stimulate approx

30% of the available lateral, followed by an extended production test to pptimize its design

before fracture stimulating the remaining lateral.

WELL FACT SHEET

OPERATOR: BNK PetroleumKEY STAKEHOLDERS: Soros Fund Management, BlackRock, Capital Research and Manage-ment Company, American Funds Smallcap World AWELL LOCATION: Gapowo, Stężyca commune, Kartuzy county, Pomorskie provinceDRILLING CONTRACTOR: MND Drilling & ServicesWELL DEPTH: 4300mWELL LATERAL: 1800m

bNK pETROLEUM:

FEb 2014, pOLANd’S LONGEST LATERAL: GApOwO b-1

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Can you tell me about MND Drill-ing & Services?

We are the largest drilling contractor in the Czech Republic with over 100 years tradition in the industry. In 2010, MND Drilling & Services was the first foreign drilling contractor to enter Poland. We spent six months getting our crew as well as Bentec 350 rig certified by local Polish authorities for our first contract for Exxon Mobil. After we drilled Exxon Mobil’s two wells, we went to work for Lane Energy, Orlen Upstream, BNK Pol-ska and also ConocoPhillips. For BNK Polska this year, we drilled the longest horizontal in Europe, which was com-pleted in March.

Was it technically challenging to drill the longest horizontal well in Europe?

First of all I know that at the time it was the longest horizontal in shale gas - un-fortunately I am not sure how it com-pares to conventional projects. The main challenges are of course always on the operators’ side and it is the contractor’s task to follow the project plans and try

to fulfil the requirements of the operator. Our company has drilled throughout the years number of deviated and horizon-tal wells so this was nothing new to us but the parameters of this well were quite impressive as the total measured depth was 6,058 meters. The horizontal section was in TVD approximately 4,200 meters and the whole section was 1,650 long – which equals about 15 football fields. I believe that the Operator appre-ciated the professionalism of the crew as well as the low non-productive time (NPT) of the rig.

You are a member of MND Group. Can you tell me about MND Group’s glob-al oil and gas portfolio?

MND Group represents a strong and sound Czech group of companies en-gaged in oil and gas activities in the Czech Republic, Russia, Georgia and Germany. The area in the Czech Re-public where we come from and where our main assets are, have over 100 years history in the oil and gas sector. We focus on oils and gas production and exploration, gas trade, under-

ground storage and drilling and work-over services. As a vertically integrated company, we offer a complete range of services.

Since you started in Poland in 2010, the number of wells drilled annu-ally has been decreasing. How have you dealt with the slowdown?

As a matter of fact we still had job op-portunities in Poland when we de-cided to move the rig to Serbia, but of course we had expected some de-crease in the number of wells drilled in Poland and we wanted to take up the unique chance and enter another new market. The good thing about our Bentec rigs is that they are manu-factured and equipped as a so called Euro rigs - meaning they are designed to work even in highly populated areas throughout the whole of Europe. That’s why over the last few years, we’ve drilled successfully in Hungary, Slovak Republic, Germany, Poland or Serbia - and we’re looking right now at a lot of work - so the slowdown has not slowed us down.

MND Drilling & Services, a Czech company, drilled the longest horizontal in Europe, a 1650 meter horizontal for a Baltic operator that will soon be hydraulically stimulated.

MND Drilling & Services: Longest Shale Horizontal in Europe

M N D D R I L L I N G & S E R V I C E S

I N t E R V I E W W I t H R a D o V a N J E D L I č k a


You mentioned you drilled horizontal wells elsewhere; can you tell us more about your experience with direc-tional drilling? Well, directional and horizontal drilling is a common practice for any drilling contractors and I would say that most of the wells drilled today are directional. As a matter of fact the rig and the crew that carried out the horizontal project in Po-land had drilled the deepest geothermal well (6036 meters MD) in Germany in a joint venture with our German partner. Also drilling and workover make up a large majority of MND Drilling & Service’s activities. We operate four drilling crews and four workover crews - in and outside the Czech Republic. We brought our own drilling crews with us to Poland because we think that it’s important to keep an

experienced crew working continu-ously on a drilling rig. This way, you retain all the learning that go into the drilling. What are the specifications on the Bentec 350 rig?

Actually we own three Bentec rigs - 450, 350 and we have last addition into our fleet the Bentec 250 coming at the be-ginning of June 2014. This last rig was purchased to fill in the gap between our smaller IDECO rigs and the heavier Ben-tec rigs. All the Bentec rigs are state of the art, manufactured in Germany and less than 5 years old. The hook load ca-pacity of 250, 350 and 450 tons; top drives for the 450 and 250 are manufac-tured directly by Bentec and by NOV Varco for the 350. The rigs are AC driven and joystick operated, using all the ben-efits of the following systems: Info Drill,

Automatic Driller, Soft Torque Rotary, Anti Collision or Gas Detection. As the rigs are intended for operations in Eu-rope they are very quiet, flexible and all three of them equipped with skidding system. We can demobilize and move the rig within 10-12 days even on long distances.

tell us a bit about the company’s policies.

All of MND Group activities are based on consideration and preservation of the natural environment, adhering to prin-ciples designed to maintain ecological balance. We support regional culture and sports, and promote a policy of equal opportunity. Those who want to talk to me are welcome to get in touch at [email protected].

a d v E R t o R i a l

“We’ve drilled successfully in Germany, Poland and Serbia - and we’re looking right now at a lot

of work - so the slowdown in Poland has not slowed us down”

M N D D R I L L I N G & S E R V I C E S I N P o L a N D


Was your intention to defend oil and gas companies against envi-ronmentalists like Josh Fox [di-

rector of Oscar-nominated docu-mentary, Gasland]?

No. I don’t care about energy corpo-rations, I don’t even care about Penn-sylvania farmers, whom I’ve shown in the movie. To be honest I don’t care about Polish pensioners. Caring is not my job. I’m not a therapist. I’m a jour-nalist and my job is to tell the truth and to be skeptical.

When someone looks me in the eyes and says – I’ve got three types of ura-nium in my water, two of them weapon’s grade – I have to respond with a normal rational reaction. My duty is to search for evidence of these allegations, not to feel sorry for that person. And there is no evidence – the water is clean.

People are afraid of fracking but they’re afraid for very good reasons. They’ve been told it’s dangerous. The fear is real. I want to look for the sci-ence behind it and let people make up their own minds.

Are you alone in this approach?It’s not just me who says all those

things about fracking and shale gas. Lisa Jackson, head of Environmental Protec-tion Agency [until February 2014] under President Obama is definitely not a friend of the oil and gas industry, but she gave evidence to Congress that there’s not one single case of fracking ever having contaminated ground water, even though there’s been thousands of wells fracked in the United States. You’re more likely to win the lottery than to have your water polluted by fracking.

At this stage, it’s not for me to find cases of environment contamination but for Josh Fox and the Sautners to prove their claims.

[Ed. note: the Sautners, who had flam-ing faucets, are the main characters of Gasland. They are shown in FrackNation to have produced false evidence claiming their water was contaminated by hydrau-lic fracturing.]

They had their own independent test-ing [done, which] they never released. State level testing said the water [in Di-mock, PA where Gasland was filmed] is

clean. The Environmental Protection Agency – best scientists in America -- went to Dimock, PA and confirmed it.

The anti-fracking movement is either a mass illusion or the truth is some-where in the middle. Some things that Gasland claimed must be true, no?

I don’t believe in truth being in the middle. The truth is absolute, it’s binary – either true or not. But I’ve met victims of hydraulic fracturing – their family is sick, they’re getting divorced, they drink too much. [Ed note: Their problems have nothing to do with fracking.]

Willie Sutton was a famous American bank robber. Once someone asked him “why do you rob banks?” and he answered “because that’s where the money is”. So why do you sue oil and gas companies? Because that’s where the money is.

And there’s another reason – every-one wants to be famous in America, and to exist in a reality show. People get this ephemeral feeling after claim-ing in TV the industry destroyed their life and health.

Caring is not my job

i n T E R v i E W

Phelim McAleer’s documentary Fracknation is challenging allegations made in another famous film, Gasland, which presented fracking as a threat to the environment and people. It is not the case, says Mr. McAleer.

i n T E R v i E W b y G O R d O n W A S i l E W S k i

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yet people have legitimate concerns, for example increased traffic, about fracking in their communities, no?

There’s only one thing worse than too much traffic -- not enough traffic. Yes, fracking will change your countryside and that’s a political decision to make: do you want trucks and inconvenience? Lots of Poles drive trucks in Ireland, the Irish do the same in Canada. Wouldn’t people rather have them driving trucks in their homeland? Your roads will have to be reconstructed, bridges strengthened – because of heavy traffic.

Who is Josh Fox?He was born in Manhattan, his father

was a lawyer, his mother a psychothera-pist. He’s the elite, he’s rich. The home he has in Pennsylvania was not his domicile

[where a person has his/her permanent principal home]. He was neither born nor raised there.

This whole movement is driven by urban elites - although I don’t think we should consider them as such. They are hyper-educated, opinionated elites, who don’t know where electricity comes from, who fly around the world to tell other people they can’t fly around the world.

Josh Fox is not motivated by money. He’s a true believer. Otherwise anyone could buy him off.

What is the biggest threat to shale gas in Europe, other than the geology and the red tape? is it external like Russia or internal?

Russia doesn’t want shale gas, but Rus-sia is not an enemy. You are your own enemy. It’s completely up to you. I think western environmentalists are a bigger threat than Russia. Mr. Putin can’t stop you drilling.

In Romania, people are against frack-ing. They don’t trust their government for good reason.There’s a lot of corrup-tion. There is no good rule of law. If someone does something illegal, you can’t really sue him. [Ed. note: There is wide-spread belief that an individual doesn’t have a chance to have a fair hearing against a company, especially if they don’t have money to fund their case.]

If a big multinational company lands on a farmer’s field and that farmer doesn’t feel he has a right to be heard in a local court, he’s not going to be pro-fracking. There needs to be the possibility of dis-putes being resolved fairly. That would make fracking a lot easier. In America, it works because people trust their local government and courts and believe in the rule of law.

What do you think about the public’s approach to organizations such as Greenpeace?

People need to treat environmentalists the same way they treat big business. As a journalist you ask the same hard ques-tions of both big environmentalists and big entrepreneurs. Greenpeace is a mul-tinational globalist organization that has offices all over the world, more offices than Chevron. It has a bigger marketing budget than Chevron.

They don’t even have to tell the truth. If the chairman of Chevron lies, he goes to jail, gets an investigation, [Chevron’s] share prices drops, bankers pull loans out. There are consequences for the whole firm.

If the head of Greenpeace lies, they raise more money. Journalists need to hold them accountable. It’s theater jour-nalism not to treat ‘Big Environment’ the same way you treat ‘Big Business’.

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WCaring is not my job

T h E d i R E c T O R

Phelim McAleer is an Irish journalist and filmmaker. he has covered Romania and Bulgaria for the Finan-cial times and the economist. he has also covered Ireland for the Sunday times. his Fracknation documentary is a polemic with Gasland, a documentary by Josh Fox that attempted to prove that fracking is dangerous for the environment and human health. In Fracknation, mr. mcaleer chal-lenges these allegations. mr. mcaleer was interviewed during the european premieres of Fracknation in Brus-sels and warsaw, which were organized by the Kosciuszko Institute, a conservative think tank, and claeys & casteels, a publish-ing house based in the netherlands special-ising in european law, which is publishing a portfolio of titles about shale oil and gas. the film was produced with crowd-funding from Kickstarter.

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The Only Show in Town

With $165 million invested, UOS has been building their market position, betting on shale gas production on a commercial scale. But things have moved slower than the company’s CEO Dennis McKee would like, and the oilfield veteran’s strategy is at a critical point now.

B Y W o j c i e c h K o ś ć

i N T e R V i e W

Dennis McKee is not a young guy. He’s retired twice, only to be lured back when opportunity

comes knocking. A petroleum engineer with deep experience in Texas shale gas plays, Mr. McKee has a few stories that reach back to the 1970s.

Knowing then his long standing ca-reer in the oilfield, it should come as no surprise to hear that in 2010, amid an oilfield boom in his home country, Mr. McKee took up another challenge. He lived out of a Warsaw hotel for three months to prepare to do what he loves to do: prove up a shale play in a coun-try with no shale experience.

Upon his arrival to Warsaw, Mr. McKee had little to prove. He had worked for Halliburton and Weather-ford and then founded several oil and gas start-up companies which he would later exit at a considerable premium to his initial investment. But Poland would prove a challenge the likes of which he’s never faced before, and whether he will succeed is very much an open question.

SWEET DREAMSBack in 2010, shale gas was hardly the

talk of the street in Poland that it be-came in 2011 following an investors’ rush to capitalize exploration, but those few foreign companies with conces-sions on Polish onshore acreage were enthusiastic.

The 2011 change in enthusiasm came at the hest of very optimistic estimates of Poland’s shale gas reserves from the US Energy Information Administra-tion, working with Advanced Interna-tional, and later from Wood Mackenzie, a consultancy. The most optimistic estimates allowed for Poland not only to become independent from Russian gas but turning into a gas exporter, with a geopolitical and economic position rising to unprecedented heights in the region.

“The strategic goal that Poland would like to achieve [in] taking advantage of shale gas sector is to improve Poland’s energy security,” Barbara Stelmach, deputy foreign minister, told SGIG in 2012.

This early exultation had waned by 2012, however, with some explorers leaving and service companies strug-gling to stay afloat. It took another year, until 2013, for the climate around shale

gas to improve although the return to the optimism of 2011 seems all but impossible.

BACK ON THE RIGHT TRACKMr. McKee says he has seen the govern-ment do a lot of “funky things that scared investors, but things are back on the right track again. Last year was a turning point as the number of wells doubled and this year is going to keep up pace,” Mr. McKee said.

Not only are there several horizontal wells being drilled this year, but in the Baltic Basin, where UOS has been working with San Leon Energy, the vertical well Lewino yielded enough gas for the operator and UOS to say that Poland’s shale gas has been “un-locked.”

“It’s going to be far from the maxi-mum potential of course. Once you get the gas flowing at commercial rates, you start tweaking things to optimize and that takes a long time and a lot of wells,” Mr. McKee said. “But it’s gonna flow,” he added.

“I believe that all shale in Poland is going to productive. The TOCs are good and even if permeability is low


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with gas prices the way they are now, Polish shale gas will be commercial even at low volumes,” Mr. McKee said. “If we get five to ten million [cubic feet] a day per horizontal, it’s gonna be there,” he added.

HARD TALK, EVERY QUARTERThat said, this bright future of shale gas in Poland is still some time away and a private equity-backed company like

UOS has to answer to investors, among them the CEE based Enterprise Inves-tors. After all, Poland has drilled 60 wells in four years, compared to the Marcellus shale play in Pennsylvania which saw close to 2,000 wells drilled in a comparable period.

There is $165 million of investor equity tied up in a company with seis-mic, drilling and fracking assets. Inves-tors are impatient, given that seismic

exploration has been all but put on hold. Some are clamoring for assets to be divested, while others are struggling to stay patient in a world where inves-tors demand a return on equity in 18 to 36 months.

Mr. McKee admits he has some hard time convincing his investors that shale gas in Poland may be slow in coming, but it is coming. “Happens every quar-ter!” he laughed. “It takes three years here what it takes three months in the US. But I tell them that once we get to production, activity can only speed up the way we provide services,” Mr. McKee said.

UOS is currently performing three out of every four frack jobs in Poland. According to Mr. McKee they have won them because UOS has been able to put an incredible downward pressure on pricing - even up to 75 percent - but also due to up-to-date equipment, and efficiency of work that the big oilfield service companies are not able to pro-vide at the moment.

“The big guys have been in Europe for 50 years and they haven’t brought in new equipment since the EU was formed. You can’t blame them because companies like them won’t spend capital on a niche market like Europe. They will do what they’re capable of doing with what they have, but there was no chance they could do it success-fully in non-conventional shales,” Mr. McKee said.

“We can mob and de-mob in days, not weeks. We move in and out quick-ly and we don’t charge stand-by,” said Mr. McKee.

Oilfield veteran Dennis McKee claims Poland’s shale gas will take off soon

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This Lubocino well made headlines in 2013, after PGNiG flared some gas on it, but there has been hardly any positive news from the well since. The well lies close to the likely location of Poland’s first nuclear power plant, Żarnowiec.

LubocinoPGNiG

INFO BOXConcession Holder PGNIG

Well Name Lubocino - 2H

Concession Name Wejherowo

Commune, Province Krokowa, pomorskie

Fracture Date January - February, 2013

Depth (meters) 3,050

A lot has been said about how shale gas development is imposing environmental challenges on the relatively densely populated Polish countryside. This section provides geographical context to where the drilling and fracking is actually taking place.

On the ground

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sAccording to Orlen Upstream, “the inflow of hydrocarbons was successfully induced during the production test, but [didn’t] reach commercial level.” The company says, however, it’s not done with the Lublin Basin yet.

INFO BOXoperator Name Orlen Upstream

Fracture Date December, 2013

Well Name Berejow - OU2K

Concession Name Lubartow

Commune, Province Niedzwiada, lubelskie

Total Water Volume (cubic meters)* 22,499

Water % of total hydraulic fracturing fluid** 94,5%

Proppant (kilograms) 1,101,477

Proppant % of total hydraulic fracturing fluid** 4,6%

True Vertical Depth (TVD, meters) 2563

BerejówOrleN UPstream


INFO BOXoperator Name Lane Energy Poland

Fracture Date October 2010

Well Name Łebień LE-1

Concession Name Lębork

Commune, Province Nowa Wieś, pomorskie

Total Water Volume (cubic meters) 1,452

Water % of total hydraulic fracturing fluid 94.08

Proppant (kilograms) 86,401

Proppant % of total hydraulic fracturing fluid 5.6

True Vertical Depth (TVD, meters) 3,092

z o o m i N o N C o N C e s s i o N s

One of the pioneering wells in Poland that was flared, briefly, in 2011 and then for over a week in 2012. Although it didn’t prove commercial, the well showed that Polish shale gas could become reality.

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The Lewino 1G2 well along with BNK Petroleum’s Gapowo B1 (also shown on the map below) is where the focus is on now, as both San Leon and BNK have said their respective wells have a lot of what it takes for production to take place (see also p. 38).

INFO BOXFracture Date July 2, November 9, November 13 - 2013

Well Name Lewino 1G2

Concession Name Gdańsk W. 71/2009/p

Commune, Province Linia, pomorskie

Total Water Volume (m3)* 4,685

max mass % of total hydraulic fracturing fluid** 94.5

Proppant (kilograms) 209,802

max mass % of total hydraulic fracturing fluid** 5.42

True Vertical Depth (TVD) 3,600m

LewinosaN leON eNerGy


With increasing demand for energy, the uK must seek al-ternatives to the declining

production of conventional oil and gas fields in the north Sea. the present im-perative is to evaluate unconventional resources, which primarily lie onshore.

the development of uK shale plays will be accelerated by applying lessons learned from north america. Over the past de-cade, operators have found success in a number of u.S. shale plays, including the delaware Basin, eagle Ford, Wolf Camp and utica. nuteCh has been instrumen-tal in defining and evaluating the plays and driving increased production since the consultancy started in 1998 in houston, texas.

RESERVOIR INTELLIGENCEReservoir Intelligence is nuteCh’s life cycle strategy that helps operators and investors to value, manage and act upon the reservoir. We apply a unique and ho-listic approach to petrophysics in order to inform reservoir modelling, completion design and engineering solutions.

In a new shale play, participating op-erators have specific questions to answer and vital decisions to make: how do I adeptly expand my position? What is the quickest way to reservoir understanding? how do I ensure reservoir economic suc-cess and optimization? how can I manage capital and preserve growth? In order to make those decisions, operators must

have a firm grasp and understanding of the critical reservoir elements utilized in Reservoir Intelligence: effective porosity, total organic carbon, permeability, volume of clay, saturation, mineralogy, brittleness and rock competency.

UK BASIN WIDE STUDY nuteCh’s uK Onshore Shale Play Study commenced with a large and challenging exercise in data gathering. nuteCh joined with the department of energy and Climate Change (deCC) to become a data release agent for the uK onshore, enabling the acquisition of digital well log

data and all relevant documentation such as drilling and geological reports, for thorough examination in preparation for the study.

the uK Onshore Shale Play study was divided geographically into seven main basins (Figure 1) across mainland Britain: We s s e x , We a l d , We s t l a n c a s h i re , Cheshire, east midlands, north east england Province and midland valley, with a total of 381 individual wells anal-ysed via available well log data and sup-porting reports.

Core and cuttings samples were ob-tained from the British Geological Survey and analysed by the nuteCh laboratory, POROlaBS, in order to measure total Organic Content (tOC) and carry out mercury Injection Capillary Pressure (mICP) tests, X-Ray diffraction (XRd) and Source Rock analysis (SRa). these mea-surements provide calibration points in the petrophysical evaluation of the wells and support a better understanding of the kerogen characteristics.

an advanced petrophysical process (Figure 2), using textural analysis models suitable for source rock environments was applied to evaluate the reservoir charac-teristics and geomechanical properties (brittleness and competency) of each individual well in order to estimate the hydrocarbon in place and reservoir po-tential. Particular skill and detailed quality control was required in working with old vintage logs.

By R. G R E i S S, C. H U G H E S , S. L a RG E

Reservoir Intelligence works to combine staff experience and expertise with proprietary technology to provide integrated solutions at all stages of a reservoir’s lifecycle.

EXPERT’S CORNER

UK Unconventional Shale Play Study

MIDLANDVALLEY BASIN

NE ENGLAND PROVINCE

WEST LANCASHIREBASIN

EAST MIDLANDSPROVINCE

WORCESTERGRABEN

CHESHIREBASIN

WESSEX/ WEALDPROVINCE

UK ONSHORE BaSiNS iN STUDy

SouRce: NuTecH



W W W.Cle anteChPOl and.COm | 55

“Reservoir Intelligence is NuTecH’s life cycle strategy that helps operators and investors to value, manage and act upon the reservoir”

next, correlation cross-sections and attribute maps, drawn across the seven basins, provide a view of the reservoir con-tinuity, reservoir thickness (isopachs), clay volume, average porosity and permeability. most importantly, the study helps to iden-tify hydrocarbons in place, resulting in the identification of formation sweet-spots.

INSIGhT AVAILABLE With this study, which is now available, nuteCh better equips operators and service companies with knowledge of the geological, depositional, structural, petro-physical and geomechanical nature of the uK unconventional reservoirs and forma-tions. Overall, holders of the study will be better placed to make wise decisions in the investment and development of these re-sources in order to achieve success by drilling fewer wells.

as the uK shale plays develop, the study can be updated with new data as it becomes available, further enhancing the Operator’s Reservoir Intelligence, to bring these assets to life. analogues will be made to compare with the experiences of north america and development programs will be refined to drive more favourable economics, increase resource recovery and optimize productive field life.

Stuart large, Senior account manager, and co-author of the article, can tell you more about the uK unconventional shale play study at [email protected].

CONVENTIONAL DATAnutech begins the nulook analysis using conventional log data such as Gamma Ray (GR), Spontaneous Potential (SP), resistivity, neutron porosity, density porosity and sonic porosity or a subset of these.

VOLUmE ShALEvolume of shale (vsh) is calculated from multiple shale indicators.

TExTURAL mODELnuSpec track displays the pore size distribution from clay sized to large pores derived from the textural model.

IRREDUCIBLE WATERIrreducible Water (BvI) is modeled using relationships derived from nuclear magnetic Resonance output responses and nutech’s multiple modeling logic (mml) produced from conventional log data responses.

TOTAL ORGANIC CARBONKerogen Fraction is determined using multivariable logic Corrections for Kerogen effect on density, neutron, sonic, and Pe are made.

VOLUmE CLAYnutech utilizes the new input of BvI to quantify the amount ofmechanically bound water contained in the matrix as well as the amount of silt contained in the shale volume.

LIThOLOGYthe Kerogen corrected data is used in multimineral model to solve for Silica, lime, and heavy minerals to determine porosity.

BULK VOLUmEWater Saturation, bulk volume water are determined usingnutech’s proprietary multimodeling logic.

PERmEABILITYPermeability is determinded using an algorithm calibrated to core data and production matching.

FLAGSnutech’s grading system indicates the risk rating applied to each zone. the number of flags increases as the quality andcalculated productivity of each identified zone increases. at least three flags are needed to indicate if a zone qualifies in the net pay.

ADSORBED AND FREE GAS VOLUmESadsorbed and Free Gas volumes are determined from corecalibrated data langmuir Isotherms.

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l China’s once laughed-at shale gas plans might be getting into shape, p. 58

l Political pressure mounts in the US to sell its shale gas across the world, p. 60

l Mexico’s reform on energy could open doors to exploration, p. 62

l India’s enormous energy imports inspire early attempts to flow shale gas, p. 63

l Argentina pays off Repsol to boost attractiveness to oil and gas investors, p. 64

l South African government seen as too zealous to control shale resources, p. 65

l CEE in pains to reduce dependence on Russian gas, p. 66

l Western Europe: what shale gas? p. 68

CONTENTS

China Wins the dash for gas

G L O B A L U P D A T E

By SGIG InternatIonal correSpondentS

Most markets are still in early exploration stages, trying to overcome political, societal and geological obstacles. China, however, is full steam ahead in a manner that seems unattainable in Western democracies based on rule of law and respect for human rights.

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| Shale Ga S Inve S tm ent GuIde | sUmmEr 201458

ChInA’S EnERgy CoMPAnIES, including giants PetroChina and Sinopec are gearing up their ac-

tivities to explore and develop the country’s vast shale gas reserves in order to meet the government target of ramping up the shale gas production up to 6.5 billion cubic metres (bcm) as early as in 2015, up from 200 million cubic meters last year.

For 2014, PetroChina has earmarked more than 10 billion yuan (USD 1.6 billion) for a campaign in two pilot zones – Weiyuan-Changning in Sich-uan province and Zhaotong in Yunnan province, both in the country’s south-west – aiming to produce 1 bcm from Weiyuan-Changning and 500 million cubic metres from Zhaotong.

Another 100 million cubic metres would come as a result of a production sharing agreement with Royal Dutch Shell in the Fushun-Yongchuan block in Sichuan, according to PetroChina’s vice president Sun Delong.

Bulk of PetroChina’s outlay will go to building 28 drilling pads, Mr. Delong said at the National Conference On Shale Gas Exploration Promotion held in Chongqing in April. At the Weiyuan-Changning play alone, PetroChina is slated to build 20 drilling pads involv-ing 110 wells at the cost of about 70 million yuan (USD 11.2 million) per well till June next year.

In the meantime, PetroChina is now adding finishing touch to a 94-kilome-tre shale gas pipeline linking local users and Shanglou township at the Weiyu-an-Changning field. The line will have a daily moving capacity of 4.5 million cubic metres.

Sinopec’s shale gas E&P is no less than PetroChina’s. Its Fuling shale gas discovery in southwestern China’s Chongqing city with 2.1 trillion cubic metres of gas in place is now Sinopec’s major battlefield, where it aims to pro-duce 1 Bcm this year, 3.2 Bcm next year before peaking at 4.8 Bcm in 2016.

By April 2014, the company has completed 33 wells, with 23 under trial production and another 29 being drilled at the 7,308-square kilometre field. Ground facilities include a gas gathering center, water supply system capable of supplying 8,000 cubic metres of water per day for fracturing.

“Shale gas wells deplete quite fast, but the good thing for Fuling is that most of the wells so far drilled flowed more than 100,000 cubic metres per day when fractured,” said a source with Sinopec Jianghan Oilfield Fuling Branch Company that is the drilling contractor in the area. Some wells are still producing more than 50,000 cubic metres per day after two or three years of production, the source also added.

The field is now producing at close to 3 million cubic metres per day, with gas being sold to Zhejiang, Jiangsu, Jiangxi, Anhui and Hubei provinces. In 2012, the discovery well Jiaoye 1HF flowed 203,000 cubic metres per day

B y W u M I n G I n B e I j I n G

Unlike in the past, the big leap in China’s shale gas production might just turn out a success, as gas is flowing already while infrastructure investment are gaining momentum.

The Big Shale gaS leap

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after fracturing. The well is now pro-ducing 60,000 cubic metres per day.

In September this year, Sinopec will start building a shale gas dedicated pipeline spanning 141 kilometres from Fuling to the local markets with an-nual capacity of 7.2 Bcm. The line will be completed in June 2015.

Local Shaanxi government-owned Yanchang Petroleum is targeting to prove 150 Bcm of shale gas reserves and built up 500 million cubic metres of shale gas production capacity by 2015 under 2.5 billion yuan (USD 400 million) development program.

LESS LUCK FOR FOREIGNERSForeign oil and gas companies as well as service providers have their role to play in China’s shale gas sector, though lady luck is yet to fall on some players. To minimize the risk, international majors prefer to start with joint study on geology of the blocks they are inter-ested in, before entering into multiple

pilot development schemes of shale gas to full field development.

Shell is expected to complete drilling development wells at Fushun-Yongch-uan shale gas block in June this year, with test production to complete by the end of this year before first gas next year. In addition to Fushun-Yongchuan, Shell is also the operator of Xiang E Xi block in partnership with Sinopec in Hubei and one block in Anhui province China National Offshore Oil Corpora-tion (CNOOC). No discoveries have been made on these two blocks yet.

American upstream giant Chevron has decided to withdraw from shale gas exploration in Qiannan basin in Gui-zhou province after having drilled three wells to unsatisfactory results. “We are wrapping things up in Guizhou and have just completed environmental as-sessment before we exit,” a Chevron source told the SGIG.

In April this year, US Natural Re-sources Group signed a production sharing contract (PSC) with local Chongqing Energy Group to jointly explore and develop the Qianjiang shale gas block in Chongqing city. The PSC with Chongqing Energy holding a 51 percent stake with USNRG hold-ing the remainder commits the part-ners to investing 1.7 billion yuan ($276 million) till next year. Chongqing Energy was licensed to explore the Qianjiang block in Chongqing city through the country’s second shale gas auction in 2012.

In 2012, Henan Provincial Coal Seam Gas Development & Utilisation Com-pany (Henan CBM) farmed out part of Xiushan block it won via China’s first shale gas auction to Australia’s Dart Energy in a PSC subject to Chinese government approval.

The area is home to estimated 35 tril-lion cubic metres of shale gas in place in five basins - Ordos, Junggar, Tuha, Songliao and Bohai Bay - covering 250,000 square kilometres. Of the 35 Tcm shale gas in place in the five basins, eight Tcm are considered recoverable.

Overall, in two shale gas auctions that have taken place so far, China awarded 21 blocks to 18 mostly non oil and gas companies in an attempt to push reform in the country’s upstream sector as well as to introduce more investment in shale gas E&P.

According to rules, the winners must invest 30,000 yuan (USD 4,800) per square kilometre, and drill two wells every 500 square kilometres.

The 19 blocks licensed to 16 com-panies in the second shale gas auction in late 2012 will involve 12.8 billion yuan (just over USD 2 billion) invest-ment till 2015.

According to the Ministry of Land and Resources (MLR), which monitors upstream activity in China, by the end of the last year, China had drilled 285 shale gas wells, of which 105 are verti-cal survey wells, 94 are vertical explora-tion wells and 86 are horizontal ap-praisal wells.

Upon fracturing, 38 wells flowed more than 10,000 cubic metres of gas per day and 23 flowed more than 100,000 cubic metres per day.

Independents have been complaining about the challenges in exploration due to complex geology and lack of data. To facilitate the exploration activities by independents, the MLR has decided to invest more to drill more wells to obtain more data about the blocks to be offered in the third round, which has been rescheduled to take place in mid- or late 2014.

Most of the wells so far drilled [in Fuling play] flowed more than 100,000 cubic

metres per day when fractured


ThERE hAS bEEn much talk lately whether the export of US energy products such as liquefied

natural gas can actually play a role in calming international energy markets.

The recent spat between Ukraine and Russia over Crimea has led to specula-tion that the United States would some-how enter new markets exporting natu-ral gas to Europe, where Russia has been a major supplier.

The US, in turn, has seen an expan-sion in hydraulic fracturing and hori-zontal drilling that have unlocked large energy reserves. In 2009, the U.S. sur-passed Russia, the world’s top pro-ducer of natural gas. And last year, the U.S. exceeded Russia as the world’s largest producer of oil and natural gas combined, according to American Petroleum Institute (API).

“Now is the time to build our en-ergy infrastructure, expand exports and lock in the economic and geopo-litical opportunities that our energy revolution has created,” API’s director of upstream and industry operations Erik Milito said.

EXPORTER BY 2016But in order to do that, American poli-cymakers would have to do two things. First, they will need to continue offering its support to build LNG export termi-

nals. With more investments, according to the Energy Information Administra-tion, America could become a net ex-porter of LNG by 2016. Thanks to the shale gas boom, the country could ex-port 10 billion additional cubic feet of natural gas per day by 2020.

Secondly, the U.S. Department of Energy (DOE) would have to approve long-delayed LNG export permits to non-Free Trade Agreement nations.

Under the Natural Gas Act of 1938, a person or company wanting to import or export natural gas in the United

States, including LNG, must first get authorization from the DOE. In the case of the US, a large country isolated by oceans from Asian and European mar-kets, the only way to export natural gas is LNG (liquefied natural gas).

To create LNG, natural gas has to be super-cooled and then transported in specially built double-hulled ships. The US is not expected to have its first LNG export terminal up and running until mid-2015, though companies have been applying for approval for some time now.

As of February, the DOE had ap-proved 32 applications for exporting LNG to countries with free-trade agreements with the US as well as six applications for exporting LNG to non-FTA countries. Of the six, only one has a full, final approval from the government: the Sabine Pass Liquefac-tion plant in Sabine Pass, Louisiana. The facility is currently under con-struction and is scheduled to begin exporting LNG in late 2015.

The plant is a subsidiary of Cheniere Energy Investments that plans to build six trains to treat, liquefy, store and ex-port natural gas.

Houston-based Cheniere Energy could roughly handle even one sixth of the amount of gas that flows from Russia to Europe daily by the year 2017. The com-

B y c l a u d I a p e r e z r I v a S I n e a G l e F o r d S h a l e p l a y, t e x a S

US shale gas continues to flow at favorable market prices, political pressure mounts Washington to change legislation to allow exports to many more countries than it’s legal today. Political issues of US influence are also at play.

To The ReScue?U s

“Now is the time to build our energy

infrastructure, expand exports and

lock in the economic and geopolitical

opportunities that our energy revolution

has created” Erik Milito, API


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“LNG exports will create jobs for America, strengthen foreign policy and help allies who are held hostage to Russian energy”

Senator John Barrasso

pany has already been contracted by India and South Korea.

Given the time it will take for the ter-minals to come into play, there are those that suggest the US will not have a global energy impact. To this, Mr. Milito gives two reasons as to why that may not be so. “First, market signals are incred-ibly powerful - provided the market believes that we will do what we say we will do,” Mr. Milito said.

Currently, the United States faces rapidly-moving competition around the world. Over 60 non-US LNG ex-ports facilities are being planned or are

under construction. Those nations that act quickly will be the ones that will reap the rewards.

FREE HOSTAGESBack in March, ambassadors for Hun-gary, the Czech Republic, the Slovak Republic, and Poland petitioned US Congressional leaders to help expedite US LNG exports as a means of protecting the stability and independence of Eastern

Europe, a region where many nations rely on a single supplier for 70 to 100 percent of their natural gas.

“By accelerating exports, we can strengthen the global energy market against future market disruptions and send a signal to the world that the United States is ready to lead,” Mr. Milito said. “Our growth as a major exporter would bring competition into the market and help ease the ties that bind our allies to any single supplier,” he added.

The unexpected growth in US produc-tion has already helped improve leverage

between its allies during contract nego-tiations. The DOE commissioned a study from NERA, which concluded that LNG exports would yield net economic ben-efits across all scenarios. The study also showed that concerns about domestic natural gas prices were unfounded.

As the NERA study noted, “the market for LNG exports is self-limiting, in that little or no natural gas will be exported if the price of natural gas in the US in-

creases much above current expecta-tions.” In part, that is because the cost of liquefying and exporting gas creates a natural price buffer, while multiple stud-ies confirm that production will increase as the market expands.

In recognition of this important is-sue, a growing number of US policy-makers are ready to act. Influential Democrats, House Speaker John Boeh-ner, and Senator Jim Inhofe have all spoken out for more exports. Senators Mark Udall, John Barrasso, and Mark Begich, along with Representatives Cory Gardner, Michael Turner, and Ted Poe have all announced work on legislation that would reduce barriers for the export of natural gas.

Some have proposed fast-tracking approval for NATO or WTO trading partners, and a report by the House Energy and Commerce Committee recommends immediate approval for all pending applications.

In early May, Senator John Barrasso released a statement saying he will introduce an amendment to the En-ergy Savings and Industrial Competi-tiveness Act of 2014. The amendment being presented will require the De-partment of Energy to approve lique-fied natural gas exports to all World Trade Organization member countries, including Ukraine.

“I have said repeatedly that I will take every opportunity to get a vote on legisla-tion that will make it easier for the United States to export LNG to other countries,” Barrasso said.

The amendment aims to create jobs for America, strengthen foreign policy and help allies who are “held hostage to Rus-sian energy”, Barrasso said.

“Bipartisan support for exporting LNG continues to grow stronger each day and it’s time for Washington to act on this important issue now,” Barrasso added. “The pending energy bill is the perfect opportunity to finally get this done.”

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Burgos Basin, one of Mexico’s most promising shale gas plays, is a part of the long-proven Eagle Ford play in Texas. Following an energy reform bill, the shale gas industry is now bracing itself for a kick-off next year.

Tequila ToaST To TexaS

m E X I C O

RIghT ACRoSS from the spiritual home of shale - Texas - north Mex-ico has some of the largest shale gas

reserves in the world, yet the country imports about a third of its gas. This could change after the Mexican govern-ment adopted potentially game-changing energy reforms in late 2013, though the reforms’ real impact is yet to take place.

The Mexico Energy Reform Bill that was signed by Mexican president En-rique Pena Nieto in late 2013 allows foreign companies to explore in Mexico.

The reform will allow contracts or profit- and production-sharing, as well as licenses, in which companies pay royalties and taxes to the Mexican gov-ernment for the right to explore and drill. Flexible contract terms for private com-panies would be available, with prefer-ences written in for Mexican suppliers if they can match terms offered by foreign counterparts.

The rules must still be approved by Congress, which is expected to vote until a special session in late June, but it seems a done deal already.

Benjamin Torres-Barron, a partner in the Mexican offices of the Baker & McK-enzie law firm recently said the reforms are game changers. It is lack of foreign investment, technology and know-how that has prevented Mexico to kick off exploration to date.

MEH-HEE-KOHAccording to Mr. Torres-Barron, explo-ration and production companies that

are interested in investing in Mexican oil and gas should begin preparing now for the first state contract tenders, which are scheduled to take place in 2015.

Once and if Mexico changes into a shale gas exploring country, the market could be really huge. It is estimated that Mexico has approximately 681 trillion cubic feet (Tcf) of technically recoverable shale resources. Mexico currently ranks sixth in the world in terms of shale gas potential, behind China, Argentina, Algeria, the U.S. and Canada, according to the United States Energy Information Administration (EIA) data. The EIA also estimates it has 14 billion barrels of re-coverable shale-oil reserves.

Winners of state contract tenders will face a difficult business environment once and if they get on with exploration.

Mexico currently lacks the infrastructure and technical expertise in shale gas to develop these resources. Mexico’s state-owned oil and gas company Pemex has not been able to invest enough in shale gas development for lack of experience on complex drilling procedures.

The greatest known shale potential in Mexico is located in the portion of the Eagle Ford Shale that extends into the country’s Burgos Basin from South Texas. There, Pemex began its first ever production of shale gas from a test well, one of four drilled in the area. The well yielded a modest initial production rate of 2.8 MMcfd of gas. Pemex has three other wells in the play and plans to drill a total a total of 10 shale test wells in 2014 and up to 75 in the whole of Burgos Basin through 2015.

Oil and gas companies should begin preparing for the first state contract tenders for shale gas E&P that will take place in 2015

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hAvIng dRIllEd the country’s first exploratory well in Gujarat’s Cambay basin in October 2013,

ONGC is on track to start commercial production of shale gas this year. The Cambay basin is estimated to have a shale gas potential of 20 trillion cubic feet (Tcf).

The US Energy Information Ad-ministration (EIA) estimates India’s recoverable shale gas reserves at 96 trillion cubic feet (Tcf), which could meet India’s energy demand for 26 years.

ONGC plans to drill 30 exploratory wells across the country by March 2015. In addition to Gujarat, ONGC is exploring shale gas formations in the state of Rajasthan and has ear-marked 20 billion Indian rupees (USD 330 million) per year for the cause. In future, the company will also explore Krishna-Godavari, Cauvery and Vindhyan basins.

The company expects to derive some help from the US-based Cono-coPhillips in its attempt to derisk Indian shale plays. In 2012, the two companies signed a memorandum of understanding to share shale gas knowledge and cooperate in a number of potential plays, such as Cambay, Krishna Godavari, Cauvery and Damodar.

ONGC’s shale gas work accelerated after the country had revised rules for exploration of unconventional re-sources in October 2013 to allow ONGC and another national oil com-

pany, Oil India Ltd., to explore for shale gas and shale oil on their acre-age.

The government’s strategy is to boost domestic energy production and reduce soaring energy import bills, which contribute significantly to India’s current account deficit.

In fiscal year 2012-13, India’s oil imports rose to USD144 billion, rep-resenting the largest portion of its overall import costs. The country has increased oil imports from about 40

percent of total demand in 1990 to more than 70 percent by 2011, accord-ing to the EIA, shooting current ac-count deficit up to USD88 billion or 4.7 percent of GDP in fiscal year 2012-13, compared to USD78 billion or 4.2

percent GDP in the previous year.In November 2013, Oil minister M.

Veerappa Moily said shale gas explora-tion would be a major step for the country’s “economic freedom”.

India is the fourth largest consumer of energy in the world after China, US and Russia. The country is meeting about 75 percent of its energy needs through oil and gas imports. Adding to its energy woes, Asia’s third largest economy’s energy demand is expected to rise 132 percent by 2035, surpassing a 71 percent demand growth in China and Brazil and a 20 percent growth in Russia in the so-called BRIC group, ac-cording to the latest energy outlook report by British Petroleum.

Gas demand is expected to increase to 446 million standard cubic metres per day (MSCMD) by fiscal year 2015-16. Meanwhile, domestic production and imports are expected to yield 118 MSCMD and 170 MSCMD, respec-tively, resulting in a shortage of 158 MSCMD, according to the petroleum and natural gas ministry.

In order to tackle the crisis, the government has been encouraging companies to acquire profitable en-ergy assets overseas, especially in African and other Asian countries.

However, the government in New Delhi currently thinks that tapping unconventional resources such as shale gas would be a more feasible option to tackle the country’s deep-ening energy crisis, given the sector’s enormous potential.

I N D I A

B y j e r I n M a t h e W I n B a n G a l o r e

State-owned Oil and Natural Gas Corporation (ONGC) is spearheading India’s initiatives in the shale gas sector, as the country is looking to marry economic growth with ever-growing demand for energy.

STaTe of DeficiT

India is the fourth largest consumer of energy in the world after China, US and Russia. The country is meeting about 75

percent of its energy needs through oil and

gas imports


B y r h o d r I d a v I e S I n B u e n o S a I r e S

Argentine has shed some of its bad reputation in the world of oil and gas investment after compensating Spain’s Repsol for the 2012 nationalization.

Milking a DeaD cowA r G E N T I N A

ARgEnTInE STATE-oWnEd en-ergy company YPF hopes a settle-ment between Argentina and Spain’s

oil and gas giant Repsol, agreed in Febru-ary 2014, will attract new investors to explore for shale gas in the country, whose recoverable reserves of uncon-ventional gas are thought to be the sec-ond largest in the world after China. The U.S. Energy Information Administration said Argentina has 802 trillion cubic feet (Tcf) of technically recoverable shale gas.

President Cristina Fernandez de Kirchner’s government nationalized the 51 percent stake in YPF, or Yacimientos Petrolíferos Fiscales, in 2012. Ms. Kirch-ner argued that Repsol, which previ-ously controlled YPF through this major-ity percent stake, had not done enough to raise output.

In February, Argentina agreed to pay Repsol $5 billion in compensation for its action. “Although late, [the deal is] a good sign for companies who are con-sidering partnering with YPF in the future,” said Emilio Apud, a former of-ficial at the energy ministry and now an Academic Councillor at Argentine re-search center Liberty and Progress. “Without this payment arrangement, the nationalization was illegal and therefore the ownership of those shares by the Argentine state was not recognized in-ternationally.”

INVESTMENT, CURRENCY NEEDEDThe government now hopes to exploit the reserves and export natural gas to bring in desperately needed foreign cur-rency, increase Argentina’s energy inde-pendence, and drive economic growth.

The American oil major Chevron said in April it will develop the western Neuquen Basin, part of so-called Vaca Muerta (“Dead Cow”) reserves, a poten-

tially massive shale gas play, where YPF said it has also found 22 billion barrels of shale oil. Chevron has drilled three exploratory shale oil wells since 2012, but will now look to drill test wells for shale gas. Next, Chevron will drill 100 wells on its own in 2014 and another 1,500 later in a joint venture with YPF.

The western Neuquen Basin contains 50 percent of Argentina’s shale gas re-serves. It’s followed by Golfo San Jorge and Austral-Magallanes basins in the southern region of Patagonia. There are also reserves in the north, towards the border with Paraguay and Bolivia.

In Argentina, mineral rights are owned by the state, and control is split between

federal and provincial governments. Lo-cal communities have voiced opposition to fracking, most vocally indigenous communities in Neuquen, but there are groups opposing fracking throughout the country, usually citing environmen-tal pollution, particularly concerning water, as the biggest concern.

But Chevron and YPF appear deter-mined to raise daily production in these early exploration stage to about one mil-lion cubic feet of cubic gas compared to current 1,369 billion cubic feet daily production nationwide. The entire re-mainder of the resource needed to cover domestic demand comes from neighboring Bolivia.

Many more investors need to make substantial investment commitments,

however, if Argentina’s shale gas ambi-tions are to be fulfilled.

For now, YPF is in talks with Petronas, Malaysia’ state oil and gas company, over a shale gas venture, YPF Chief Executive Miguel Galuccio said in January 2014. The two firms have “advanced towards a future deal,” he said.

“The picture today is wait and see,” said Mr. Apud. “The development of the potential of Vaca Muerta requires more than ARG$15 billion ($1.8 billion) per year over the next 20 years. Argentina has the resources, but lacks technology and capital.”

Fulfilling the country’s resource po-tential could make it energy indepen-

dent, and even an exporter. Being a firm inside Argentina and trying to export energy can be problematic because of high Argentine export taxes put in place to ensure cheap supply for domestic consumption. To address this issue, the government has floated the idea to per-mit firms investing $1 billion over five-years to sell up to 20 percent of their output abroad, tax-free.

“The energy market remains distorted with insufficient long-term incentives for producers to explore for and extract more hydrocarbons, and with similarly insuf-ficient incentives for consumers of en-ergy to curb their heretofore subsidized demand,” said Arturo Porzecanski, a professor of economics at American University in Washington DC.

“The development of the potential of Vaca Muerta requires more than ARG$15 billion

($1.8 billion) per year over the next 20 years” Emilio Apud, Liberty and Progress


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ThE KARoo bASIn’S Lower Permian Ecca Group shales contain 1,559 trillion cubic feet (Tcf) of

technically-recoverable resources, ac-cording to the US Energy Information Administration. This makes the Karoo potentially the eighth largest such re-source in the world, two-thirds of the size of shale gas reserves in the United States.

It could give the South African economy a massive boost.

“If there were only 50 Tcf, you get a lot of revenue to the state,” said Shell Upstream General Manager Jan-Wil-lem Eggink. “You get many jobs – hun-dreds of thousands of jobs not only with the ordinary gas industry, but also with the new industries that will pop up because there’s security of supply, and in addition to that a significant boost to GDP.”

No wonder, then, that Africa’s largest fund investor, the Public Investment Corporation (PIC), with a portfolio estimated at $135 billion, has thrown its weight behind shale gas. “We have taken the decision that we will play the lead in the energy space,” PIC Chief Executive Elias Masilela told Bloom-berg in April. “Energy is one of the biggest barriers for the continent.”

This gung-ho attitude is also echoed by the latest company to apply for a shale gas exploration license, Bundu Gas & Oil Exploration, 95 percent owned by Australian junior Chal-lenger, which joins Shell, Falcon, and Chevron in the queue.

Results from a series of wells drilled in apartheid times by state exploration company Soekor piqued Bundu’s inter-est. “When Soekor penetrated the shale, they actually took such a kick from gas that they had to activate the blowout preventers and then the gas flowed to surface,” Challenger managing director Robert Willes told Engineering News in January 2014. “This is an incredibly exciting and encouraging prospect.”

This excitement is shared by South African Mineral Resources Minister Susan Shabangu, who commented at the Mining Indaba in Cape Town:

“Government is excited about major game-changing discoveries of untapped potential for petroleum development,

spanning both off-shore and on-shore, including shale gas. We will move ahead decisively, yet responsibly, with the exploration of shale gas.”

NATIONALIZATION BY STEALTHDespite the staggering potential of Karoo shale, not a single license has been granted. The process risks being derailed altogether by a controversial amendment to the Mineral and Petro-leum Resources Development (MPR-DA) Bill, passed by the South African Parliament in March 2014.

Under the original version of the MPRDA Bill, the State was entitled to 20% free carry interest – effectively a risk-free portion of production. In ad-dition, it was mooted that the State be entitled to claim 30% of production at the going market rate. However, under the amendment – passed abruptly without the industry having been con-sulted – the State now has the right the exercise the option to purchase 80% of production “at an agreed price,” not the going market rate.

In other words, the State’s risk-free 20 percent share in production is raised to a potential 100 percent. Commenta-tors have evoked the spectre of “nation-alisation by stealth”, saying any signifi-cant shale gas investments could ef-fectively be nationalised by the state. In such a regulatory environment, in-vestors such as Shell – which has com-mitted USD 250 million to exploration alone – aren’t likely to bother drilling in the first place.

“If we’re providing a regulatory framework where there’s no assurance of a reasonable return on your invest-ment, they’re going to look elsewhere,” said oil-and-gas legal expert Dr. Luke Havemann from ENSAfrica, a law firm. “They will simply relinquish their acreage.”

s O U T H A F r I C A

B y G r e G p e n F o l d I n c a p e t o W n

Investors large and small have been lining up to get their teeth into South Africa’s shale gas reserves, but recent legislation may kill the sector off before a single well is sunk.

poTenTialTo waSTe

“If we’re providing a regulatory framework

where there’s no assurance of a

reasonable return on your investment, they’re going to look

elsewhere” Dr. Luke Havemann,

ENSAfrica

STalleD ouT

C E N T r A L & E A s T E r N E U r O P E

The strategic disadvantage of CEE states’ being too much dependent on gas imports from Russia has been striking for two decades now. Yet, even the Ukraine crisis isn’t much prompting anyone in the region to increase domestic gas production.

B y W o j c I e c h K o ś ć


Romania, two years after the govern-ment of Victor Ponta lifted a morato-rium on fracking that was instigated by the previous cabinet as a result of popular protests.

Fracking may be legal in Romania, but protests continue. February saw biggest one to date, with a 1,500-person demonstration in Curtici, western Romania, the area permitted to Hun-gary’s national oil and gas company MOL and SC Expert Petroleum.

In April, American IOC Chevron was permitted to drill two shale gas exploration wells in Vaslui county, in south-eastern of the country, Chevron Romania Manager Tom Holst an-nounced in mid-April. Instead of mov-ing forward to shale gas production, however, the Chevron announcement is rather expected to give the protest movement a new momentum in Cur-tici, Vaslui and other locations seen as prospective for shale gas exploration.

Historically a major oil and gas country, Romania is still able to cover 75 per cent of its oil and gas demand with domestic production. All of its gas imports come from Russia.

In theory, the country might have enough shale gas reserves to meet do-

STATISTICS of EURoPE’S de-pendency on Russian gas could be misleading. The bulk of countries that are largely dependent on Rus-

sia for their gas supplies are in Central and Eastern Europe.

It’s unsurprising that Poland is the most vocal state advocating shale gas exploration now that the European Union is coming to terms that Russia might not be a credible supplier after all. Elsewhere, however, despite fairly encouraging geological data and reli-ance on imports from Russia reaching 100 percent, the shale gas industry has made little to no progress.

In some countries, political decisions to ban fracking are holding back de-velopment, like in Bulgaria or the Czech Republic (where also nuclear

power is an important energy source). Some governments also don’t see shale gas as worth going after, having huge potential in shale oil (Estonia) or again nuclear power (Slovakia).

Even if this is looking improbable at the moment, shale gas has a chance to alter energy mixes, apart from Poland, in Romania, Lithuania and Hungary.

ROMANIAExploration is still at a slow start in

Shale gas still has a chance to alter the energy mix in Romania, Lithuania and

Hungary

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mestic demand for decades to come. But it will take at least five years of exploration before any gas flows at all, the Prime Minister Ponta said in April.

Until that time, wrote foreign policy and strategic studies expert Ariz Huseynov in analysis for New Eastern Europe magazine, Romania will con-tinue to rely on gas imports that are substantial enough to cause problems if halted. Romania’s relationships with Russia are also tense because of Mol-dova that Romania considers its his-toric territory and promotes Moldova’s integration with the EU.

LITHUANIAFollowing Chevron’s retreat from Lithuania, the Baltic state now mulls announcing a new tender for a poten-tially shale gas-rich strip in Western Lithuania in the fall of 2014, Lithuanian minister of environment, Valentinas Mazuronis tells SGIG. Before the ten-der takes place, however, some work to ease the public with shale gas is still needed, Mr. Mazuronis says.

“We have not yet stitched up the program aimed at having the public acquainted with the process of explo-ration and extraction and the benefits that the community in the area in question will have from it,” Mr. Ma-zuronis said.

“The shale gas information dissemi-nation program will be overwhelming and will encompass a range of mea-sures, from using the traditional media to working on-site with every com-munity. This would be following in the Poles’ footsteps in terms of getting lo-cals in favor of shale,” the minister said.

Chevron, which won the previous tender for shale gas exploration, pulled out from Lithuania, citing adverse tax and legal environment. The US energy giant was particularly disappointed in a proposal to levy a 40 percent basic tax on shale gas.

The government has changed its tax strategy, however. It now proposes that shale gas extraction will be tax-free for up to four years once operators flow gas. A tax of 15 percent will be applied after the tax-free period ends.

HUNGARYIn Hungary, Ireland-based Falcon Oil & Gas announced the beginning of the well testing operations on the Kút-völgy-1 well.

The well is the first of three to evalu-ate the gas potential of the Algyő For-mation in Falcon’s Mako Trough per-mit. The drilling and testing pro-gramme is funded by Naftna Indus-trija Srbije (NIS) is expected to take about 3 months.

According to a January 2013 study by RPS Energy, a natural energy re-

sources consultancy, Falcon might be operating acreage with 568 billion cu-bic feet (bcf) of prospective recoverable gas resources.

Interest in shale gas is going to re-ceive some more attention this spring, as the results of a bid for gas explora-tion licences, which took place in late 2013, will be made available.

The bid has been long awaited by the industry, as there have been no new concessions since 1998 and no new exploration licenses issued since 2010, Natural Gas Europe reported in No-vember 2013. Four exploration areas were selected for the bid, whose results will provide an important indicator in shale gas interest in Hungary.

With reporting from Maria Popa in

Bucharest and Linas Jegelevicius in Vilnius.

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IT CAnnoT be a coincidence that in the European Union, shale gas is most loudly praised by the

United States two staunchest allies - Poland in the east and the United Kingdom in the west.

Elsewhere, the discussion about shale gas exploration has largely stopped at the stage of identifying potential plays and the battle is on between industrial and environmental lobbies, typically supported by govern-ments, to put a shale gas strategy in place.

EU: NO BINDING RULESAn EU-wide development that could have an influence on Western Europe’s stance on fracking took place in Janu-ary 2014, as the European Commis-sion said there would be no binding rules for shale gas exploration in the EU.

Contrary to concerns that in coun-tries like Poland the UK had that the Commission would phase-in strict rules concerning shale gas across the EU, the Commission said in its January guidelines that countries are free to do what they think is best. The Commis-sion did make sure it had a power to step in, however, as it said that in case of shale gas development proving harmful to the environment, binding

rules could enter into force. The Com-mission will give shale gas situation in the EU an overview in July 2015.

The Commission suggests that coun-tries that will support shale gas devel-opment will need to show compliance with the best environmental practices

that require extensive public consulta-tions and environmental impact as-sessments - pretty much as in the case of almost all major energy or infra-structure developments.

The countries would also be called to implement a system to monitor

operations “in a way which prevents possible surface leaks and spills to soil, water or air.” Reduction of flaring and venting will also be encouraged.

Just two countries in Western Eu-rope, apart from the UK, are actively discussing shale gas: Germany and Spain. Another major European economy, France, is anti-shale gas, expected to remain that way as long as current president Francois Hollande is in power.

SPAINIn Spain, a legal tussle continues be-tween the regional government of Cantabria and the federal government in Madrid over Cantabria’s ban on fracking that the regional authorities imposed in April 2013.

The move by Cantabria had Repsol, Spain’s largest oil producer, postpone planned shale gas explorations in Northern Spain. Repsol holds a con-cession over 290 square miles in Can-tabria, licensed in 2011 for six years, conditional upon a minimum invest-ment of 30 million euros in explora-tion activities.

A hearing is scheduled to take place before Spain’s Constitutional Court to rule on Cantabria’s ban. The central government will reportedly argue that the ban violates the national law on

B y W o j c I e c h K o ś ć

There’s only a faint echo of the Ukraine crisis in Western Europe, so governments there have been giving little political importance to shale gas exploration. Some countries however have their own reasons to go after gas.

whaT Shale gaS?W E s T E r N E U r O P E

“Cheaper natural gas in the US is

lowering electricity and other energy

costs for American manufacturers, while

Germany’s [power costs] continue to

rise IP Journal, Germany

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hydrocarbons, which allows hydraulic fracturing under the permitted explo-ration techniques for the oil and gas sector.

GERMANYA stalemate over the future of shale gas in Germany continues, as German oil and gas industry has been at odds with the so-called Great Coalition of two biggest political parties, conservative CDU and leftist SPD over political reasons to keep a ban on fracking, originally introduced in 2012 by the previous CDU-led government.

According to the industry, German politician are giving in to environmen-tal lobbyism all too easily, while do-mestic production of gas has been in decline. “Currently, there is a decline in domestic production. A major share of planned investments in our industry is stymied politically,” said Hartmut Pick, spokesman for the WEG oil and gas industry group, told Reuters.

The industry claims that the ban on fracking isn’t well grounded at all. “While shale gas development through

hydraulic fracturing is new to Ger-many, the technique has been used in the country since 1961 to allow gas production from low permeability, or tight sandstone reservoirs,” Ritva Wes-tendorf Lahouse, spokeswoman for ExxonMobil’s German operations, told Natural Gas Europe in February.

German manufacturers, in turn, are concerned that German industry will lose competitive edge against its American counterpart as a result of energy prices in the US going down thanks to shale gas.

“Cheaper natural gas in the US is lowering electricity and other energy costs for American manufacturers, while Germany’s continue to rise. This is especially of concern to energy-in-tensive industries, where the EU now has 36 percent of world capacity and the US only 10 percent. Secondly, as the US begins to build facilities for export of liquefied gas (LNG), this capacity could have a significant effect on the price of electricity and gas in Asia, which looks to become the main recipient of US LNG, which would

improve Asian competitiveness versus the EU,” German foreign policy maga-zine IP Journal noted in February.

FRANCEAccording to a parliamentary report on shale gas, development of shale gas in France would produce less benefits to consumers than in the US due to produc-tion costs, and regulatory moves should prioritise protecting energy intensive companies, Platts reported in May 2014.

The report said that France, as well as entire Europe, would not be able to pro-duce shale gas to reach prices anywhere near in the US. European shale gas’ price would stand at about USD 7-8 per Mil-lion british thermal units (Mbtu), as compared to America’s price of just USD 3.7 per Mbtu.

The report comes in support of France’s state policy not to allow fracking, which is considered dangerous to envi-ronment and agriculture. Several indus-try sectors are however lobbying for president Hollande to revert on his 2013 statement that shale gas development simply would not happen in France.

whaT Shale gaS?

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In early February, 50 miles south of Pittsburgh, Wild Well Con-trol, a service company that responds

to oilfield emergencies, was called to a well blowout. According to the Associ-ated Press, Chevron spokesman Trip Oliver said, “A fire was reported at about 6:45 a.m. on February 11 at the Lanco 7H well in Dunkard Township.”

John Poister, a spokesman for the Pennsylvania Department of Environ-mental Protection (DEP), said “the fire was aided by a truck on the well pad which contained 1,000 litres of propane, which exploded and killed one of the site workers.” He added that the fire was so intense the firefighters had to pull back from the flames. “They essentially re-

treated to let the fire burn,” Mr. Poister said.

CHEVRON BLOWUPIn April, the DEP cited Chevron Appa-lachia with nine violations, including various health and safety violations. The DEP took air and soil samples within days of the accident and concluded that due to the fire the area had higher con-centration of propane, heptane, and 1,2,4-trimethylbenzene than is typically

found in rural areas across the state. The higher concentrations of propane are believed to have come from the nearby storage tanks, the DEP reported.

Among the violations, the DEP alleged that Chevron Appalachia refused unre-stricted access for two days to properly identified agency personnel at the wellsite the day of the incident. Chevron Appa-lachia failed to effectively prevent an explosion; they failed to prevent waste of gas due to inadequate blowout equip-

w e l l p a d s e c u r i t y

Well blow-outs, uncontrolled fires, and road accidents pose serious risks to human health and environmental safety.

B y h u n t e r d i a m o n d

Accidents Don’t Happen

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ment, and they failed to contain fugitive air emissions.

Chevron Appalachia, in responding to the DEP’s allegations, was quoted in the Pittsburgh Post Gazette saying, “During our response to this incident, Chevron’s first priority was to ensure the safety of all responders and prevent additional injuries. For that reason, access to the Lanco site during the initial stages of the incident was restricted.

“At Chevron’s request, the Pennsylvania State Police established an access control point near the pad. No one, including

Chevron personnel, was permitted access to the pad on the day of the incident, until experts from Wild Well Control arrived on the scene and were able to assess the situation.”

According to reporting by the NGI’s Shale Daily, the explosion and fires that began on February 11th at Chev-ron’s Lanco 6H and Lanco 7H wells were one of the “worst accidents the state has seen in modern history and the largest accident yet at an uncon-ventional well in the state.” The AP reported that one worker was killed and another was injured in the inci-dent. The fires didn’t extinguish them-selves until February 15th.

Industry isn’t well equipped to deal with emergencies or explain how big

these risks are. The Marcellus Shale Coalition, an industry group, avoids discussion of the well blowout alto-gether. In the last two years, no news piece on their website, nor update from a member, describes anything unfavorable. Europe could do better with a tasteful reporting of the facts, resolutions and discussion.

ACCIDENTS DON’T HAPPEN?Underreported are the traffic accidents that result from onshore oil and gas production. The growth in the Barnett

shale play has more than quadrupled the number of heavy trucks on local roads in some counties in Texas.

According to the Star Telegram, the local Texas newspaper in Fort Worth, “two young boys crushed to death last year by a tanker truck in West Vir-ginia. A father in Pennsylvania was killed by a tanker in 2011. And a 19-year old Texas man fatally was injured in 2012 after colliding with a drilling truck on his way to work. A month later, on the same road, three retired teachers died in another collision with a truck.”

A study on the impact of well drill-ing and ensuing increase in truck traf-fic to and from well pads in Pennsyl-vania, carried out by Resources for

Future think tank, suggested that “one additional well drilled per month raises the frequency of accidents in-volving a heavy truck by more than 2 percent and that with one additional well drilled in a county, the number of accidents involving a fatality increases by 0.6 percent.”

Although any increase of any type of traffic will increase likelihood for ac-cidents and fatalities, the study also pointed out to the fact that “there are oil field exemptions from highway

safety rules created in the 1960s that allow truckers in the oil and gas indus-try to work longer hours than drivers in other industries.”

Marvin Odum, director of Royal Dutch Shell’s exploration operations in the United States, said that deadly crashes are “recognized as one of the key risk areas of the business.” Improv-ing road safety and lessening the risk of well site accidents is important for an industry who will be under close scrutiny in Europe.

Although in Europe the industry is under tighter regulation, from fuel burning to waste removal, from site impacts to making noise, the chances for “accidents that never happen” are still as high.

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“Chevron’s first priority was to ensure

the safety of all responders and

prevent additional injuries”

Chevron Appalachia spokesman

Due to the fire the area had higher concentration of propane, heptane, and 1,2,4-trimethylbenzene than is

typically found in rural areas across the state


There is an environmental impact of shale gas production, though not quite as dramatic as is often presented. These technologies from the established North American markets should be making their way into Europe - sooner the better.

B y G o r d o n w a s i l e w s k i a n d J a n w y p i J e w s k i

at the early stage of US shale development, E&P companies were so engaged in drilling and fracking

wells they forgot to address communi-ties’ concerns about technology and its possible impacts on environment. Be-cause shale development is getting more and more attention from the public outside of the United States, new technologies deserve a close look.

Now anti-fracking movements, both national and local, force the industry not merely to explain, but also to ensure the public trust with new HSE solutions and establish a system of transparency.

Meeting tight regulatory conditions and increasing social acceptance takes a bulk of well development time, thus it is crucial to focus on meeting these conditions using best practices and state-of-art technologies.

Technologies to reduce shale gas operations’ impact on the environment and minimize risk to human health makes it easier to win support for shale development on the side of local com-munities and authorities as well as build public trust in companies’ ac-tivities. On the other hand, these tech-nologies often provide operators with

an opportunity to reduce costs. Below are examples of technologies

that can be put to use in order to gain local communities and authorities sup-port by reducing the potential environ-mental impact of shale development.

EMISSIONS REDUCTIONArguably the biggest concern of local communities and environmentalists is the release of Volatile Organic Com-pounds (VOCs) and greenhouse gases.

VOCs, emitted while venting hydro-carbons during the last stages of well preparation, contribute to smog forma-tion and air pollution with benzene, which is carcinogenic, and hexane, which may cause dizziness, nausea, skin and eyes’ irritation. Other sub-stances like oxides of nitrogen, carbon monoxide and PM2.5 (particulate mat-

ter of less than 2.5 micrometers in di-ameter) also flow into the air during flaring.

Prevention, not Cure

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Industry’s answer to this issue is a process called “green completion”, which allows operators to recapture a majority of toxic fumes like VOCs that would have been vented or flared oth-erwise.

The whole process is based on the three-phase separation of reservoir fluid after hydraulic fracturing of the well. Initially, a sand separator filters out sand grains from the water-gas mixture coming from a wellbore. In the second phase, water is separated from the fluid, which then mixes again with sand in the disposal tank. As a result, natural gas is directed into a separate pipe and eventually finishes in a pro-cessing plant.

In 2012, the US Environmental Pro-tection Agency (EPA) in its new regu-lations about the reduction of harmful emissions linked with oil and gas in-dustry, identified the green completion as the best available technology for tackling air pollution. The technology will be required at all wells hydrauli-cally fractured from 2015.

Gina McCarthy, EPA Assistant Ad-ministrator, estimated that between 12,000 to 20,000 tons of benzene and

90,000 to 290,000 tons of VOCs would be prevented from release annually.

Some companies have already intro-duced the technology voluntarily. Devon Energy started green comple-tion at Barnett Shale in 2004, while BP has been using Reduced Emission

Completions in Wyoming since 2001.A drawback of this technology is that

it cannot be applied in every case. For example, it isn’t working properly in

case of low reservoir pressure, and low pressure wells are exempted from the EPA requirements.

NOISE REDUCTIONIn early 2000s, a drilling rig worked just next to a shopping center’s wall in LA’s Beverly Hills.

The drilling site was operated by Stocker Resources and it was not a sole instance of oil and gas companies’ ur-ban operations that meet environmen-tal standards for noise thanks to the use of acoustic barriers.

This simple yet effective method of reduction of noise coming from the drilling rig is not uncommon in Po-land. For example APEX Contracting offers mobile acoustic walls that have been used during Halliburton’s hy-draulic fracturing on Chevron’s Za-wada Z-1 well on Zwierzyniec conces-sion in the Lublin region, eastern Poland, Lane Energy’s nitrogen lifting on Strzeszewo LE-1 and Łebień LE-2H in the Gdańsk region, northern Po-land, and Chevron’s drilling operation of K-1 well on Kraśnik concession in the Lublin region.

Typically, the use of acoustic walls will differ well by well. According to APEX, one contract assumed constructing three rows of sound barriers, for ex-ample. According to Chevron, the noise level 550 meters from the Zawada well pad, near the closest house, was 38.4 dB. Similar results were published in the Polish Geological Institute’s report from Lane Energy’s Łebień LE-2H activities, where the noise level at the fencing of the well site was 77.5 dB but 53.8 dB adjacent the nearest houses. The Min-istry of Environment puts acceptable noise levels at 55 dB during the day and 45 dB at night.

WATER RECYCLINGCompared to other hydrocarbons, shale gas receives most attention that is

Green completion means the recapture of a majority of toxic fumes like VOCs that would

have been otherwise vented or flared

disposal method total Vol. (bbl eq.) % (of total)

Centralized Treatment Plant for Recycle 940,692 26.8

Injection Disposal Well 94,888 2.7

Landfill 2,186 0.1

Reuse other than Road Spreading 2,457,025 70.1

Storage Pending Disposal or Reuse 9,227 0.3

Centralized Treatment then Discharge 46 0.0

F lo w B a c k m a n a G e m e n tpennsylVania

JanuaRy-June 2013

SOurCE: JOhN VEil, SPE Dl


typically centering around water use by the industry. But according to a 2013 study of John Veil of Society of Petro-leum Engineers, Marcellus Shale con-sumed 0.32 percent of Total Water Withdrawal (in other words, total con-sumption of water related to human activity) in Pennsylvania, New York and West Virginia and is responsible for 50 out of 882 billion gallons of pro-duced water per year in the United States in the oil and gas sector.

Stringent regulations, truck transpor-tation and disposal costs influence ef-

fective water management. Com-monly, flowback and produced water are injected into disposal wells, treated into clean brine or fresh water, or fil-tered and reused. In European condi-tions treatment and recycling seem to be the most prospective as water recy-cling has many benefits such as reduc-ing environmental footprint, volume of water used and ultimately the total overall production costs.

Flowback and produced water may contain hydrocarbons, solids, bacteria and heavy metals. Service companies offer various water reuse systems.

For example, Halliburton’s Clean-

Wave technology offers electrocoagula-tion (removing contamination from water by applying electrical charge to it) of frac flowback and produced water treatment at rates up to 26,000 bbl/d using minimal power.

The system electrically destabilizes and “glues” dispersed matter into bigger particles which are easily removed from the water. The same technology also decreases amount of chemicals needed in wastewater treatment and helps handle hydrogen sulfide, a highly haz-ardous compound that is sometimes encountered during drilling.

Another technology is Schlumberg-er’s subsidiary M-I SWACO’s compre-hensive water treatment solutions like Aqualibrium that aim at maximizing water recovery, minimizing waste and reducing disposal logistics and costs. In the Marcellus shale play, reclaiming and reusing frac water provided $900,000 savings for an operator in two locations.

GROUND MONITORINGGround-gas and groundwater monitor-ing carried out before, during and after drilling and completion enables ac-curate identification and quantification of hazards and provides authorities and local communities with confidence in what companies are doing.

The Continuous Ground-Gas Moni-toring Approach and ground-gas risk

assessment by companies like UK firm Ground-Gas Solutions (GGS) provide a range of techniques reducing shale projects’ impact uncertainty by acquir-ing continuous data sets from monitor-ing wells.

GGS’ GasClam technology is an in-borehole control device, collecting precise well data at intervals of up to three minutes. Apart from physical parameters, such as atmospheric pressure, borehole pressure and tem-perature, it measures concentrations

of methane, carbon dioxide, oxygen, carbon monoxide, hydrogen sulphide and total VOCs content.

Ground monitoring comes handy to identify well casing or cement integ-rity loss resulting in shale gas or haz-ardous chemicals’ escape into soil.

Ground-gas and groundwater

monitoring enables identification and quantification of

hazards and provides authorities and local

communities with confidence in what

companies are doing

The industrial real estate market in Po-land has now matured. In order to pro-vide potential tenants with a good insight into it, real estate agencies, like DTZ with its 20 years on the Polish mar-ket stand to represent tenants, as well as other parties involved, like develop-ers or investors.

In the first quarter of 2014, the total amount of modern warehouse space in Poland totaled 270,000 square me-ters (sq.m.) and reached 8.0 million sq.m. Greater Warsaw counts 2.8 mil-lion sq.m. (36% of the stock) which makes the region the largest industrial hub in Poland. It is followed by upper Silesia (1.5 million sq.m., or 19% of total stock), Central Poland (1.1 million sq.m., 13%), Poznań Region (950,000 sq.m., 12%) and Lower Silesia (870,000 sq.m., 11%).

In Q1 2014 as much as 95% of the new space was delivered to the re-gional markets, whilst only 5% to the Greater Warsaw area. The highest vol-ume of space delivered in Q1 2014 was located in Central Poland (74,000 sq.m.)

and Poznań Region (70,000 sq.m.). Given the strong take-up and few

speculative projects, as well as the high volume of leased space under con-struction, the level of vacancy rates is expected to remain steady or will slightly decrease in the selected mar-kets at the end of 2014. Prime headline rents remained similar to those record-ed in the previous year and are at the level of €2.3-5.5 per sq.m. per month in Greater Warsaw and between €2.7-4.3 in regional locations.

Specialists from the DTZ’s Indus-trial & Logistics agency provide com-prehensive services encompassing strategy development, projects com-pletion and commercialization. We work with various clients, including logistics providers, producers, distribu-tors, financial institutions and develop-ers. We have an in-depth knowledge of the market supported by experience, allowing us to effectively advise on the process of acquiring industrial and lo-gistics space, taking into account cost optimization. Through strategic think-

ing, we can effectively help build mar-ket advantage of our customers.

In cooperation with other DTZ teams we provide the following ser-vices: • cooperation with property devel-

opers in winning new tenants • negotiation terms of the contract

on behalf of developers / tenants • cooperation with companies in-

terested in subleasing space • linking tenants with logistics pro-

viders • advisory in terms of logistics op-

erations • advisory in Bts (built-to-suit) proj-

ects • Business location advisory ser-

vices • winning new lease / sale property

instructions from developers, funds or individual property own-ers

• Focusing on long term coopera-tion with our business partners across poland and europe • mar-keting services

Industrial property market in Poland has now matured. With its 20 years of experience, DTZ stands to represent tenants, developers and investors.

dtZ: solutions for a developed market

a d v e r t o r i a l

k a m i l k u G au d o, dt Z

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l Celtique Energie p. 78

l Cuadrilla Resources p.78

l Dart Energy p.79

l Egdon Resources p.79

l GDF Suez p.80

l IGas Energy p.80

l Magellan Petroleum p.81

l Total p.81

operators

In this issue of the Shale Gas Investment Guide, we introduce selected four companies prospecting for shale gas in the United Kingdom. Once again it seems to be up to the independent and small enterprises to prove up the acreage before IOCs show major interest in the play.

Hydrocarbon exploration concessions in the UK are known as Petroleum Exploration and Development Licences, (PEDL). Older concession types, EXL and AL, are no longer being issued.

Guide


WhO’SWhO

iN CONCeSiONS/uK


UK

CONTACT INFO

Geoff DaviesChief Executive Officer

40 Berners StreetLondon W1T 3NAUnited Kingdom(+44) 20 7255 6100www.celtiqueenergie.com

bOARD MEMbERSGeoff DaviesPeter BirdSimon BarkhamPeter Coulson

hOlDING COMPANIESCeltique Energy Holdings

c o n c E S S i o n a R E a

Concession area

concESSionS HELD

name acreage (km2)

Wells

PEDL 231 400

PEDL 234 300

PEDL 243 300

“Celtique Energie expects that shale gas

in the United King-dom might be present

at the concessions 231,234 and 243”

Piotr Nowak, Country Manager

CONTACT INFO

Francis EganCEO

Cuadrilla House Stowe Court, Stowe Street Lichfield, Staffordshire WS13 6AQ, UK (+44) 1543 266 444 www.cuadrillaresources.com

bOARD MEMbERSLord BrowneHaroun Van HovellJohn LancasterAllan CampbellTony KellyRoy FranklinFrancis EganTony CarruthersAndrew Quarles

hOlDING COMPANIESCuadrilla Resources Holdings Ltd

concESSionS HELD

name acreage (km2)

Wells

PEDL 165 118 6

PEDL 244 15

PEDL 247 54

EXL 189 4

EXL 189 3

EXL 269 5

“We’re committed to being a good neigh-bour and to talking

with the community at every stage of the

process”Francis Egan, Cuadrilla’s

chief executive


Concession area

COMMENT:

“We are pleased to confirm that we have submitted a planning application for a temporary exploration well west of Fernhurst, following extensive engagement with the local community.”

- Geoff Davies, Chief Executive Officer

COMMENT: “As a result of the extensive technical and geological analysis, we have decided to focus on just two sites at this time. This will allow us to reduce the potential impact on the local area during exploration while still gathering the important information we need to determine how much gas could be recovered.” - Francis Egan, Cuadrilla’s Chief Executive

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UK

CONTACT INFO

John McGoldrickCEO

Laurel Hill Business Park Polmaise Road, Stirling FK7 9JQ, UK (+44) 333 800 2000 www.dartenergy.com.au

bOARD MEMbERSNicholas DaviesJohn McGoldrickEytan UlielMartin CooperMark Lappin

hOlDING COMPANIESGP Energy Dart Energy (Europe)

COMMENT:

“We welcome GDF SUEZ’s entry into onshore UK unconventionals, bringing valuable expertise at a critical time for the gas industry in this country.”

- John McGoldrick, Dart Chief Executive Officer

concESSionS HELD

name acreage (km2)

Wells

PEDL 012 50

PEDL 133 367

PEDL 200 120

PEDL 207 30

PEDL 210 10

EXL 288 10

PEDL 147 90

PEDL 185 100

PEDL 186 100

STaKE inconcession

nameinterest

(%)Holder

PEDL 139 17.5 IGas

PEDL 140 17.5 IGas

concESSionS HELD

name acreage (km2)

Wells

PEDL 187 70

PEDL 189 100

PEDL 195 100

PEDL 196 75

PEDL 198 75

PEDL AL010 75


Concession area

CONTACT INFO

Mark AbbottManaging Directors

The Wheat House 98 High Street, Odiham Hampshire, RG29 1LP, UK (+44) 1256 702292 www.egdon-resources.com

bOARD MEMbERSMark AbbottPhilip Stephens Jerry Field Walter Roberts Ken Ratcliff Andrew Lodge

hOlDING COMPANIESEgdon Resources U.K.

COMMENT:

“Egdon Resources had announced completion of 3D seismic at PEDL 139/PEDL 140.”

concESSionS HELD

name acreage (km2)

Wells

PL 161

PL 162

PEDL 209 64

STaKE inconcession

nameinterest

(%)Holder

PEDL 139 14.5 IGas

PEDL 140 14.5 IGas


Concession area

- Egdon Resources news , March 31, 2014


UK

CONTACT INFO

Jean Claude PerdiguesManaging Director

40 Holborn Viaduct London EC1N 2PB (+44) 203 122 1400 www.gdfsuezep.co.uk

bOARD MEMbERSJean Claude Perdigues Delphine Cherel-Sparham Ian Conacher Andy Hirsch Rob Buchen Andy Spancer Steve Thomson

hOlDING COMPANIESGDF SUEZ E&P UK Ltd


Concession area

STaKE inconcession

nameinterest

(%)Holder

EXL 273 25 Dart Energy

EXL 288 25 Dart Energy

PEDL 12 25 Dart Energy







STaKE inconcession

nameinterest

(%)Holder





CONTACT INFO

Andrew AustinCEO

7 Down Street London W1J 7AJ UK (+44) 207 993 9899 www.igasplc.com

bOARD MEMbERSAndrew AustinStephen BowlerJohn Blaymires

hOlDING COMPANIESIsland Gas

concESSionS HELD

name acreage (km2)

Wells

PEDL 139 100

PEDL 140 141

PEDL 107 211

PEDL 116 102

PEDL 145 102

PEDL 145N 102

PEDL 184 386

PEDL 190 386

PEDL 193 296 1

“We have now complet-ed our 3-D seismic acqui-

sition on PEDL 139/140 on behalf of our joint

venture partners, Total E&P UK Limited, Egdon Resources, Dart Energy

and Corp”IGas news 31.03.2014


Concession area

COMMENT: “We have had a productive six months across the business with our exploration well underway at Barton, demonstrable progress on our Chase the Barrels initiative and the acquisition of Caithness.”

- Andrew Austin, CEO

COMMENT:

“GDF SUEZ is pleased to enter this first investment in UK shale gas as it complements the large presence of the Group in the UK We look forward to working with our partner , Dart Energy, to unlock the potential of these licences.”

- Jean-Marie Dauger, Executive Vice-President

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UK

CONTACT INFO

Thomas WilsonPresident and Chief Executive Officer

1775 Sherman Street Suite 1950, Denver, CO 80203 United States of America (+1) 720 484 2400 www.magellanpetroleum.com

bOARD MEMbERSThomas WilsonAntoine LafargueMark Brannum

hOlDING COMPANIESMagellan Petroleum Corporation


Concession area

STaKE inconcession

nameinterest

(%)Holder

PEDL 231 50 Celtique Energie



COMMENT:

“Magellan Petroleum UK Ltd holds a 50% interest in PEDLs 231, 234, 243, which are located in the central Weald Basin.”

- Company’s press release 13.01.2014

“Magellan Petroleum UK Ltd holds a 50%

interest in PEDLs 231, 234, 243, which are

located in the central Weald Basin.”

Cleantech Poland

CONTACT INFO

Christophe de MargerieChief Executive Officer

Crawpeel Road, Altens Aberdeen, Hampshire AB12 3FG, UK (+33) 1 47 44 45 46 www.total.com

bOARD MEMbERSChristophe de MargerieThierry DesmarsetPatrick ArtusPatricia BarbizetGunnar Brock

hOlDING COMPANIESTotal E&P UK Ltd


Concession area

STaKE inconcession

nameinterest

(%)Holder

PEDL 139 40 IGas

PEDL 140 40 IGas

PEDL 209 50 Egdon

COMMENT: “Total announced that it has acquired a 40% interest in two shale gas exploration licences in the United King-dom, PEDLs 139 and 140 in the Gainsborough Trough area of the East Midlands region of the UK which cover an area of 240 km2.” - Company’s press release, January 13, 2014

“With investments of approximately 2 billion dollars each year in the

UK, Total E&P UK will become the largest oil

and gas producer in the country by 2015”

Comapny’s Press release 13.01.2014

The Who’s Who section is dedicated to unconventional resource exploration companies and their unconventional concessions exclusively. According to Polish law only one entity may be a concession holder. This is why especially in cases of JVs, dedicated holding companies are formed. We list companies as having stake

in those dedicated holding companies rather than concessions themselves. Holding companies in Poland are typically limited liability companies (sp. z o.o.)

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Guide


l 3legs Resources p.84

l bNK Petroleum p.84

l Chevron p.85

l ConocoPhillips p.85

l Cuadrilla Resources p.86

l Eni Spa p.86

l Esrey Energy p.87

l hutton Energy p.87

l lotos p.88

l Marathon Oil p.88

l Petrolinvest p.89

l PGNiG p.89

l PKN Orlen p.90

l San leon Energy p.90

l TransAtlantic Petroleum p.91

l Wisent Oil & Gas p.91

operators

WhO’SWhO

iN CONCeSiONS/POlaNd

84 | Shale Ga S Inve S tm ent GuIde | SUMMER 201484 | Shale Ga S Inve S tm ent GuIde | SUMMER 2014

POlAND


CONTACT INFO

Kamlesh ParmarCEO

ul. Chmielna 13A00-021 Warsaw(+48) 22 505 91 77www.3legsresources.coml

bOARD MEMbERSKamlesh Parmar Clive NeedhamPaul Quirk

hOlDING COMPANIESLane Energy Exploration Lane Resources Poland

RUSSIA LITHUANIA

BELARUS

SLOVAKIA

CZECHREPUBLIC

GERMANY

Zone of interestConcession area

Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

Katowice Kraków

COMMENT:

“We continue to work with ConocoPhillips on finalising the completion and testing programme for the lateral well and are satisfied that our 2013/14 drilling programme is proceeding according to plan.”

- Kamlesh Parmar, Chief Executive

concESSionS HELD

name acreage (km2)

Wells

Cedry Wielkie 809 1

Stegna 625

Godkowo 904

STaKE inconcession

nameinterest

(%)Holder

Damnica 30 ConocoPhillips

Lębork 30 ConocoPhillips

Karwia 30 ConocoPhillips

COMMENT: “BNK Petroleum has successfully drilled, cased and cemented its Gapowo B-1 horizontal well with excellent gas readings regularly recorded throughout the lateral.”

CONTACT INFO

Troy WagnerGeneral Manager

ul. Wiktorska 6302-587 Warsaw(+48) 22 540 17 50www.bnkpetroleum.com

bOARD MEMbERSWolf RegenerWarren NelsonCoenraad LeoHans HandlerDavid NelsonMartin Robert

hOlDING COMPANIESIndiana Investments Saponis Investments


RUSSIA LITHUANIA

BELARUS

SLOVAKIA

CZECHREPUBLIC

GERMANY


Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

Katowice Kraków

concESSionS HELD

name acreage (km2)

Wells

Starogard 878 1

Słupsk 919 1

Sławno 1,154 1

Darłowo 1,152

Bytów 1,169 2

Trzebielino 1,167 1

“The Gapowo B-1 well is believed to be the longest horizontally

drilled well in Poland.”

The Company’s press release

- The Company’s press release , February 24, 2014

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POlAND

CONTACT INFO

John ClaussenCountry Manager

Aleja Wyścigowa 6 02-681 Warsaw (+48) 22 460 100 www.chevron.coml

bOARD MEMbERSDavid Jones Marian Sewerski John Claussen George Psefteas Derek Magness

hOlDING COMPANIESChevron Polska Energy Resources


RUSSIA LITHUANIA

BELARUS

SLOVAKIA

CZECHREPUBLIC

GERMANY


Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

Katowice Kraków

COMMENT:

“The cooperation would enable both parties to reduce costs and - by obtaining economies of scale – acceleration of explora-tion work, and hence, the process of assessing the potential of shale gas resources in Poland. Binding agreements between Chevron and PGNiG are expected to be signed in 2014.”

- PGNiG Press Office

concESSionS HELD

name acreage (km2)

Wells

Zwierzyniec 824 1

Kraśnik 1,194 1

Frampol 1,178 1

Grabowiec 1,195 1

“Chevron Poland is delighted to partner

with PGNiG in the safe and efficient

exploration of energy resources”

John Claussen, Country Manager

CONTACT INFO

Laurie St AubinCountry Manager

Rondo ONZ 1 00-124 Warsaw (+48) 22 209 04 00 www.conocophillips.com

bOARD MEMbERSRyan Lance Matt Fox Al Hirshberg Jeff Sheets Don Wallette

hOlDING COMPANIESConocoPhillips E&P Poland ConocoPhillips Poland BV Lane Energy Poland


RUSSIA LITHUANIA

BELARUS

SLOVAKIA

CZECHREPUBLIC

GERMANY


Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

Katowice Kraków

COMMENT: “In 2014 work will be continued regarding exploring and evaluating potential shale gas including additional drilling and seismic surveys” - ConocoPhilips website

concESSionS HELD

name acreage (km2)

Wells

Damnica 784 1

Lębork 1,062 4

Karwia 209 1

“In January 2014, ConocoPhilips fin-ished Sławoszyno

LEP-1 exploration well in Karwia concession

and Lublewo LEP-1 exploration well in

Lębork concession.”Cleantech Poland


POlAND

COMMENT:

“We have sent a letter to the ministry about resigning from conducting further work at the Łuków concessions. At the Pionki concession we have finished interpretation of the seismic and now we conduct work related to the designation of the area for the location of the planned drilling.”

- Marek Madeja, Country Manager

CONTACT INFO

Marek MadejaCountry Manager

ul. Syrokomili 5C 03-335 Warsaw (+48) 22 818 97 95 www.cuadrillaresources.com

bOARD MEMbERSMark Miller Marek Madeja Dennis Carlton Peter Turner Ken Lowe

hOlDING COMPANIESCuadrilla Poland


RUSSIA LITHUANIA

BELARUS

SLOVAKIA

CZECHREPUBLIC

GERMANY


Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

Katowice Kraków

concESSionS HELD

name acreage (km2)

Wells

Łuków* 628

Pionki 827

* Resignation of further work

“Cuadrilla Resources will remain only one

concession in Poland as Międzyrzec P. conces-

sion has expired and the company is prepar-ing for exit from Łuków

concession”Cleantech Poland

CONTACT INFO

Giuliano InvernizziVP External Com.

Aleje Jerozolimskie 30/70 00-024 Warsaw (+39) 06 598 220 30

www.eni.com

bOARD MEMbERSGiuseppe Recchi Giorgio Ruffoni Guiseppe Tannoia Giorgio Silva Pablo Scaroni

hOlDING COMPANIESEni Polska

concESSionS HELD

name acreage (km2)

Wells

Elbląg 574 2


RUSSIA LITHUANIA

BELARUS

SLOVAKIA

CZECHREPUBLIC

GERMANY


Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

Katowice Kraków

COMMENT: “Eni’s Malbork and Młynary concessions have expired and the company does not intend to renew them. Elbląg concession is due to expire in 2018. The decision was confirmed by Poland’s Ministry of Environment.”

- Cleantech Poland

“Italian company Eni is likely to abandon all

of its shale gas proj-ects in Poland”

Cleantech Poland

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POlAND

CONTACT INFO

David NelsonCEO

ul. Bagno 2/225 00-112 Warsaw (+1 778) 373 0103 www.lngenergyltd.com

bOARD MEMbERSDave Afseth Robert Gayton Paul Larkin Richard Green David Cohen

hOlDING COMPANIESEsrey Energy Limited


RUSSIA LITHUANIA

BELARUS

SLOVAKIA

CZECHREPUBLIC

GERMANY


Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

Katowice Kraków

“The acquisition of ad-ditional interest in the

Baltic Basin is consistent with our long-stated

objective of maintaining optionality in our hold-

ings in Poland”David Nelson,

President and CEO

STaKE inconcession

nameinterest

(%)Holder

Starogard 42.96 BNK

Słupsk 42.96 BNK

Sławno 42.96 BNK

Węgrów 50 San Leon

Iława 50 San Leon

COMMENT: “The Company has entered into a binding agreement to add to its holdings in Poland’s Baltic Basin through the acquisition of additional interest in Saponis Investments Sp. z o.o.”

Company’s press release

CONTACT INFO

Pawel ŻukCountry Manager

Aleje Jerozolimskie 81 02-001 Warsaw (+48) 22 695 02 70 www.huttonenergy.com

bOARD MEMbERSDavid MessinaCharles Morgan

hOlDING COMPANIESStrzelecki Energia Strzelecki Energia Warszawa Strzelecki Energia Mazowiecka Strzelecki Energia Łukowska Strzelecki Energia Wołomin Strzelecki Prabuty Południowe


RUSSIA LITHUANIA

BELARUS

SLOVAKIA

CZECHREPUBLIC

GERMANY


Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

Katowice Kraków

COMMENT:

“Hutton Energy’s Polish subsidiary, Strzelecki Energia Sp. z o.o has announced the completion of 2D seismic acquisition over three Jurassic license areas (Kolo, Poddebice and Lodz Zachod) located in Central Poland . We are looking forward to integrat-ing all the data we now have in this area to better define the opportunities in this exciting play.”

concESSionS HELD

name acreage (km2)

Wells

Prabuty Południowe 481 1

Koło 1,172

Poddębice 645

Łódź Zachód 809

Oleśnica 1,161

Wieluń 888

“Hutton Energy ex-pects that shale gas can

be present in central Poland, therefore the

company applied for two new licenses to the Min-

istry of the Environment”

Cleantech Poland

- David Messina, Hutton’s Managing Director


POlAND

CONTACT INFO

John PorrettoExternal Communications

ul. Zlota 59 00-120 Warsaw (+48) 22 379 94 40 www.marathonoil.com

bOARD MEMbERSLee M. TillmanDennis H. Reilley

hOlDING COMPANIESMarathon Oil (Area A - J)


RUSSIA LITHUANIA

BELARUS

SLOVAKIA

CZECHREPUBLIC

GERMANY


Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

Katowice Kraków

COMMENT:

“We anticipate our exit will be completed during the second half of 2014 following all appropriate measures to ensure our longstanding commitment to environmental stewardship and the terms of our concessions.”

concESSionS HELD

name acreage (km2)

Wells

Kwidzyń 1,197 1

Brodnica 1,088 1

Orzechów 1,008 1

Rypin 670 1

“After an extensive evalu-ation of our exploration activities in Poland and

unsuccessful attempts to find commercial levels of hydrocarbons, Marathon

Oil elected to conclude op-erations in the country”

John Porretto - External Communications Specialist

- John Porretto, External Communications Specialist

CONTACT INFO

Maciej PowroźnikDeputy Director

Stary Dwór 9 80-958 Gdańsk (+48) 58 301 30 61 www.lotos.pl

bOARD MEMbERSZbigniew PaszkowiczDariusz Wojdyński Krzysztof Sułecki

hOlDING COMPANIESLOTOS Petrobaltic


RUSSIA LITHUANIA

BELARUS

CZECHREPUBLIC

GERMANY

Zone of interest

Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

Katowice Kraków

Concession area

COMMENT: “Lotos has 8 licenses for exploration of shale gas in the Baltic Sea. The company in 2012 entered into agreement with PGNiG about joint exploration activities at 4 onshore concessions. However, in 2013 the company announced it won’t engage with these activities.”

concESSionS HELD

name acreage (km2)

Wells

Gotlandia 881

Różewie 1,172

Łeba 1,154

Gaz Południe 887

Sambia W 888

Sambia E 1,092

Słupsk E 1,139

Słupsk W 1,021

“The company highlights the fact that Lotos has

shale concessions at Bal-tic Sea but the technol-ogy available now does not allow for viable ex-

traction of the resource from the seabed”

Cleantech Poland

- Cleantech Poland.

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POlAND

CONTACT INFO

Tomasz TarnowskiCommunications

Al. Jerozolimskie 65/79 00-697 Warsaw +48 22 553 85 14 www.petrolinvest.pl

bOARD MEMbERSBertrand Le Guern Franciszek Krok

hOlDING COMPANIESSilurian ECO Energy 2010

COMMENT: “Project of new regulations and the conflict in Ukraine (03.2014), should accelerate shale gas exploration in Poland. We are ready to cooperate on our licenses”

- Bertrand Le Guern President of Petrolinvest S.A.

concESSionS HELD

name acreage (km2)

Wells

Częstochowa 750

Repki 882

Siemiatycze 892

Grudziądz 699

Maków Mazowiecki 699

Chodel 189

Opole 1,044

Głubczyce 1,156

Kędzierzyn-Koźle 994

STaKE inconcession

nameinterest

(%)Holder

Lidzbark Warminski 31.67 Wisent

Węgorzewo 31.67 Wisent

Gołdap 31.67 Wisent

Kętrzyn 31.67 Wisent


RUSSIA LITHUANIA

BELARUS

SLOVAKIA

CZECHREPUBLIC

GERMANY


Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

Katowice Kraków

CONTACT INFO

Piotr GliniakHead of Exploration

ul. Kasprzacka 25 01-224 Warsaw (+48) 22 691 79 67 www.pgnig.pl

bOARD MEMbERSMariusz ZawiszaJerzy KurellaJarosław BaucZbigniew SkrzypkiewiczAndrzej Parafianowicz

hOlDING COMPANIESPolskie Górnictwo Naftowe i Gazownictwo


RUSSIA LITHUANIA

BELARUS

SLOVAKIA

CZECHREPUBLIC

GERMANY


Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

Katowice Kraków

concESSionS HELD

name acreage (km2)

Wells

Wejherowo 731 5

Kartuzy-Szemud 783

Stara Kiszewa 1,178 1

"172" 937

"173" 937

"192" 922

"193" 942

Warka-Ursyów 734

Ryki-Zyrzyn 426

concESSionS HELD

name acreage (km2)

Wells

Kock-Tarkawica 1,028

Pionki-Kazimierz 530 1

Wiszniów-Tarnoszyn 1,106 1

Tomaszów Lubelski 741 1

Górowo Iławeckie 1,094

Pakosław Krotoszyn 1,096

COMMENT: “PGNiG has finished nine exploratory wells related to shale gas. Currently drilling of one well and preparation for three next drillings is taking place. By 2014, PGNiG will spent around PLN 1.6 billion. This amount will include drilling of 33 wells, 10 of which relates to shale gas exploration.”

- PGNiG Press Office


POlAND

CONTACT INFO

Oisin FanningExecutive Chairman

ul. Mokotowska 1 00-640 Warsaw (+353) 1291 6292 www.sanleonenergy.com

bOARD MEMbERSOisin FanningPaul SullivanRay KingDaniel MartinJeremy BoakPiotr Rozwadowski

hOlDING COMPANIESAurelian Oil and Gas Poland Joyce Investments, San Leon Rawicz, San Leon Praszka, Helland Investments, Gora Energy Resources, Maryani Investments, San Leon Wschowa, Liesa Energy, San Leon Czersk, South Prabuty LLP, Oleśnica LLP, Baltic Oil&Gas Sp z o.o., Wieluń LLP


RUSSIA LITHUANIA

BELARUS

SLOVAKIA

CZECHREPUBLIC

GERMANY


Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

Katowice Kraków

concESSionS HELD

name acreage (km2)

Wells

Gniew 1,191

Iława 746

Węgrów 711

Nowa Sól 1,166 2

Wschowa 1,078

Rawicz 742

Góra 706 1

Praszka 1,199

Czersk 702

concESSionS HELD

name acreage (km2)

Wells

Prusice 758

Kotlarka 213

Gdańsk W 894,41 1

Braniewo S 1037 1

Szczawno 603,4 1

Prabuty Południowe 481 1

Oleśnica 1160,64

Wieluń 888

COMMENT:

“San Leon Energy has announced the successful completion of flow testing in the Ordovician shales in the Lewino-1G2 well on its Gdansk W concession. This is the most encouraging vertical shale well test in Poland to date.”

- Oisin Fanning, Executive Chairman

CONTACT INFO

Dominika MackiewiczPR Specialist

ul. Przyokopowa 31 01-208 Warsaw +48 22 778 02 00 www.orlenupstream.pl

bOARD MEMbERSWiesław PrugarPaweł Martynek

hOlDING COMPANIESOrlen Upstream


RUSSIA LITHUANIA

BELARUS

SLOVAKIA

CZECHREPUBLIC

GERMANY


Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

Katowice Kraków

COMMENT: “PKN ORLEN has done so far 9 exploratory wells in search for shale gas including 2 horizontal wells in Berejów and Syczyn towns in the Lublin region. The company, based on the approved work schedule, plans to drill in 2014 at least four exploration wel

concESSionS HELD

name acreage (km2)

Wells

Garwolin 884 1

Lubartów 1,156 3

Bełżyce 1,019

Lublin 967 1

Wierzbica 702 3

Hrubieszów 415

Sieradz 917

Wołomin 1,180

Wodynie-Łuków 1,191 1

- Company’s Press Release , February 10, 2014

“In parallel to the drilling works in the municipality of Stoczek Lukowski, PKN Orlen is preparing for the

implementation of the next well in the county świdnicki

(Lublin Province)”

The Company’s Press Release 10.02.2014

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POlAND

CONTACT INFO

Wes J. SkrobowskiCEO

ul. Chocimska 14 A 00-791 Warsaw (+48) 22 856 10 00 wisentoilandgas.com

bOARD MEMbERSWiesław Skrobowski William Marble Manuro Sutherland

hOlDING COMPANIESWisent Oil & Gas Sp. z.o.o.

concESSionS HELD

name acreage (km2)

Wells

Lidzbark Warmiński 895 1

Węgorzewo 134

Gołdap 621

Kętrzyn 683 1

STaKE inconcession

nameinterest

(%)Holder

Braniewo S 45 San Leon Energy


RUSSIA LITHUANIA

BELARUS

SLOVAKIA

CZECHREPUBLIC

GERMANY


Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

Katowice Kraków

COMMENT:

“Wisent has completed all of its obligations under the farm-out agreement to earn a 45% equity stake in the San Leon’s Bra-niewo S concession.”

- Cleantech Poland

CONTACT INFO

Malone MitchellChief Executive Officer

16803 Dallas Parkway, P.O. Box 246Addison, TX 75001-0246 (+1) 214 220 4323 www.transatlanticpetroleum.com

bOARD MEMbERSMalone MitchellBrian BayleyMel RiggsBob AlexanderCharles CampiseMarlan DowneyGreg Renwick

COMMENT: “TransAtlantic Petroleum has signed an agrement with San Leon, whereby TransAtlantic will carry out six op-erations to test three plays in nine concessions, namely Nowa Sol, Wschowa, Gora, Rawicz, Prusice, Kotlarka, Olesnica, Praska and Wielun concessions. After the completion of the work program TransAtlantic will earn an undivided 50% working interest in all the concessions. The final agreement is subject to the approval of regulatory authorities and negotiation of final agree-ments”

- TransAtlantic’s presentation on the potential acquisition, March 27, 2014

concESSionS HELD

name acreage (km2)

Wells

Nowa Sól 1,166

Góra 706

Wschowa 1,078

Rawicz 742

Prusice 758

Kotlarka 213

Oleśnica 1160,64

Praszka 1,199

Wieluń 888


RUSSIA LITHUANIA

BELARUS

SLOVAKIA

CZECHREPUBLIC

GERMANY


Łódź

Poznań

Wrocław

Rzeszów

Olsztyn

Gdańsk

Szczecin

WARSZAWA

Lublin

Bydgoszcz

Katowice Kraków

“In consideration for the work program TransAtlantic will

earn an undivided 50% work-ing interest in all the conces-

sions and will become the operator. The final agreement

is subject to the approval of regulatory authorities and ne-gotiation of final agreements.”

San Leon Energy News 27.03.2014


Guide


ServiceSdirectory

� Foreign owned companies (as in outside Europe) have begun to enter the CEE oil and gas markets. Two Chinese owned equipment manufacturers have entered the Polish market - Jereh and Kerui. The former is the 3rd largest pumping manufacturer globally and has a huge Chinese business; the latter has hired a new country manager to expand their sales in the CEE. An EPCM contractor with an Indian parent who has acquired a company with deep roots in North American shale plays has begun to focus on Poland. Elsewhere, companies with long histories providing services in Aberdeen and the North Sea are looking to send that experience to mainland UK and continental Europe. Clear Solutions, for instance, a pumping fluids/solutions provider, is looking to grow their footprint across Europe. The service markets however across Europe in uncon-ventionals are sluggish. The big four service companies (big blue and big red among them) are cost conscious while their competitor UOS has grabbed a big toehold, in a market whose drilling volume has decreased 50% year-on-year.

Parker Snyder (+48) 517 469 [email protected]

P A r K e r S n Y D e r D i r e C t o r , C l e A n t e C h P o l A n D

C o m m e n t A r Y


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DRILLING

Casing & Cementing BakerHughes Exalo Halliburton Schlumberger Weatherford UOSDirectional Drilling BakerHughes Drilltech Halliburton Exalo MeehanDrilling Schlumberger Weatherford UOSDrill Bits, Fluid Systems BakerHughes Exalo Halliburton MI-SWACO Sirius Pruit UOS SchlumbergerDrilling tools and Services BakerHughes Bentec Drilltech Exalo JSHDrilling Kerui NationalOilwellVarco Pruittengineering and modeling CCS CoreLaboratories(Saybol) Geolog ILF Wellynx NationalOilwellVarcohard Banding Arnco HardbandingSolutionsmud logging BakerHughes Drill-Lab Exalo Geolog GEO-data Geokrak Halliburton Schlumberger UOS WeatherfordmWD and lWD BakerHughes Halliburton Schlumberger Weatherford UOSPipe Supply JSHDrilling NationalOilwellVarco SumitomoEurope Tenaris USSteel Workstringsrig Contracting DiscoveryDrilling ExaloKCADeutag MNDDrilling NationalOilwellVarco UOSWaste management EkoTechEnergy MI-SWACOWater hauling ApexContractingWell Pad Construction ApexContracting CDMSmith NTSConstruction

Casing & Cementing BakerHughes Exalo Halliburton Schlumberger Weatherford UOSChemicals Brenntag ChampionTechnologies DOW DowCorning DowMicrobial MultiChemCoil tubing BakerHughes Drill-tech Halliburton Exalo MeehanDrilling Schlumberger Weatherford UOSequipment Supply BakerCorp BalancePointControl Bentec C.A.T. CAT DiscoveryDrilling Drill-Lab Drilltech GEOil&Gas ITS(Parker) JSHDrilling Kerui NationalOilwellVarco PackersPlus SuperiorEnergyServices TechPomp Tenaris UOS Weir WorkstringsPressure Pumping BakerHughes Halliburton Exalo Schlumberger Tenaris Weatherford UOSProppant Supply BalticCeramics WeirWater management AECom ApexContracting BakerCorp CDMSmith GEOil&Gas PP-EKO Veolia Tech-Pomp

COMPLETIONS

Basin modeling Argo BakerHughes GEO-Data Geokrak Geomage Kidova Pangea SerafimConstruction of Well Pads Construction of roads ApexContracting CDMSmith NTSConstructionCorporate Services PWC TrinityCorporateServicesData Services Argo ION GEO-Data Geokrak GeofizykaKraków GeofizykaTorun Geolog Geomage Geotrace IHS Kidova Pangea PFCEnergyDue Dilligence equity Fundraising CleantechPolandenvironmental Services AECom CDMSmith Golder&Associates GSEEnvironmental Inwatec PP-EKO URS VeoliaWaterFacilities management DBMServicesGeological Analysis Argo BakerHughes GEO-Data Geokrak Geomage Kidova Pangea Serafimhuman resources HAYS IPGroupland man ApexContracting CDMSmith IPGroupPermitting ApexContracting CDMSmith IPGroupSeismic Services AcousticGeophysical ApexContracting ION GeofizykaKraków GeofizykaTorun IPGroup ION UOStechnical translation Bireta

3rd PARTYSERVICES

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Logo company SpecIalIty area addreSS contact

Abbot Group Construction, Drilling

Global KCA DEUTAG Drilling GmbH

(+44) 122 429 9600

Abbot Group is an oil and gas services company based in Aberdeen, Scotland. The Abbot Group employs more than 8,000 people in over 20 countries and has two operating divisions, KCA DEUTAG and Bentec, which provide drilling and related well and facilities engineering services to the energy industry. Abbot Group has a presence in the North Sea and operates in locations such as Russia, the Middle East, Caspian Region, North and West Africa, and Asia.Acoustic Geo-physical Services (Viking)

Seismic services CEE Ul. Chłodna 11 lok. 425 00-891 Warsaw

[email protected]

Acoustic Geophysical Services provides acquisition services for land seismic projects. Viking Services B.V. (Viking) an-nounced the completion of its acquisition of Acoustic Ventures, LLC (Acoustic Geophysical Services) in late 2012. In a company statement, AGS said they will continue to provide seismic acquisition services in eastern and central Europe.

AECom General services Global Ambassador Building, 9th floor, Domaniewska 34a, Warsaw 02-672

(+48) 228 220 051 [email protected]

AECOM is a global provider of technical and management services to in transportation, facilities, environmental, energy and water. AECOM has 45,000 employees in 140 countries and 2013 revenue of $8.2 billion. The Poland office was awarded a Chevron contract in 2013. Follow AECOM on Twitter at @AECOM.

Apex Contracting Sp z o.o.

Seismic, compensation, permitting

Poland, Ukraine

Ul. Rondo 1,00-124 Warsaw

Eric (+48) 503 861 695 (US) Norbert (+48) 601 999 345 (PL) apexcontracting.pl

Apex Contracting provides a range of energy services, including seismic, construction and logistics for water, waste and related oilfield services. In Poland, Apex provided permitting and compensation for ION Geophysical on the Poland SPAN project. Apex was responsible for well pads, sound walls and roadway construction, working for clients such as Marathon Oil, Chevron and Halliburton. In Iraq, Apex is providing construction services in Kurdistan for HESS. Archer Well - Allis Chalmers

Integrated Oil-field Services

UK, Denmark, Norway- Global

Damsgårdsveien 135, 5160 Bergen, Norway

(+47) 55 51 15 00 archerwell.com

Archer is a global oilfield service company that specializes in production drilling, unconventionals, well intervention and well integrity. Archer employs 8,300 people. The name “Allis-Chalmers” is the name of the former company, the Allis-Chalmers Manufacturing Company. In February 2011, Allis-Chalmers Energy merged with Seawell to form specialist drilling and well service company Archer.Argo Geological Consultants

Seismic Ser-vices

Netherlands Bachlaan 46, 3706 BD Zeist, The Netherlands


Argo Geological Consultants offer geo-scientific services to the oil and gas industry. Formed in 1987, Argo consultants perform the following services: seismic interpretation, geological and geophysical mapping, stratigraphic prediction, reser-voir modeling, and E&P team support. Argo Consultants can be seconded to the client office.

Arnco Hardbanding Global Aberdeen, UK (+44) 774 028 0302 [email protected]

Arnco Technology Trust, Ltd. - Arnco - does hardbanding in a history that dates to 1946 when its founder Roman F. Ar-noldy developed and patented a hardfacing alloy. Arnco Technology has products to improve drill string performance and casing wear protection. Consider the product for extreme conditions in deeper, more critical, directional and horizontal extended reach wells.AVISHIP Logistics (mari-

time)France Bat D3, 135 Av Pierre

Semard, 84000 - AVI-GNON - France


AVISHIP is dedicated to maritime transportation of project cargo, breakbulk and heavylifts. AVISHIP has a 10 year history providing lifting and maritime transport, consulting expertise and services in maritime engineering and brokerage. The company works in the energy, oil and gas industries, in projects related to civil engineering, offshore drilling and marine infrastructure.Baker Corp Liquids and

sludge storageNorth America/Europe

North Lincolnshire, DN20 8UN, UK


“BakerCorp provides containment, pumping and filtration equipment and services. BakerCorp provides temporary steel storage tanks to the oilfield industry. The company has 100 locations in the U.S.A. and operators internationally in Europe, Canada and Mexico. Markets include chemical, manufacturing, refining, oil and gas, construction, municipal, industrial services, environmental remediation and wastewater. Baker Hughes All integrated

well servicesGlobal France Office and Ul.

Rondo ONZ 1, 00-124 Warszawa

(+44) 203 320 4900 [email protected]

Baker Hughes is an oilfield services company. Baker Hughes operates in 90 countries, providing drilling, formation evalu-ation, completion, production and reservoir consulting services. Baker Hughes has its headquarters in the America Tower in the American General Center in Houston. Baker Hughes Incorporated was formed when Baker International and Hughes Tool Company merged in 1987.


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Balance Point Control BV

Balanced pres-sure and wire-line services

UK, Germany, Netherlands

Karel Doormanstraat 4, 7825 VT Emmen, The Netherlands


Balance Point Control (BPC) provides hydraulic work over, snubbing, well control, engineering, wireline and rental ser-vices. Equipment includes Space Saver 385K, 340K Unit, 600K Unit, HWT 600K, Pulling Units, Casing Jack and Wireline Unit. Projects include water production shut off, straddle recovery, safeguarding a blown out well and securing a chemi-cally contaminated well.

Baltic Ceramics Proppant Poland ul. Reymonta 7, 68-300 Lubsko

(+48) 22 654 66 14 [email protected]

Baltic Ceramics retails proppants and other products used in the extraction of hydrocarbons from un-conventional oil and gas formations. Baltic Cerammics is the first proppant distributor on the Polish market, and aims to build a large production facility through both private and public funding sources.

BDP International Logistics Global ul.Osmanska 5 02-823, Warsaw, Poland

(+48) 22 544 1721 bdpinternational.com

BDP provides logistics services: air, ocean and ground - through the use of subsidiaries throughout Europe. In Poland they work with POL-MARE, ul. 17 Stycznia 32 lok. 2/8 02-148 Warszawa and C.E. TRANSPORT POLAND SP. Z O.O., ul. Osmanska 5, 02-823 in Warsaw. The company is privately owned and located in Philadelphia, Pennsylvania in the U.S.A.Bentec Rig and drill

manufacturer Europe, Middle East

Deilmannstraße 1, 48455 Bad Bentheim


Bentec is a manufacturer of drilling rigs and oilfield equipment worldwide based on 125 years of history. A vertical inte-grated systems provider, their drilling solutions include engineering, design and manufacturing customized drilling rigs, drilling components and electrical control systems. They can provide 24/7 field support and can repair or overhaul rigs globally. Bireta Translation Poland ul. Bronikowskiego 3/1,

02-981 Warszawa(+48) 22 648 55 77 [email protected]

Bireta provides technical translation services up to several thousand pages per month. A project management team guides translators and proofreaders in the construction, process control, electrical, mechanical, natural gas and information tech-nology sectors. Projects include FGD Plants, wind farms, power units, CFB boilers, Combined Cycle Power Plants, CCS plants, NOx denitrification plants, and the LNG Regasification Terminal.Brenntag Chemical distri-

butionGlobal Ul. Kwasowa 5,

95-100 Zgierz, Poland(+48) 61 89 36 510 brenntag.pl

Brenntag is a chemical distributor headquartered in Germany. Brenntag operates a global network in 70 countries em-ploying 13,000 and generating sales of €9.7 billion in 2012. Brenntag links chemical manufacturers to users with 10,000 products and claims to be market leader in Europe.C.A.T. Oilfield Equip-

ment, Tubing, Proppant

Europe Celle, Vorbruch 6, 29227


C.A.T. is a designer, manufacturer and marketer of oilfield equipment. A 20 year history, C.A.T.’s product lines include equipment for well stimulation, well workover and service, including drilling, coiled tubing, nitrogen pumping, cementing, acidizing and sand control equipment. Headquartered in Celle, Germany C.A.T. is vertically integrated: C.A.T. Construc-tion GmbH, TACROM Service S.R.L., and TACROM Drilling S.R.L. among its sister companies.

C.H. RobinsonLogistics, Supply Chain Management

Global Al. Jana Pawła II 29 Warsaw, Poland

(+48) 22 653 65 30 [email protected]

C.H. Robinson is one of the world’s largest third party logistics (3PL) providers offering multimodal transportation services and logistics solutions. In Poland, C.H. Robinson works with shale gas operators and service companies to manage air and ocean freight forwarding, customs brokerage, intra-continental distribution, documentation, and regulatory requirements.

Caterpillar Machine Con-struction

Global 100 North East Adams Street, Peoria, Illinois USA 61629

(+1) 309 675 1000 cat.com

Caterpillar provides equipment and services to the oil and gas industry including gas compression, land and offshore drill-ing, well servicing, work over rigs, mechanical drives for cranes, fire pumps, fracturing, pressure pumps, generator sets, power modules. Claims to be one of the market leaders in gas compression, drilling, and well servicing products.CB&I Technology,

procurement and construc-tion

Global Oostduinlaan 75 2596 JJ The Hague

(+31) 703 732 010 cbi.com

Chicago Bridge & Iron Company, commonly known as CB&I, is a large multinational conglomerate engineering, procure-ment and construction (EPC) company. CB&I specializes in projects for oil and gas companies. According to one of the founder’s heirs, “Chicago Bridge & Iron isn’t in Chicago, doesn’t build bridges and doesn’t use iron.” CB&I employs ap-proximately 50,000 persons.CDM Smith Consulting,

engineering, construction, permitting and operations

Global Ul. Stawki 40, 01-040 Warsaw, Poland


CDM Smith provides services in water, environment, transportation, energy and facilities. An engineering and construc-tion firm, CDM Smith is employee-owned with its headquarters in Cambridge, Massachusetts in the U.S.A. In Poland, the company provides environmental, construction and project management services to the oilfield and power sectors.

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Logo COMPANY SPECIALITY AREA ADDRESS CONTACT

Champion Tech-nologies

Chemicals Global 3200 Southwest Free-way, Suite 2700, Hous-ton, Texaspian B.V.

(+1) 713 627 3303 champ-tech.com

Champion Technologies is a specialty chemical company with 3,200 employees in 100 locations in more than 50 countries delivering to upstream and midstream oil and gas markets. Champion Technologies, from its roots in West Texas, provides services in offshore/deepwater, Arctic, heavy oil, oil sands, EOR, refinery, shale gas and oil, and industrial facilities.Cleantech Poland Commercial due

dilligenceEurope ul. Krucza 51/31, 00-

022, Warsaw(+48) 517 469 881 [email protected]

Cleantech Poland LLC is a consultancy for oil and gas who connects clients to help them grow their businesses. Cleantech Poland LLC publishes the Shale Gas Investment Guide, a magazine about unconventional onshore European oil and gas. Cleantech Poland LLC provides commercial due dilligence for investors entering the CEE oil and gas markets, and intro-duces prospective parties to equity investors. Continuous Control Solutions (CCS)

Control Systems & Engineers

Global 11275 Aurora Ave., Des Moines, IA


CCS provides the design, implementation and commissioning of control systems for industrial turbines, compressors and process applications. CCS turbo machinery systems control gas turbines, steam turbines, expanders, compressors, pumps and generators for use in speed control, load control, surge prevention control, among other processes.Core Laboratories Reservoir

description and management, production enhancement

Global Herengracht 424, 1017 BZ Amsterdam, The Netherlands

(+48) 5586 244 641 [email protected]

Core Laboratories provides reservoir description, production enhancement, and reservoir management services. Core Laboratories has 70 offices in 50 countries to increase total recovery from existing fields. Core Laboratories helps clients optimize their reservoir performance and maximize hydrocarbon recovery from their production fields.DBM Services Facilities, project

management, HSE, operations and logistics

Poland ul. Klimczaka 12B/2802-797 Warsaw, Poland


DBM Services, a private venture named after its two managing partners: Dorota Flint and Marek Cibor, as well as Bill Flint the President, provides facilities management services to Halliburton, and aims to expand across segments including HSE, contract management, procurement, project handover, closeout and testing/commissioning.dGB Earth Sciences Seismic Analysis India, Texas,

NetherlandsNijverheidstraat 11-2, 7511 JM Enschede, The Netherlands

(+31) 53 4315155 [email protected]

dGB Earth Sciences is a privately owned company that has been providing seismic interpretation solutions to the oil and gas industry since 1995. dGB operates under a unique freemium business model. They make money by giving their soft-ware away for free, and having clients pay for commercial plug-ins and customer support.Discovery Drilling Equipment

Drilling Rigs and Equipment

Global Hanover Square, 16 Ha-nover Square, London – W1S 1HT

(+44) 207 408 9494 [email protected]

Discover Drilling is a private equipment and drilling rig manufacturing company in the oil and gas industry. Headquar-tered in London, with offices and representations in most major oil regions of the world including US, Canada, Middle East, Northern Africa, Russia and South East Asia. Discovery is a new name in the industry, after the company was formed by private investors on the basis of some rig/component building assets purchased in late 2008.

DNV GLConsulting: Risk Management

Global Ul . Łużycka 6E 81-537 Gdynia, Poland

(+48) 58 511 50 00 dnvgl.com

Stiftelsen Det Norske Veritas (DNV GL) is a classification society organized as a foundation, with the objective of “safeguarding life, property, and the environment”. The organization’s history goes back to 1864, when the foundation was established in Norway to inspect and evaluate the technical condition of Norwegian merchant vessels.

DOW Chemicals including lubri-cants and gelling agents

Global Domaniewska 50A 02-672 Warsaw

(+48) 228 332 222 easterneruope.dow.com

The Dow Chemical Company, Dow, is an American multinational chemical corporation headquartered in Midland, Michigan in the USA. As of 2007, it is the second-largest chemical manufacturer in the world by revenue and as of Febru-ary 2009, the third-largest chemical company in the world by market capitalization with a presence in 160 countries.Dow Corning Global ul. Marynarska 15,

02-674, Warsaw(+48) 228 540 320 [email protected]

Dow Corning is an American multinational corporation headquartered in Midland, Michigan in the USA. Dow Corning specializes in silicone and silicon-based technology, offering more than 7,000 products and services. Dow Corning is an equally-owned joint venture of Dow Chemical and Corning to produce silicone sealants, adhesives and other products.

DOW Microbial Control

Plastics and chemicals Global Domaniewska 50A,

02-672 Warsaw (+48) 228 540 320

Dow Microbial Control is a provider of biocide and antimicrobial technologies that control & prevent growth of nuisance and dangerous micro-organisms. Products stress process preservation, formulation expertise, dry film fungicides, water treatment chemistry, sanitizing and disinfecting.


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Drill-Lab Sp. z o.o. (PGNiG)

Mudlogging equipment and services

CEE Ul. Krośnienska 7, 65-958 Zielona Góra


Drill-Lab has provided geological consulting and mudlogging services to customers since 1990. Custom developed soft-ware for mudlogging delivers real-time parameters during drilling, which are visually and numerically to operators so they know what they’re drilling into. Equipment is supplied by Petron Industries Inc. of Houston Texas.Drilltech Drilling equip-

ment rentalGlobal Greenwell Road, East

Tullos, Aberdeen, AB12 3AX

(+44) 122 424 9988 drill-tech.pl

Drilltech Group is a specialist drilling rental tool company whose focus is supporting complex drilling such as ERD, deep-water, horizontal and HP/HT. Drilltech supplies drill strings with high torque capabilities and Spiro-Torq, a casing wear protection and torque reduction device. Achilles certified and ISO standards on equipment.

DTZ Real estate services

Poland, Global

ul. Złota 59, 00-120 Warsaw


DTZ is a property services company, providing occupiers and investors with end-to-end property solutions, global and local market knowledge, forecasting and trend analysis. In the oil and gas markets, DTZ can help suppliers and logistics companies find commercial space for lease, as DTZ has experts who can help real estate assets throughout the CEE

Duon Energy Trading Poland ul. Serdezna 8, Wysogotowo k. Poznania, 62-081 Przeźmierowo

[email protected] (+48) 61 664 18 50

DUON Capital Group sells and distributes natural gas and trades in electricity. The origins of the Group activities date back to 2000. Currently DUON is one of the leading private providers of natural gas in Poland. Since 2011, it also has been building its position on the market of electricity trading.EkoTech Energy Waste manage-

ment, treate-ment, effluents

Global Aleje Jerozolimskie 96, 00-807, Warsaw


EkoTech Energy is a privately company partly owned by Climate Equity Solutions. CES is an investment vehicle estab-lished in 2006 for investing in start-up companies. EkoEnergy offers technologies, products, and services aimed at the cleantech, renewable energy and waste management sectors.Energy Specialists Platform (ESP)

General, Independent Consultants

Europe Klateringerweg 6, 9433 TB Zwiggelte, The Netherlands

(+31) 593 33 13 30 [email protected]

ESP is a team of twenty employees with a technical, economic and commercial background. All employees are experienced in the oil & gas industry or have been working in the gas sales market. Most have international experience, while some are technical specialists and/or function in management. ESP works both upstream and downstream oil and gas.Ensign Drilling,

well services, production and manufacturing

Global 400 - 5th Avenue SW Calgary, Canada

(+1) 403 262 1361

Ensign Energy Services Inc. is a land-based driller and well service provider for oil, natural gas and geothermal. Since Ensign’s launch in 1987, the Canada-based company has a drilling fleet characterized by proprietary technology such as Automated Drill Rig (ADR). With headquarters in Calgary, Alberta, Ensign’s shares are listed on TSE.EurMidstream Midstream

servicesEurope Chaussée de la Hulpe

120, 1000 Brussels (+32) 266 317 63 [email protected]

EurMidstream is in the midstream oil and gas business from early stage production to commercial production. Services are offered during the testing and commercialization phases: testing involves CNG trucking and gas powered electricity generation. Commercialization involves design, construction and operation of facilities e.g. pipelines and infrastructure

Exalo Drilling S.A. Integrated oil-field services

Africa, Eu-rope, India, Pakistan, Russia

Pl. Staszica 9, 64-920 Piła

(+48) 67 215 13 00 [email protected]

Exalo, a Polish state owned services company, was formed by the merger of five PGNiG Group companies, Exalo Drilling is the largest service company in terms of the size of its drilling and workover fleet in the Polish onshore drilling market. Exalo works predominantly in Central and Eastern Europe, but has a presence in Asia and Africa. Expro Well testing,

wireline inter-vention, produc-tion systems

Global Morton Peto Rd, Great Yarmouth, Norfolk, NR31 0LT UK

(+44) 1493 600021 exprogroup.com

Expro offers well flow management. They sell products and services that measure, improve, control and process oil and gas from wells. Expro’s areas of service include exploration and appraisal, subsea safety systems, drilling/completions, flow-back/clean-up, production, well integrity and intervention. 40 years, 5,000 employees, across 50 countries.Fairstar Heavy Transport

Transport (heavy)

Netherlands Floor 20, 3012 CN, Rotterdam, The Neth-erlands


Fairstar Heavy Transport is a full subsidiary of Dockwise Ltd., a provider of marine heavy transport solutions, specializing in high-value cargoes for the offshore and onshore energy and construction industries. Fairstar owns and operates four of the most modern semi-submersible heavy transport ships in the global fleet, FJORD, FJELL, FORTE and FINESSE.


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Fugro Consulting/Analysis

Global Veurse Achterweg 10, 2264 SG, Leidschen-dam, The Netherlands


Fugro provides geotechnical, survey, subsea and geoscience services. Fugro was founded in the Netherlands in 1962 and is listed on the Amsterdam stock exchange of NYSE Euronext since 1992. Fugro was included in the AEX-index as of September 2008. Fugro employes 14,000 staff in 60 countries.GE Oil & Gas Water treatment,

oilfield equip-ment

Global Ul. Emilii Plater 53, 00-113, Warsaw

(+48) 22 520 53 53 [email protected]

GE Oil & Gas provides equipment and services to the oil and gas industry. Products include drilling solutions: both on and offshore, subsea, enhanced oil recovery, unconventionals, LNG, power, refinery, gas storage and pipeline. 43,000 employees in 100 customers, GE is involved in the value chain from extraction to end-use.

GEO-Data GmbHWellsite servic-es, environmen-tal consulting

EuropeCarl-Zeiss-Str. 15, 30827 Garbsen, Ger-many


Services in mudlogging, wellsite geology, laboratory services, and core analytics partner with GeoKrak Sp z o.o. as part of an expanded suite of services (surface logging, wellsite geology, cutting & gas sampling, and isotope analyt-ics) for the Polish market. GEO-data documents and evaluates drilling data regarding geology, drilling and hydraulic peformance.

Geo-Microbial Technologies (GMT)

Geochemical Analysis

Global 56 BoulevardSaint Michel 75006 Paris, France


GMT reduces the risk of drilling dry holes by identifying positive hydrocarbon signatures at the surface. To do this they provide interpretation services. The two techniques they retail are microbial oil survey technique (MOST), where soil samples are tested for hydrocarbons and sorbed soil gas analysis (SSG) testing for the absorption of gas in soils.GeoDynamics Research

Seismic Services Italy Via Maioliche, 53, Leno Center, Rovereto, Trento, Italy

(+39) 0464 75 00 95 [email protected]

G.D.R. GeoDynamics Research performs low frequency passive seismic spectroscopy to detect and monitor hydrocarbon reservoirs in exploration areas and developed fields based on GeoSpectra IPDS®, which stands for infrasonic passive differ-ential spectroscopy. The evolution of passive seismic spectroscopy at low frequency started in 1995, and the GeoDynamics Research group was founded in 2003 in Italy.

Geofizyka Kraków (PGNiG)

Seismic services, well logging, data interpretation

Poland, Austria, Slovakia

Ul. Łukasiewicza 3 31-429 Kraków


Geofizyka Kraków is a geophysical company that performs and analyzes seismic surveys. Geofizyka Kraków is a geo-physical contractor, helping clients to explore hydrocarbon and geothermal. Services include seismic data acquisition, processing, interpretation, well logging and VSP services. State owned with a 50 year history.

Geofizyka Toruń (PGNiG)

Seismic services, well logging, data interpretation

Europe, In-dia, Egypt

Ul. Chrobrego 50 87-100 Toruń


Geofizyka Toruń provides geophysical services to the oil and gas exploration industry. The services are focused on conventional oil and gas, shale gas, geothermal deposits, and underground storage. State owned with a 50 year his-tory, having worked in Asia, the Middle East, North Africa, Europe, and Latin America.

Geokrak Sp z o.o. Geological services CEE Ul. Mazowiecka 21

30-019 Kraków (+48) 126 338 110 [email protected]

Since 1992, providing geological services associated with deep well exploration. It offers a combined suite of services (surface logging, wellsite geology, cutting & gas sampling, and isotope analytics) with their partner firm GeoData GmbH for the Polish market. Servicing the unshore unconventionals market as it develops in Poland.

GeoLog Surface Logging Global, Italy, Netherlands

2 Rubislaw Terrace Aberdeen AB10 1XE, Scotland

(+44) 782 156 9280 geologinternational.com

GEOLOG International B.V. (“GEOLOG”) is an oilfield services company that does surface logging. GEOLOG’s mud logging services are centered on the optimization of the overall drilling times and costs of each well and the acquisition of good data to improve formation evaluation. GEOLOG services national and international oil companies, both onshore and offshore, across more than 35 countries.


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Geomage Seismic Process-ing

USA, Eu-rope, Russia

11011 Richmond Ave. Suite 225, Houston, Texas 77042

(+1) 832 7675918 geomage.com

Geomage is a global company that provides seismic imaging technologies and services. Using an approach involving multi-focusing, geological modeling, and reservoir characterization for a diverse range of oil and gas companies. Multifocusing may be the only method able to obtain sufficient data for geological interpretation in areas characterized by complex geol-ogy, high noise or low-fold seismic data.Geotrace Data In-tegration Services

Technology- Data Integration

Global 12141 Wickchester Lane, Suite 200, Hous-ton, Texas 77079 USA

(+1) 281 497 8440 geotrace.com

Geotrace data integration services involves a proprietary software called Tigress. The software helps tie disparate data together and enables the data to be shared among geologists and geophysicists, petrophysicists and engineers, at every stage of the E&P workflow. Geotrace Data Integration Services is the software services and data management division of Geotrace.GL Noble Denton Technical Ser-

vice ProviderGlobal Brooktorkai 18, 20457

Hamburg, Germany(+49) 403 614 90 [email protected]

GL Noble Denton is a technical service provider for the oil and gas industry. GL Noble Denton designs, builds, installs and operates oil and gas onshore, maritime and offshore assets to ensure safety, sustainability and superior value. GL Noble Denton are independent advisors providing consulting, design, assurance and project execution services.Global Geophysical Seismic services Global Ul. Warowna 3/01,

02-654, Warsaw(+48) 224 930 135 [email protected]

Global Geophysical provides seismic data processing, analysis, interpretation, and data integration. Global uses propri-etary and patented technologies that are ideal for processing and analyzing the full offset, rich azimuth, reservoir grade 3D datasets that our crews collect. Global Geophysical can characterize azimuthal anisotropy along with advanced time and depth imaging to extract rock properties and reservoir characteristics.Golder Associates Consulting,

design and construction

Global Al. Solidarności 117/700, 00-140 Warsaw


Golder Associates is an employee-owned company that provides consulting, design, and construction services in earth, en-vironment, and energy. 8,000 employees operate from more 180 offices in Africa, Asia, Australasia, Europe, North America and South America. Golder serves the manufacturing, mining, oil and gas, power, urban development and infrastructure sectors. The company was founded in Toronto, Canada in 1960.GSE Environmen-tal

Lining Global Orchideengarten 30 09125 Chemnitz


GSE retails environmental products such as geotextiles and membranes. Headquartered in Houston, GSE has manufactur-ing facilities in Texas, South Dakota and South Carolina. GSE laboratories are accredited by the Geosynthetic Accredita-tion Institute, and the company has manufacturing facilities in Chile, Germany, Thailand and Egypt. A history of 40 years and a global sales network.Halliburton Integrated oil-

field servicesGlobal 53 Ul. Emilii Plater 53,

WFC 26th Floor, 00-113, Warsaw


Halliburton is one of the world’s largest oilfield services companies with operations in 80 countries. It owns hundreds of subsidiaries, affiliates, branches, brands, and divisions and employs over 100,000 people. Halliburton provides a range of integrated oilfield services such as pressure pumping, wireline, coiltubing and wastewater. Some technologies are propri-etary, such as clean stream that uses UV light to treat wastewater.Hardbanding Solu-tions

Hardbanding, hard facing tool joints

Global Hardbanding Solutions Europe, Scotland


Postle Industries designs alloys for mining, farming, agriculture, recycling and manufacturing. Hardbanding Solutions, a trade name, moved the company into drill pipe, drill collars and casing/risers. Tuffband and Duraband are two of their proprietary products, and tool joint build-up wires and a non-magnetic hardbanding are two of their strategies for tough-ening up oil pipe in extreme conditions.

HAYS Human Resources Global ul. Złota 59,

00-120 Warsaw(+48) 22 584 5650 [email protected]

HAYS has operated in Poland since 2002 and provide professional services in recruitment for the executive busi-ness and industrial companies. HAYS has offices in Warsaw, Tricity (Gdynia), Katowice, Wrocław, Kraków, Lodz and Poznan. Hays Poland can find employees in Accountancy, Finance, Business Services, Construction, Property, Energy among others.

IHS Consultant Services

Global Jaśkowa Dolina 15, Gdansk, Poland

(+1) 888 906-8566 ihs.com

IHS is a global information company with expertise in energy, economics, geopolitical risk, sustainability and supply chain management. IHS employs more than 8,000 people in 31 countries. In oil and gas, IHS has grown over the last 50 years through a series of acquisitions, including companies such as Reservoir Visualization and Geological Consulting.IP Group Seismic permit-

ing, compensa-tion, human resources

Poland Ul. Elektryczna 2 00-346 Warsaw


IP Group entered the market in 2012 to provide human resources, permitting and compensation services on a govern-ment funded seismic contract. The company, under the leadership of Peter Turo, has expanded into human reources to the financial and insurance markets, alongside the energy markets.


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INiG (PGNiG) State spon-sored research institute

Poland ul. Lubicz 25A, 31-503 Kraków

(+48) 12 421 00 33 [email protected]

Oil and Gas Institute is one of the oldest research institutes in Poland. Its 60 year history dates from November 29, 1944, when the State Petroleum Office issued a document authorizing the establishment of the Oil Institute in Krosno. In 2008, the minister of economy incorporated the oil and gas research institute.Inwatec Environmental

Consultancy Poland, Germany

ul. Pastewna 25, 02-954 Warsaw, Poland

(+48) 22 642 95 66 [email protected]

INWATEC Sp. z o.o. was founded in 2003 from the merger of several companies in the field of environmental protection. The company’s activity is directed to small and medium-sized enterprises, and relates to the purification of waste water from a variety of industries, including: food industry.ION Geophysi-

cal Services, Seismic

Europe, North/South America

2105 CityWest Blvd., Suite 400 Houston, TX 77042-2839


ION Geophysical is a seismic services company that provides acquisition equipment, software, planning and seismic processing, and seismic data libraries to the oil & gas industry. The company’s technologies and services are used by E&P operators and seismic acquisition contractors to generate high-resolution images of the subsurface during exploration, exploitation and production operations.ITS (Parker Drill-ing)

oilfield equip-ment and services

Global Takelaarsweg 13, 1786 PR Den Helder,


“Parker Drilling (NYSE:PKD) provides advanced drilling solutions to the energy industry: drilling services, rental tools and project management, including rig design, construction and operations management. Parker’s international fleet includes 25 land rigs and two barge rigs in strategic markets, and its U.S. fleet includes 13 barge rigs in the U.S. Gulf of Mexico. JSH Drilling Tool Co., Ltd.

Drill Pipes, Drill Collars

North America, Europe, Asia, Middle East

No.18 Shuguang In-dustrial Park, Jiangyan City, Jiangsu Province,P. R. China

(+86) 523 868 2188 [email protected]

Jiangsu Shuguang Huayang Drilling Tool Co., Ltd. (JSH) is a joint venture which was set up by Jiangsu Shuguang Group Co., Ltd., Blue Diamond Pipe And Equipment SA (USA) and Wickander & Associates, Inc. (USA) and the holding company is Shuguang Group. The annual production capacity is 100,000 joints of drill pipe, drill collars, heavy weight drill pipes, non-magnetic drill collars, kellys, pup joints and others. The registered address is No. 18 Zhanghang Road, Baimi Town, Jiangyan City, Jiangsu Province.

KCA DEUTAG Drilling, General Global

Minto Drive, Altens Industrial Estate, Aberdeen AB12 3LW, Scotland

(+44) 122 429 9600 [email protected]

KCA DEUTAG is an international oil and gas services company with headquarters in Aberdeen, United Kingdom. It has approximately 8,000 employees and operates in more than 20 countries. KCA DEUTAG is the merger of KCA Drilling and Deutag AG in 2001. The company has regional offices in Germany, Russia, the Middle East, the Caspian region, North and West Africa, Asia, Norway and across its wider operations. KCA Deutag has 61 land rigs and 39 offshore.

KeruiOilfield equipment and services

GlobalDomaniewska 44, 02-672 Warsaw, Poland

www.keruigroup.com

Kerui Group is a Chinese company based in the region of second largest Chinese oilfield. It is a fast-developed and comprehensive international enterprise group, which combines research and design of hi-tech petroleum equipment, technical service for oilfield integrated engineering supply of oilfield comprehensive solutions and EPC turnkey projects. Kerui Group has recently joined the Poland Shale Coalition.

Kidova Geological Modeling

North America, Europe, Australia

155 avenue Roger Salengro, F-92370 Chaville, France

(+33)1 47 09 09 49 [email protected]

Since 1993, KIDOVA specializes in oil & gas, environment (soil, groundwater, air), geothermal and nuclear or hazardous waste disposal sectors: geostatistics, spatial and spatiotemporal data analysis and modeling, characterization and upscal-ing of porous and naturally fractured rock properties, simulation of single and multiphase flows in porous and fractured media, mesh or grid generation and optimization. KIDOVA’s services cover structural and geological modeling, research and development, consulting and expert studies. Linde Gaz Polska Gas, egineering,

supply chainPoland Al. Jana Pawła II 41a,

31-864 Kraków, Poland(+48) 12 643 92 00 www.linde.pl

Linde Gaz Polska is the local daughter of an international company specialized in the production and distribution of gas, including the delivery of integrated gas solutions, and the construction of industrial facilities. Employing some 62,000 people in around 100 countries, The Linde Group has a 100 year history and has been in Poland since 1993.

Maxi Cargo Logistics Poland Os. E. Raczyńskiego 31/13, 62-020 Swarzędz

(+48) 61 610 10 26 [email protected]

Maxi-Cargo company operates in the field of oversize load specialist transport, including flatbed transport. Covering the EU, Maxi-Cargo’s services include oversize load transport, non-standard transport, flatbed transport, large-size transport, transport of machines, transport of construction machinery, and transport of agricultural machines.

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Meehan Drilling Drilling UK 40 Kilmorey Street, Newry Co. Down, BT34 2DE, UK

(+353) 28 3025 2678 [email protected]

Meehan Drilling specializes in drilling and ground engineering services to clients in the public, commercial, domestic and agricultural sectors. Established in 1972, the company offers a wide range of high quality water development, oil & gas drilling, trenchless installations and renewable energy services..MI-SWACO (Sch-lumberger)

Drilling Fluids, Completions, Waste Manage-ment

Global P.O. Box 42842 Hous-ton, TX 77242


M-I SWACO offers systems and technologies for drilling, including drilling fluid systems engineered to improve drilling performance by anticipating fluids-related problems, fluid systems and specialty tools designed to optimize wellbore pro-ductivity, production technology solutions to maximize production rates, and environmental solutions that manage waste volumes generated in both drilling and production operations.

MND Drilling & Services Drilling Global

Velkomoravská 900/405, 696 18 Lužice, Czech Republic

(+420) 518 315 555 info-ds.mnd.cz

MND Drilling & Services is the largest drilling contractor in the Czech Republic, including oil, gas and geothermal exploration/production drilling and well workovers to the drilling and completion of underground gas storage wells. Since 1999, a member of the International Association of Drilling Contractors (IADC).

Multi-chem (Hal-liburton)

Chemicals, biocides, inhibi-tors, defoamers, breakers

Poland 2905 Southwest Bou-levard San Angelo, TX 76904


Oilfield chemcial provider, owned by Halliburton, with a number of commercial, proprietary products, such as Acro-Clear, an acrolein based H2S scavenger and iron sulfide dissolver to remove iron sulfide in production and injection wells. Chemicals help with pipeline integrity by repairing near wellbore damage caused by iron sulfide deposits and previous acid-jobs and can be effective in removing iron sulfide based deposits on pipe or tubular surfaces.NADRA Group Geological

ServicesEastern Europe

41-49 Agiou Nikolaou, Nimeli Court, Block C, 3rd floor 2408, Nicosia, Cyprus

[email protected]

NADRA GROUP provides a range of exploration works from regional geological evaluation to the field exploration and development, support of oil and gas, metallic and non-metallic minerals and ground water production throughout the life cycle of the field. NADRA GROUP works with production companies and governments of EU, Asia and Africa.National Oilwell Varco

Oilfield services United States

Domaniewska 5, 05-800, Warsaw

(+48) 40 729 639 686 nov.com

National Oilwell Varco (NOV) is an American multinational corporation based in Houston, Texas. NOV is a worldwide provider of equipment and components used in oil and gas drilling and production, oilfield services, and supply chain integration services. NOV conducts operations in over 1,160 locations across six continents.Navigant Business Advi-

soryGlobal 5th Floor, Woolgate

Exchange, 25 Basinghall Street, London, UK

(+44) 20 7469 1111 [email protected]

Navigant (NYSE: NCI) is a global expert services firm. Through senior level engagement with clients, Navigant profession-als combine technical expertise in disputes and investigations, economics, financial advisory and management consulting, with business pragmatism in construction, energy, financial services and healthcare industries. Neste Jacobs Petro Chemicals Europe,

North America,

Neste Jacobs Oy (+358) 10 4581200 [email protected]

Neste Jacobs is a technology, engineering and services company for oil and gas, petrochemicals, chemicals and biotech-nology. Nestle Jacobs has 50 years experience in technology development and industrial investment projects as well as maintenance and performance improvement in Europe, North and South America, Asia and the Middle East with 1000 employees

NTS Construction Well pad construction Poland Rynek 26,

37-500 Jarosław(+48) 16 623 22 51 [email protected]

NTS offers construction services to the oilfield. With a work history in highway construction and spe-cializing in stabilization technologies, earthwork, roadwork, preparatory and finishing work. NTS staff has twenty years experience in implementing civil engineering construction projects.

NUTECHPetrophysical, geological, field study, and well services

Global7702 FM 1960 East, Suite 300, Houston, TX 77346


NUTECH, visionary reservoir intellience, is a privately-owned global oilfield services company founded in 1998 by oilfield professionals who pioneered Nuclear Magnetic Resonance research and development. Headquartered in Houston, Texas with over 80 employees, NUTECH has offices in the US and internationally. NUTECH has analyzed 45,000 wells in over 80 countries.


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Pace Global Energy Services

Consultant Ser-vices, General, Management

Global 4401 Fair Lakes Court Fairfax, VA 22033 USA

(+1) 703 818 9100, [email protected]

Pace Global is an energy consulting and management company. Consultants due commercial, technical, financial, and regulatory due dilligence to help maximize value and manage risk. For more than 35 years and in over 60 countries. Active in managing energy assets, energy companies, funds and financial institutions, industrial and commercial facilities.Packers Plus Open hole,

multi-stage completions equipment

Canada, US, Middle East, Russia

Bow Valley Sq. 2, Suite 2200, 205 - 5th Ave. SW, Calgary

(+44) 791 715 4740 [email protected]

Packers Plus Energy Services Inc. is a privately held, Calgary-based oilfield service company that provides completion equipment and services. The company specializes in multi-stage fracturing systems for open hole, horizontal wells. Multi-stage fracturing systems are used for hydraulic fracturing, or breaking up tight rock formations to enable release of oil and gas allowing for segmentation of horizontal wells into sections or stages such that they can be fractured.Pangea “Geophysical

and geological data processing

Europe, Russia, Africa

Aleksandr Solzhenitsyn Street, 27 Moscow, Russia

(+7) 495 912 6503, [email protected]

PANGEA is a leading Russian consultant in the upstream oil & gas industry and a developer of high-technology software systems for geophysical and geological data processing, interpretation and modeling. PANGEA does geophysical surveys, including seismic, gravimag, electromagnetic data acquisition added by geochemical exploration services. Clients include ONGC (India), OMV (Austria), REPSOL (Spain), JOGMEC (Japan), Naftogaz India, GAIL (India).PBG Geophysical Exploration,

Geophysical Services

Poland 76 Jagiellonska 03-301 Warsaw


PBG LTD. offers services for exploration, engineering & environmental purposes. A Poland based company with 60 years of experience, PBG has completed work in Africa and Asia, executing contracts for oil and gas prodders, government and research agencies and private companies. Services include exploration geophysics, structural and deposit geology, although they do not do seismic exploration.PanTerra Geocon-sultants

Seismic Analysis Global Weversbaan 1-3, 2352 BZ Leiderdorp, The Netherlands


Established in 1988, PanTerra Geoconsultants is a geoscience consultancy group providing services to the upstream oil & gas industry. PanTerra Geoconsultants BV has three operating divisions: integrated subsurface evaluations, labora-tory services, including conventional and special core analysis services, production chemistry, PVT, and geoscience staff secondment.PerekopBromine Chemicals CIS, CEE Laboratornaya Str.

45, Dnepropetrovsk, Ukraine

(+38) 056 787 37 00

Publicly listed BROM (Ukraine) is the only enterprise in Ukraine and the largest enterprise in CIS and Eastern Europe specializing in the production of bromine and bromides. In 2004 the company became part of Olvia, an industrial corpora-tion, and from that time began an active revival of the company and developing new product markets, especially overseas. PJSC Brom is a major industrial facility in Ukraine.Perforator GmbH Completions,

Pressure Pump-ing

Global Bei dem Gerichte, D-37445 Walkenried, Germany


PERFORATOR is a German manufacturer with 30 years experience. Since 2002, its the core business of the former Schmidt, Kranz mining technique as an independent company. They supply drilling products to international customers. PERFORATOR focuses on thrust boring, trench less pipe, drill pies, tools, DTH, HDD Drilling, injections systems, mining and tunelling.Petrofac Oilfield Services Global 4th Floor, 117 Jermyn

Street, London SW1Y 6HH, UK


Petrofac is an oilfield service company with 30 years experience. They work across the entire spectrum of the oil and gas asset life cycle, on either a stand-alone or integrated basis, under flexible commercial models which are tailored to a customer’s needs. Our teams: design and build oil and gas infrastructure, operate, maintain and manage assets and train personnel.

PFC Energy Consulting Services

Global 19 rue du Général Foy, 75008 Paris, France

(+33) 147 702 900 pfcenergy.com

PFC Energy is a global consulting firm specializing in the oil and gas industry. Our clients are oil and gas operators, na-tional oil companies, service companies, investors, governments and other stakeholders. Energy specialists focused on the sector, with proprietary knowledge databases. Recently the company was acquired by IHS.

PPEKO Waste Water Treatment

Poland Ul. Agatowa 12 03-680 Warsaw

(+48) 226 770 456

PP-EKO is an environmental engineering company based in Poland. Services include designing, consulting, technology and project management, in the field of industrial and municipal wastewater treatment, sludge processing and biodegrad-able wastes reduction. At work over the last few years customizing solutions for the oil and gas industry.


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Prochem S.A. Environmen-tal Protection Installations

Poland Ul. Powazkowska 44c 01-77 Warsaw

(+48) 223 260 100

PROCHEM is an engineering company, serving clients in the industrial, building construction and environmental protec-tion sectors that was established in 1947. Specialized in general construction, services include technology, architecture, construction and building, road work, mechanical and electrical systems, telecommunications, and various types of large installations.Pruitt Tool & Supply

Rotating control devices

Global 9700 Aire Circle, P.O. Box 181359, Fort Smith, AR 72918, USA

(+1) 479 646 1641 pruittool.com

Incorporated in 1960, Pruitt Tool and Supply was an early rental tool and fishing tool company in the Arkoma Basin. Buddy Pruitt, along with his son-in-law Bob, saw the potential revenue in rotating heads, so they began to take their first steps into the rotating head business. In 1967, their initial invention would become a reality; the “Williams” rotating head was born.

PwCConsulting, Business Advi-sory, Auditing, Tax, Legal

Global Al. Armii Ludowej 14 00-638 Warsaw


Provides oil and gas companies advisory, tax & legal, and auditing services. PwC, a global services company, has been in Poland for 20 years and there are 46 local partners. Having analyzed the proposed mining and geological law, PwC provides up to date information about the regulatory and tax environment for shale operators.

Rodelta Pumps International

Pumps Global Enschedesestraat 234, 7552 CM Hengelo, The Netherlands

Rodelta Pumps International BV is a manufacturer of pumps, located in Hengelo in the Netherlands. With 60 years developing pumps, product example includes vertically-suspended, single casing volute line-shaft driven pumps whose applications include drinking water, marine, cooling water, fire fighting and whose performance flows up to 1200 m3/h, with heads up to 120 m.l.c.Schlumberger All integrated

well servicesGlobal Al Jana Pawła II 25

00-854 Warsaw(+44) 203 320 4900 [email protected]

Schlumberger, an international oilfield service provider, was founded in 1926 by Conrad and Marcel Schlumberger. Today Schlumberger supplies the petroleum industry with services such as seismic acquisition and processing, formation evalu-ation, well testing and directional drilling, well cementing and stimulation, artificial lift, well completions, flow assurance and consulting, and software and information management.SERAFIM Ltd Consultant Ser-

vices, Reservior Modeling

Europe Belfast office 231 Ban-gor Road, Holywood, Belfast, BT18 0JQ, UK

(+44) 28 9042 1106 [email protected]

Serafim does systems, reservoir analysis and financial mathematics. FUTURE, for instance, is a production forecasting and reserves management application and database to generate P10, P50 and P90 scenarios as input to a reserve and resource data base in an efficient and auditable way. Serafim PERIMETER is a range of services offered to asset managers, senior reservoir engineers and technical directors.SGS Consulting

ServicesGlobal 38, Calea Serban Voda,

Bucharest 40212, Romania

(+40) 21 335 46 83

SGS is an inspection, verification, testing and certification company with 75,000 employees. SGS operates a network of more than 1,500 offices and laboratories around the world and offers services in four categories: inspection, testing, certification, and verification. With broad experience from health care to energy, they refer to themselves as the global benchmark.SIMCO Interna-tional Ltd.

Technology CEE Bucuresti-Domnesti 49-50 Street, Clinceni, Bucharest


Simco International Ltd. is a software company for the oil and gas industry. They program in C++, Microsoft Visual, Borland C++ and Visual Basic, also in Delphi and Java, Oracle and MySQL. Their focus is information technology for pe-troleum engineering. The company’s strategy is to develop expertise in computer applications, designing original software.

Sirius e.s. Drilling Fluids, Completion fluids, Waste Management Systems

CEE Bahnhofplatz 3, A-4600 Wels, Austria

(+43) (0) 7242/9396 5660

Sirius e.s. is an Austrian company with German department providing drilling and completion fluids, chemicals, solids control and mud treatment equipment, waste disposal managements as well as associated engineering and measurement services for clients across Europe.

Spirit Innovative Technologies

Technology Netherlands Prof. dr. Dorgelolaan 20, 5613 AM Eind-hoven, The Netherlands

(+31) 40 23 69 445 [email protected]

Spirit automates products and technical processes. Among their products, they focus on liquid and gas flow, supervisory (HMI/SCADA) software, virtual flow computer solution. Proprietary products include Spirit IT, Flow-X®, eXLerate®, SmartCen™, Flow-Xpert™ and more. Spirit IT is a technology partner to PETRONAS.


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Sumitomo Europe Tubular Steel Europe Vintners’ Place, 68 Upper Thames Street, London, EC4V 3BJ

(+44) 2072463600 sumitomocorpeurope.com

Sumitomo is a trading company with headquarters in Japan. In Europe, Sumitomo has been present since 1955. Sumi-tomo provides casing and tubing (from carbon grade to Corrosion Resistant Alloy) with both API and premium VAM connections. Seamless, ERW and UOE welded line pipe and hot bends. Speciality tube, including a wide range of stainless and alloy grades. As well as titanium sheet and coils.

SSWLegal advice to oil & gas and mining entities

GlobalRondo ONZ 1, 00-124 Warsaw, Poland

(+48) 22 544 87 00 www.ssw.pl

SSW Law Firm is providing legal advice to oil & gas and mining entities. SSW experts represent entrepreneurs in concession proceedings, environmental proceedings, investment proceedings, JV and M&A transactions. They have advised industry leaders during competitive concession proceedings before the Polish authorities, in relation to most natural resources available in Poland. SSW advises trade associations and industry members on the legislative process regarding amendment of the Geological and Mining Act and the Hydrocarbons Act.

Tata Steel Group Steel Supply Global 30 Millbank, London, SW1P 4WY, UK

(+44) 207 717 4444 tatasteel.com

The Tata Group has business operations (114 companies and subsidiaries) in seven defined sectors – materials, engineer-ing, information technology and communications, energy, services, consumer products and chemicals. Tata Steel with its acquisition of Corus is in the top ten steel manufacturers. Other companies include Tata Motors, Tata Consultancy Services (TCS), Tata Communications, Tata Power, Indian Hotels, Tata Global Beverages and Tata Chemicals.Tebodin Consultancy &

Project Manage-ment

Global ul. Taśmowa 7, 02-677, Warsaw, Poland

(+48) 22 334 41 11 [email protected]

Tebodin has been on the Polish market for 20 years. Services include integrated design and complex management for in-dustrial, commercial and infrastructural investments. Post a yearly turnover of some €25 million with 5 branch offices and 300 specialists and a total annual investment value of €500 million. Focus areas include commercial buildings, industrial projects and infrastructure works.TECH-POMP Electric, pneu-

matic, engine driven pumps

Poland Al. Sztandarów n1/3, 04-423, Warsaw

(+48) 22 612 98 25 [email protected]

Tech-Pomp has been in operation in Poland since 1979. Tech-Pomp specialize in high volume water transfer services including mobile piping systems to support hydraulic fracturing. An authorized distributor of pumps and equipment, customized services include rental or purchase, and pumps can be made to order or purchased from stock. Tech-Pomp provides pumps for agricultural, industrial, energy or municipal water services.

TenarisLine pipe, coiled tubing, casing, connec-tions

Global2200 W. Loop S., Suite 800, Houston, TX 77027, USA

(+1) 713 767 4400 tenaris.com

Tenaris provides a full range of quality casing and tubing, drill pipe, premium connections, pipe accessories, sucker rods, and coiled tubing for use in all types of oil and gas drilling and well completion activities. Exceptional services based on expertise of material selection and pipe handling. From a manufacturing center in Romania, Tenaris can serve the Baltic, Lublin and Podlasie basins in Poland. Also a plant in Italy.

TPS - Technitube Röhrenwerke

Seamless pipes, welded pipes, bending

Germany Julius-Saxler-Str. 7, 54550 Daun, Germany


TPS - Technitube Röhrenwerke is a privately owned company with production and stock facilities for tubes and pipes, oil and gas field tubular products, extended surface tubes and special piping and tubing products and accessories with 35 years experience in the supply of tubular piping products and accessories. Company headquarters is based in Germany.Trinity Corporate Services

Corporate services, HR

Poland, Czech Republic, Romania, Bulgaria

Al. Jerozolimskie 56C, 00-803, Warsaw


Trinity was founded in 2004 by three professionals with broad commercial experience gained in Poland and the Central and Eastern Europe. Trinity has grown to have EUR 14 billion of client assets under our administration. Worked for a number of the foreign E&P companies in Poland and elsewhere doing commercial, tax, advisory, hiring and back office functions.United Oilfield Services

Drilling, completions, pressure pump-ing

Poland Al. Jerozolemskie 123a, 02-017, Warsaw


United Oilfield Services is an oilfield service company providing hydraulic fracturing, modern drilling, and seismic data acquisition services to the European oil and gas industry. Headquartered in Poland, UOS delivers equipment, technical expertise, and local on-site crews to provide customized solutions for customers. UOS is an equity backed startup who launched in 2011 to offer oilfield services.

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URS Siting, permit-ting, geotechni-cal, construction management

Europe Ul. Rejtana 17, 02-516, Warsaw


URS is an engineering and environmental consulting company throughout the UK and Ireland, Continental Europe, India, the Middle East, the Americas and Asia/Pacific regions. URS does full lifecycle services for clients across a broad range of industry sectors. In oil and gas they are present in upstream, midstream, downstream and petrochemical segments.

US Steel Tubular Products

Steel pipe supply

United States, Europe

Vstupny areal, 044 54, Kosice, Slovak Republic

(+421) 55 673 9536 [email protected]

Tubular products for all sectors of oil and gas industry. Extensive experiences in the North American shale markets allows US Stell to provide an unparalleled level of service. US Steel manages their supply chain from a factory and back-office in Slovakia. One of North America’s largest integrated steelmakers and the continent’s largest producer of energy tubular products.

Vallourec Pipe and tubing France Ave. du Général Leclerc 27, 92100 France

(+33) 1 49 09 35 00 [email protected]

Vallourec is a manufacturer and retailer of tubular solutions serving the energy markets (oil and gas, power generation). With 22,200 employees and sales of 5.3 billion euros in 2012 – including 78% from outside Europe – Vallourec has inte-grated manufacturing facilities integrated in more than 20 countries. Vallourec has five research and development facilities worldwide.Veolia Water Systems

Water treatment Poland Ul. Balicka 48, 30-149 Kraków

(+48) 12 423 38 66 [email protected]

Veolia Water does water treatment for public authorities, including withdrawal, producing and piping drinking water. Veo-lia collects, conveys and treats wastewater, in order to recycle it (irrigation, watering, groundwater recharge, etc.) or release the treated water into the environment. Veolia Water conserves water resources upstream and protects release environ-ments and ecosystems downstream.

Weatherford All integrated well services

Global Ul. Krolewska 16, 00-103, Warsaw


Weatherford is an international oil and natural gas service company providing products and services for drilling, evalua-tion, completion, production and intervention of oil and natural gas wells, along with pipeline construction and commis-sioning. Headquartered in Switzerland, Weatherford currently operates in more than 100 countries and employs 60,000 people.Weir Oil & Gas Division

Pumping, prop-pant, water and flowlines

Global Aleja 3 Maja 9, 30-062 Krakow


Weir Oil & Gas delivers services for customers from capital projects to long term asset management contracts for continu-ing operations both onshore and offshore. Services range from exploration and production through transportation, refin-ing and storage. Weir has a portfolio of high performance pumps and safety critical equipment.Wellynx Engineering and

Consultancy services

Europe Viale G. D’Annunzio, 267 65127 Pescara, Italy

[email protected]

Wellynx is an independent Italian company providing engineering and consultancy services to O&G Companies. Founded in 2011, Wellynx is composed by professionals with sound oilfield experience in various fields such as design and engi-neering, operations and maintenance, quality, health, safety & environment.Workstrings Drilling, Pipe

and procure-ment

Global 1150 Smede Hwy, Broussard, LA 70518, USA


“Workstrings International is the global leading oilfield equipment rental company providing quality primary drill strings, tubing, landing strings, completion tubulars (CTM, GTM, TTM & Turbotorque™) and handling accessories using in-house engineering and cutting edge technologies. Workstrings International was created following the merger of two companies, Premier Oilfield Rentals and Workstrings LLC.

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Gas Shows

FIRST WELLS ARE WINNERS

GUIDE/POLANDSHALE GAS

investment

WHO’S WHO IN CONCESSIONS

PIPELINE NETWORK | HYDRAULIC FRACTURING | GEOLOGY OF THE BALTIC BASIN | NATURA 2000

Pioneers of the

OLD WORLD

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IN SERVICES

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UID

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SUMMER 2011

USA $18 - $18CAD - POLAND 50 PLN + VAT - EU €12 - UK £11

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WHO'S WHO

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BMPs

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Get in the Fall 2014 directoryContact us to get exposure involving

- Sponsored, expanded directory listings- Sponsorship of quarterly business mixer- Exposure in Ukraine, Lithuania, UK, Germany

Parker Snyder tel. (+48) 517 469 881 [email protected]

Guide


VISIT TO THE SEJMThe PSC, which aims to foster a positive, investor friendly climate for the production of shale gas, and is open for anyone to join, even non-governmental organizations, was invited to the Polish parliament to meet with lawmakers.

p h o t o g r a p h y B y K M r a t s c h K a

Roman Rewald, of Weil Law Firm, chief counsel for the Poland Shale Coalition

106 | Shale Ga S Inve S tm ent GuIde | sUMMEr 2014

Poland Shale Coalition (PSC), an industry orga-nization, met with members of the Polish parliament on Thursday, March 20, 2014 to discuss the future of Poland’s unconventional gas resources.

Mr. Mariusz Orion Jędrysek, a parliamentarian and former chief geologist, initiated the meeting, which took place in the Sejm, along with other members of the parliament.

Operators, suppliers and service companies were among the 18 executives from companies associ-ated with unconventional oil and gas.

According to Parker Snyder, president of the board of the PSC, “The invitation came from mem-bers of parliament. They expressed a desire to have an open dialogue and to meet members of industry.”

The discussion focused on the benefits of shale gas and the challenges industry faces.

Members of the Poland Shale Coalition meet with members of the Polish parliament in the Sejm in March of 2014

Roman Rewald, of Weil Law Firm, chief counsel for the Poland Shale Coalition

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Victor Boraks of Encana talks to Marek Madeja of Cuadrilla Jan Rzymełka, minister of parliament in the Citizens’ Platform (PO) party

Marek Madeja of Cuadrilla making a comment Parker Snyder, president of PSC, presents to parliament about the organization’s achievements

Mariusz-Orion Jędrysek, a memeber of parliament in Law and Justice (PiS), next to Henryk Kmiecik a minister of parliament in the Your Movement (TR) party

Driss Boutriha of Weatherford speaks at the meeting

PSC ExHIbITSaT TErraPInn


The Cleantech Pavilion is a 10 meter by 10 exhibition space where clients can network and showcase. The Pavilion is de-signed for networking so it has has no dividing walls. Clients are invited to the center of the pavilion for a drink. Exhibitors receive the benefit of attending the finest shale gas conference in Europe - and have a place to call home.

Baker Corp provided a liquids storage tank at Shale Gas World Europe

The PSC exhibited for the first time at a major industry event. Chosing to exhibit at the Cleantech Pavilion was a cost-effective way of introducing the industry organization to oil and gas investors.


Cleantech Pavilion

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Cleantech hostess greets a client at the pavilion

Janusz Kertyński head of chemi-cal supply for Linde Group

XxxxClients stop by the pavilion to read the Shale Gas Investment Guide


DIrECTOr, MInISTEr, anD ParlIaMEnTarIan


The first monthly meeting of 2014 was attended by minister of environment Michal Grabowski; the second by Mariusz-Orion Jędrysek, a member of parliament. Both meetings involved a frank and honest discussion, with the following representatives:

Grażyna Bukowska of Chevron, Guido Van Den Bos of NOV, Karol Kuczwalski of G-Drilling, Magda

Szostek of KCA Deutag, Parker Snyder, president of Poland Shale Coalition, Pawel Poprawa of the Instute for En-ergy Studies, Paweł Żuk of Hutton Energy, Piotr Bujnowicz of Trailer and More, Piotr Wozniak of Baltic Ceram-ics, Roman Rewald of Weil Law Firm, Lars Hubert of San Leon, Andrzej Nentwig of BNK Polska, Arne Kvams-dal of Halliburton, Jadwiga Święcicka

formerly with Talisman Energy, George Psefteas of Chevron, Cezary Filipowicz of UOS, Stanislaw Zwolan of Schlumberger, Tom Junker of BNK Polska and Pawel Chalupka of San Leon Energy.

Poland Shale Coalition is an indus-try organization open to anyone aimed at education and advocacy. To join, visit shalecoalition.pl.

Guests at the meeting include Marek Matraszek of CEC, Michal Drozdowski of Dow Microbial, Pawel Poprawa of Energy Studies Institute, Chris Hughes of NuTech, Roman Rewald of Weil law firm, Izabela Albrycht of KI, Victor Boraks of Encana and Karol Kuczwalski of G-Drilling.

PSC monthly executive lunch meetings bring together industry and government stakeholders for an open discussion of challenges to Poland’s shale exploration program. April’s meeting, pictured below, with with PGI diretor Jerzy Nawrocki.


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Jerzy Nawrocki, director of the Polish Geological Institute, second from right Mr. Boraks takes part in the discussion

Mr. Matraszek joined the meeting Mr. Nawrocki presents the work of the Polish Geological Institute

Members of the coalition enjoying lunch thanks to Dow Microbial


Polish shale gas sector is on the brink of game-changing developments in unlocking the geology of the resource, but the government should offer more help.

By K a m l e s h Pa r m a r , C e O, 3 l e g s r e s O u r C e s , P r e s i d e n t O f t h e B O a r d, t h e P O l i s h e x P lO r at i O n a n d P r O d u C t i O n i n d u s t r y O r g a n i z at i O n

From beginning to breakthrough

W e l l h e a d

I came to Poland in early 2007 with 3Legs Resources, a first mover in shale gas in Poland. The journey

has been enlightening.During my time here, I’ve seen Po-

land experience significant changes: weathering a global financial crisis, undergoing two general elections and strengthening its position in the EU. Celebrating the tenth anniversary of its accession to the EU, Poland is in a com-paratively healthy position today and has the resources required to pursue an energy revolution, which so many have predicted.

With several years now of shale gas exploration experience, I and my fellow operators in Poland are no longer be-ginners. And yet the real breakthrough is yet to come.

Global shale gas development has quickly moved from concept to a race towards demonstrating commercial rates of production. According to the U.S. Energy Information Administra-tion (EIA), Poland “offers Europe’s best prospects for developing viable shale gas/oil industry”. Our shale sector is

supported by an active political move-ment in both Poland and the United Kingdom, seeking to remove barriers to the development of domestic energy resources and to resist unnecessary over-regulation from the EU. Recent developments in Ukraine have further highlighted the importance of domes-tic energy security for our region.

Yet no matter how supportive the political environment or how good the commercial terms may be, un-locking the geology is crucial for success. The Polish Geological Insti-tute estimated that Poland has enough natural gas to supply the country for 35-65 years, with the most prospec-tive acreage being in the Baltic region, where 3Legs Resources is currently developing three exploration licenses with ConocoPhillips.

MAKE IT FLOWAll Polish operators, including 3Legs Resources, are now pursuing the key task of demonstrating whether wells can flow natural gas at commercial rates. Polish operators have now drilled

more than 50 wells, yet, according to the EIA, it has typically taken many more wells to de-risk new shale plays in North America.

With a newly refocused Polish gov-ernment finalising welcome changes to the laws and keen to see an increase in the pace of activity, we are moving closer as an industry towards commer-cial success. It is crucial that we have a legislative framework that provides adequate security for the interests of the state and manages local interests properly, while also providing industry with enough operational flexibility and commercial incentives to enable them to continue to invest the significant amounts of capital required.

As I write, there are at least three flow tests of long lateral wells being planned in the Baltic region in the coming months, all with the same basic objective of showing the potential for commercial production. Positive news from any of these wells could prove to be game-changing for Polish shale, bringing an end to the beginning and heralding the start of the break-through phase.

www.terrapinn.com/shaleeu

Early 2014 confirmed speakers include:

Europe’s #1 shale gas conference & exhibition

5th annual

24-26 November 2014EXPO XXI Centre, Warsaw, Poland

1000+ attendees100 facilitated meetings80 exhibition stands3 days

The 5th Shale Gas World Europe is firmly established as the number one unconventional oil and gas conference and exhibition in Europe.

The multi streamed conference, covers everything from the big picture strategy and investment decisions of Europe’s unconventional pioneers and technical issues through case studies, roundtables and interactive panel discussions.

The 80+ exhibition stands showcase the latest technology, equipment services for enabling a safe and commercially viable shale gas industry across Europe.

Marcin LewensteinDirector Strategy DepartmentPGNiG

David MessinaManaging DirectorHutton Energy

Basim FarajVP Business DevelopmentTamboran Resources

Andras JeneiAdvisorMinistry of National Development Hungary

GET INVOLVEDThe floor plan is filling up and there are limited speaking opportunities. To register your interest

please contact Faiz Alidina on +44 (0)207 092 1362 or [email protected]

Sponsored by

Shale Gas EU 2014 AD 210-297.indd 1 5/8/14 1:45 PM

From beginning to breakthrough

www.terrapinn.com/shaleeu

Early 2014 confirmed speakers include:

Europe’s #1 shale gas conference & exhibition

5th annual

24-26 November 2014EXPO XXI Centre, Warsaw, Poland

1000+ attendees100 facilitated meetings80 exhibition stands3 days

The 5th Shale Gas World Europe is firmly established as the number one unconventional oil and gas conference and exhibition in Europe.

The multi streamed conference, covers everything from the big picture strategy and investment decisions of Europe’s unconventional pioneers and technical issues through case studies, roundtables and interactive panel discussions.

The 80+ exhibition stands showcase the latest technology, equipment services for enabling a safe and commercially viable shale gas industry across Europe.

Marcin LewensteinDirector Strategy DepartmentPGNiG

David MessinaManaging DirectorHutton Energy

Basim FarajVP Business DevelopmentTamboran Resources

Andras JeneiAdvisorMinistry of National Development Hungary

GET INVOLVEDThe floor plan is filling up and there are limited speaking opportunities. To register your interest

please contact Faiz Alidina on +44 (0)207 092 1362 or [email protected]

Sponsored by

Shale Gas EU 2014 AD 210-297.indd 1 5/8/14 1:45 PM

Exalo Drilling S.A.

ExperienceSynergyQuality

Exalo Drilling S.A. is one of the largest providers of drilling and oilfield services in Central and Eastern Europe(CEE). The strategic goal of the company is to offer top quality services and maintain the leading position on the onshore drilling market.

Exalo Drilling S.A. continues the rich tradition of Polish exploration as it arose from five upstream companies of PGNiG Group: PNiG Krakow S.A.,PNiG Jaslo S.A., PNiG NAFTA S.A., PN Diament Sp. z o.o., and ZRG Krosno Sp. z o.o., which have unique experience in running drilling and service operations. The companies greatly contributed to the development of extraction of petroleum, gas and other natural resources in the territory of Poland and many countries all over the world .

The joint potential of five companies means a strong team of highly competent and experienced specialists as well as comprehensive technological base that allow to meet customer expectations and fulfill the growing demand of international markets.

www.exalo.pl

[email protected]

Please visit our booth 32 at Shale Gas Europe 2013 in Warsaw!

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KAmLesh PArmArGuest column

chINA WINs dash for Gas

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Shale Gas Investment Guide vol. 7

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