Poland’s Orlen: More rigs needed to develop real shale gas market

Wieslaw Prugar, president of Orlen Upstream, a company exploring for shale gas in Poland, has yet to see “any serious interest” from drilling contractors in taking rigs into his country. To him, that may be somewhat understandable at this point but is still nevertheless disappointing – and he hopes it will change soon.

There are only a little more than 100 land rigs in Europe right now, approximately 50% of them located in Poland, Romania, Germany and Ukraine. However, only a portion of those rigs are suitable for shale gas drilling. For example, there are 15 land rigs currently available in Poland, yet only five of them can be used to drill deep shale gas wells, Mr Prugar said during a presentation at the IADC World Drilling 2011 Conference & Exhibition in Copenhagen, Denmark, last week.

“It is really a bottleneck. … Most of the rigs which are available in Europe are not suited properly to the task they will have eventually on the shale, or let’s say unconventional exploration,” he said. “It may not be a problem today, but I see this problem already contracting the rigs as a problem of tomorrow.”

The potential for large-scale drilling certainly appears to be there: In April, a report by the US Energy Information Administration estimated that Poland has 5.3 trillion cubic meters (187 trillion cubic ft) of shale gas reserves. “It’s really scary from my perspective,” Mr Prugar said. “This industry in Poland is 160 years old, and we’ve never thought more than 140 billion cubic meters of recoverable reserves, and now we’re talking 5.3 trillion.”

“Of course, it’s theory. Some plays will succeed, some probably will fail. But still, even if this play works on 10%, 20%, the numbers are huge, and the numbers will require a significant amount of effort to make them commercial, including of course the service companies to help the operators.”

He estimates that approximately 20 to 25 rigs may be required in the near term in Poland. “Beyond 2020, if some of the plays will prove, we may think about additional maybe 50 rigs,” he said.

“I don’t see any serious interest yet from the drilling contractors, which is on the one side understandable. They don’t want to commit to something that doesn’t exist, but on the other hand when I talk to them that we might maybe figure out how to do it together, nobody really takes that message seriously and nobody wants to analyze the potential of the market,” he continued.

In conclusion, his message was simple: He believes that more commitment from the drilling community is needed to create a competitive market in order to investigate the shale or unconventional gas potential in Europe. “We would like to invite you to come and help us unlock the resource potential from the shale,” Mr Prugar said.