ACTIVITIES IN SHALE GAS AND
SHALE OIL EXPLORATION IN POLAND
Katarzyna Socha, Joanna Ratajczak Stockholm 10th April 2013
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PRESENTATION OUTLINE
PGNiG SA – COMPANY INTRODUCTION
ENERGY SITUATION IN POLAND
SHALE GAS RESOURCES ESTIMATION FOR EUROPE AND POLAND
SHALE GAS/OIL EXPLORATION ACTIVITY IN POLAND
PGNIG SA SHALE GAS/OIL EXPLORATION ACTIVITY
EXECUTED AND PLANNED WORKS
OVERWIEV OF THE DRILLED WELLS
RISK RELATED TO THE UNCONVENTIONAL HYDROCARBON
EXPLORATION IN POLAND
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PGNiG (Polish Oil and Gas Company) is a leader in natural gas segments in Poland that contain trade, distribution, oil and gas exploration and production as well as gas storage and processing. The company is also the largest importer of natural gas to Poland.
PGNiG provides nearly 100% of gas production in Poland and up to 70% of oil production in Poland
PGNiG produces from fields in Poland (2011):
4.33 bcm of natural gas
468 ths tons of crude oil
The production is also from fields abroad:
Norwegian Shelf - the production started at the end of December 2012
Pakistan – the production is planned to start in 2013
PGNIG SA COMPANY INTRODUCTION
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93 Exploration Concessions
with total acreage of 60.9 ths sq. km
225 Production Concessions
with total acreage of 1.5 ths sq. km
oil 40 oil and gas 32
gas 153
PGNIG SA - EXPLORATION & PRODUCTION ACTIVITY IN POLAND
110 oil fields
231 gas fields
8 oil and gas fields within
5 Petroleum Provinces
Discovered:
OIL AND GAS FIELDS IN POLAND
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PGNIG SA - CONCESSION AREAS OUTSIDE POLAND
Pakistan
Norway
Egypt Libya
Participation PGNiG SA 100%
Acreage 5 494.0 km sq
Geographic site Province Awbari,
Murzuq Basin
Obligations
3 000 km 2D seismic, fulfilled 1 500 km sq 3D seismic, fulfilled
8 exploration well
Estimate stocks 146.2 bcm natural gas
15.4 MM tons condensate
Participation PGNiG SA 100%
Acreage 4 414.4 km sq
Geographic site Western Desert
Obligations 1 350 km 2D seismic,
2 exploration well
Estimate stocks 22.0 MM tons crude oil
Participation Pakistan Petroleum Limited
PGNiG SA 30%
70%
Acreage 956.22 km sq
Geographic site Province Sindh,
Folded belt Kirthar
Obligations 1 well, 100 km 2D seismic, fulfilled
Reserves 11.6 bcm of natural gas
Participation
BG Norge AS
Idemitsu Petroleum Norge AS Norwegian Energy Company ASA
PGNIG Norway AS
40.00% 20.00% 20.00% 20.00%
Acreage 11976.96 sq km
Structures PL599
Location Norwegian Continental Shelf
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ENERGY SITUATION IN POLAND – FUEL CONSUMPTION SHARES
Poland is consuming 14.4 bcm of gas per annum (comparable to Romania and three times less than Spain, France or the Netherlands); Gas share in Polish energy market is much lower than an average in the EU (14% against 26%); It is a consequence of the extensive usage of coal (hard/brown) as the source of primary energy.
EU natural gas sales by sector in 2010**
* Source: BP Statistical Review 2011.
** Source: EuroGas Statistical Report 2011
40%
28%
29%
2%
Residential and Commercial
Industry
Power Plants
Others
PGNiG natural gas sales breakdown in 2011
Primary energy consumption by fuel in 2010*
38% 27%
26%
14%
15% 56%
12%
4% 2% 5% 1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
European Union Poland
Other
Renewables
Nuclear Energy
Coal
Natural Gas
Oil
36%
51%
10%
3%
Residential andcommercial
Industry
Power plants andheat plants
Others
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ENERGY SITUATION IN POLAND – POLISH ENERGY POLICY
Polish energy policy is determined by directives and recquirements of European Union, which assume natural gas will remain the fuel of choice and will continue to make a growing contribution to energy suply in Europe, because of „its green properties” and highly efficient application technologies.
Energy security is the main priority in Polish energy policy. This is the result of high dependancy on imported hydrocarbons. To meet the demand, Poland is forsed to import 95% of oil and more than 70% of gas. More than 94% of oil and 80% of gas is imported from Russia by Friendship and Yamal pipelines. The governments goal is to diversify the import sources and transport ways.
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In gas sector crucial Polish government activities include: Construction of LNG terminal in Świnoujście to diversify delivery sources An increase in capacities of underground gas strorages Extention of transmission and distribution system and network An increase of domestic gas production
In oil sector the crucial Polish government activity is an extention of Odessa-Brody oil pipeline from Ukraine to Polish refineries in Płock and Gdańsk
ENERGY SITUATION IN POLAND – POLISH ENERGY POLICY
Poland is willing to have high resources of unconventional oil and gas. The confirmation of that could change the energy situation in Europe. What is important for Poland, it would decrease the country dependancy on the import of these energy sources.
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EUROPEAN SHALE GAS RESOURCES ESTIMATIONS
Country Shale Gas Resources Natural Gas Reserves
BCM TCF BCM TCF
Poland 5295.84 187 164.256 5.8
France 5097.6 180 5.664 0.2
Norway 2350.56 83 2039.04 72
Ukraine 1189.44 42 1104.48 39
Sweden 1161.12 41 0 0
Denmark 651.36 23 59.472 2.1
U.K. 566.4 20 254.88 9
Netherlands 481.44 17 1387.68 49
Turkey 424.8 15 5.664 0.2
Germany 226.56 8 175.584 6.2
Lithuania 113.28 4 0 0
Ro+Hu+Bg 538.08 19 76.7472 2.71
Source US Energy Information Administration, April 2011 Bcm=109m3, Tcf=1012ft3
According to preliminary estimates, the Europe total shale gas in place resources could be 17500 BCM. If these can be proven and produced, it could dramatically change Europe's energy balance, reducing the continent's dependence on gas imports.
DISTRIBUTION OF SHALE PLAYS IN EUROPE
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Shale Gas Basins Risked Gas In-Place Recoverable Resources
Bcm Tcf Bcm Tcf
Baltic Basin 14556 514 3653 129
Lublin Basin 6287 222 1246 44
Podlasie depression 1586 56 396 14
Source: US Energy Information Administration, April 2011 Bcm=109m3, Tcf=1012ft3
POLISH SHALE GAS RESOURCES ESTIMATES
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SHALE GAS/OIL ACTIVITY IN POLAND – AWARDED CONCESSIONS company
number of concessions
Chevron 4
Composite Energy 1
Cuadrilla 2
DPV Service 5
Eco Energy 3
Eni Polska 3
Exxon 6
Gora Energy Resources 1
Indiana Investments 3
Lane Energy 13
Mac Oil 1
Marathon Oil Poland 11
Orlen Upstream Sp.z o.o. 7
Petrobaltic 7
POGC 15
Realm Energy 3
Saponis Investments 3
Silurian Sp.z o.o. 9
Strzelecki Energia 6
Talisman 3
Vabush Energy 1
Wisent Oil & Gas 4
TOTAL 111 „Shale gas/shale oil” exploration concessions in Poland – 01.03.2013 status
Up to date 22 companies (including 3 Polish companies: PGNiG SA (POGC), Orlen Upstream and Lotos) have been awarded 111 concessions for exploration of unconventional resources. Another submitted applications wait for awarding decision in the Polish Ministry of Environment.
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SHALE GAS ACTIVITY IN POLAND – DRILLED WELLS
1 Lane Energy Poland Sp. z o.o. Łebień LE - 1
2 Lane Energy Poland Sp. z o.o. Łęgowo LE - 1
3 Lane Energy Poland Sp. z o.o. Warblino - 1H
4 Lane Energy Poland Sp. z o.o. Łebień LE - 2H
5 Lane Energy Poland Sp. z o. o., Strzeszewo LE-1
6 Polskie Górnictwo Naftowe i
Gazownictwo S.A.
Lubocino - 1
7 Polskie Górnictwo Naftowe i
Gazownictwo S.A.
Lubycza Królewska - 1
8 Polskie Górnictwo Naftowe i
Gazownictwo S.A.
Markowola-1
9 Polskie Górnictwo Naftowe i
Gazownictwo S.A.
Lubocino -2H
10 Polskie Górnictwo Naftowe i
Gazownictwo S.A.
Opalino - 2
11 ExxonMobil Exploration and
Production Poland Sp. z o.o.
Energia Chełm sp.j.
Krupe - 1
12 ExxonMobil Exploration and
Production Poland Sp. z o.o.
Siennica - 1
13 Saponis Investments Sp. z o.o. Wytowno S - 1
14 Saponis Investments Sp. z o.o. Lębork S-1
15 Saponis Investments Sp. z o.o. Starogard S - 1
16 Talisman Energy Polska Sp. zo.o. Lewino - 1
17 Talisman Energy Polska Sp. zo.o. Szymkowo - 1
18 Talisman Energy Polska Sp. zo.o. Rogity - 1
19 Chevron Polska Energy Resources
Sp. z o.o.
Grabowiec - 6
20 Chevron Polska Energy Resources
Sp. z o.o.
Frampol - 1
21 Orlen Upstream Sp. z o.o. Syczyn - OU1
22 Orlen Upstream Sp. z o.o. Berejów - OU1
23 Orlen Upstream Sp. z o.o. Syczyn – OU2K,
24 Orlen Upstream Sp. z o.o. Goździk-OU1,
25 Orlen Upstream Sp. z o.o. Berejów - OU2K
26 Marathon Oil Poland Sp. z o.o. ORZ Cyców - 01
27 Marathon Oil Poland Sp. z o.o. SIE-Domanice - 01
28 Marathon Oil Poland Sp. z o.o. RYP-Lutocin - 01
29 Marathon Oil Poland Sp. z o.o. KWI - Prabuty-1
30 Marathon Oil Poland Sp. z o.o. BRO-NM Lubawskie-01
31 Marathon Oil Poland Sp. z o.o. SOK - Grębków - 01
32 Eni Polska Sp. z o.o. Bągard - 1
33 Eni Polska Sp. z o.o. Kamionka-1
34 Eni Polska Sp. z o.o. Stare Miasto - 1
35 Gora Energy Resources Sp. zo.o. Siciny - 2
36 Indiana Investmens Sp. z o.o. Gapowo B -1
37 Indiana Investmens Sp. z o.o. Miszewo T-1
38 Vabush Energia Sp. zo.o. Belvedere - 1
39 Vabush Energia Sp. zo.o. Chopin - 1
40 Liesa Energy Sp. z o.o. Lelechów SL-1
41 Liesa Energy Sp. z o.o. Czasław SL-1
42 Wisent Oil&Gas Sp. z o.o. Rodele-1
43 Chevron Polska Energy Resources
Sp. z o.o.
Zwierzyniec-1
44 Orlen Upstream Sp. z o.o.
Wierzbica-1 Status: March 2013
PGNIG SA - SHALE GAS/OIL EXPLORATION ACTIVITY
Oil prone areas within the Lower Paleozoic deposits
Concession area km2
1 Wejherowo 729.99 2 Kartuzy - Szemud 782.61 3 Stara Kiszewa 1 178.14 4 Bartoszyce 669.36 5 Górowo Iławeckie 1 094.39 6 Blok 172 936.79 7 Blok 173 936.69 8 Blok 192 921.87 9 Blok 193 942.03
10 Kock - Tarkawica 1 028.64 11 Ryki - Żyrzyn 426.86 12 Pionki-Kazimierz 532.00 13 Warka-Ursynów 734.42 14 Tomaszów Lubelski 745.76 15 Wiszniów-Tarnoszyn 1 106.55
Sum 12 766.10
Gas prone areas within the Lower Paleozoic deposits
PGNiG SA concessions
Polish national company PGNiG SA (POGC) has been awarded 15 concessions covering an area of 12 766.10 km2. PGNiG SA (POGC) concessions are located within important Paloezoic sedimentary basins, starting from the Baltic Syneclise in the northern Poland, through Podlasie Basin in the central part, ending in the Lublin Basin in the south. Lower Paleozoic shales of Silurian and Ordovician age are considered as the most prospective for unconventional hydrocarbons and are the main target for “shale gas” and „shale oil” exploration.
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Characteristics of perspective
horizon for shale gas/oil exploration:
Laterally continuous
Not significantly disturbed by tectonic activity (natural fracture
presence might be favourable in terms of hydraulic fracturing)
Thickness higher than 30m
High organic matter content (more than 2% TOC)
Thermal maturity in gas/oil window
Brittle enough to be fractured (contains more than 40% of sillica
and has proper geomechanical properties)
Contains hydrocarbons!!!
SHALE GAS/OIL – WHAT KIND OF ROCKS ARE WE LOOKING FOR?
PGNIG SA - SHALE GAS EXPLORATION ACTIVITY
Accessible geological, geophysical and geochemical data suggest that Ordovician and Silurian shales are rich enough in organic matter and thermally matured enough to be worth an inputted interest. According to available data, PGNiG SA (POGC) concessions are located within the area of different, but generally high, exploration potential what creates hope for the future success.
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PGNIG SA – EXECUTED AND PLANNED EXPLORATION ACTIVITIES FOR SHALE GAS/OIL IN 2013
1
2
3
14 15
4
6 7
8 9 10
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12 13
Wejherowo License
Executed:
Lubocino-1 well
Lubocino-2H well
Opalino-2 well
Lubocino 3D seismic survey
Planned:
Opalino-3,-4 wells
Kochanowo-1 well
Czestkowo-1 well
Tepcz-1 well
Opalino 3D seismic survey
Kartuzy Szemud and
Stara Kiszewa Licenses
Executed:
Somonino-Przywidz 2D seismic survey
Wysin-1 well – currently drilled
Planned:
Borcz-1 well
Miłowo-1 well
Kartuzy Szemud-1 well
Mirowo-1well
Bartoszyce and
Górowo Iławieckie Licenses
Analysis of available geological and
geophysical data is now beeing
performed.
After the results is known, new
exploration program will be created
for these two licenses
172, 173, 192, 193 Licenses
New 2D seismic data has been
recently acquired and is now beeing
interpreted.
New wells will be planned after
interpretation results.
Drilling is planned for 2014
Warka- Ursynów and Kock-
Tarkawica Licenses
Executed:
Czernic-Ryki 2D seismic survey
Planned:
Wojcieszków-1 well
Pionki Kazimierz and Ryki- Żyrzyn
Licenses
Analysis of available geological and
geophysical data is now beeing
performed.
After the results is known, the
decision about well location and
drilling will be made
Tomaszów Lubelski and Wiszniów-
Tarnoszyn Licenses
Executed:
Lubycza Królewska-1 well
Korczmin 2D seismic survey
Planned:
Fracking in Lubycza Królewska well
Kościaszyn-1 well
LUBOCINO-1 WELL RESULTS
The first vertical exploration well, Lubocino-1, was drilled at the beginning of 2011. The well ended up in Cambrian deposits and drilled 1843.5 m of Silurian and 63 m of Ordovician strata. 800 m of core was recovered, which was further analyzed to examine geochemical, petrophysical and geomechanical properties of the rocks. Wide spectrum of wireline logging was also applied. The results of combination of both, laboratory and geophysical analysis, turned out to be very promising and confirmed the presence of unconventional gas within the Ordovician and Silurian strata.
Black shales of Silurian age (A); Microporosity (B) and micro-fractures (C) in Silurian shales
Geochemistry interval 2200 - 2972 m
Organic matter content Range 0 – 5%
Total gas content From lab. analyses. Range 100% – 0
Gas content From a wellsite lab. Range 0.1 – 10%
Tmax Range 300 – 500°C
Hydrogen Index HI 0 - 300
•Presence of organic matter content (TOC > 0.5%) from laboratory analyses indicate good and very good source rock potential in prospective interval (2550 – 2972m). •Total gas from MudLog during
shows increased value in the most prospective interval 2550 – 2972 m. •Temperature Tmax shows
sufficient thermal maturity of organic matter within Lower Silurian and Ordovician deposits. •Hydrogen index values are also
satisfactory and are placed at the transition zone of oil and wet gas window.
S I L U R
I A N
ORDOVICIAN
LUBOCINO-1 WELL RESULTS – GEOCHEMICAL INTERPRETATION
Total porosity from helium porosimeter 20% - 0
Total porosity from Nuclear magnetic resonance (NMR) 20% - 0
Effective porosity Z NMR 5% - 0
Permeability 0.001 - 100mD
S I L U R
I A N
ORDOVICIAN
Reservoir properties interval 2200 - 2972m
• Laboratory analyses of permeability indicate its good properties especially in the 2550 – 2972 m interval where they reach up to 50mD. Its significant scattering suggest rock matrix permeability as well as fracturability and presence of fractures. •Total porosity values
measured by porosimeter and magnetic resonance analyses correspond well with total porosity interpreted from wireline logs. •Effective porosity values
measured by NMR analyses do not correlate sufficiently with effective porosity interpreted from wireline logs.
LUBOCINO-1 WELL RESULTS – RESERVOIR PROPERTIES INTERPRETATION
LUBOCINO-2H – FIRST PGNiG SA HORIZONTAL WELL FOR SHALE EXPLORATION
Lubocino-2H horizontal well was spudded on
28.08.2012 at the same well pad location as vertical
Lubocino-1.
The horizontal section was drilled at the 2925m TVD.
The total measured depth of the well was 3980m (MD).
The horizontal section, 932m in lenght, was drilled in
Upper Ordovician horizon in the 200o azimuth.
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LUBOCINO-2H WELL RESULTS- HYDRAULIC FRACTURING
2925m (horizontal section depth)
Lubocino-2H well was drilled in Upper Ordovician horizon
(Caradocian Sasin Formation) in the interval containing high
amount of sillica. Geomechanical analysis of the core samples
and geophysical measurements indicated these rocks to be
brittle. What is more geochemical analysis showed high
content of organic matter, proper thermal maturity and
hydrocarbon saturation.
7 stages of hydraulic fracturing was planned but due to
technical problems 6 were executed.
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3D SEISMIC DATA IN PLANNING THE HORIZONTAL WELLS- LUBOCINO 3D SEISMIC SURVAY
Using different seismic atributes (relating on acoustic
parameters of rocks and principles of acoustic waves
propagation) it is possible to define the areas of the best
geological and geomechanical properties of rocks. It is
highly recquired in the planning of well location and
stimulation processes.
Seismic signal coherence
Seismic anizotropy and directions of the highest
values of seismic inversion velocity
Seismic anomalies obtained from the cross graph
of Vp/Vs
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OPALINO 2 WELL AND PLANNED OPALINO 3D SEISMIC DATA SURVAY
OPALINO-2
Or
OPALINO-2
Opalino-2 well is the exploration well designed to
recognize the Lower Paleozoic potential for
unconventional exploration and the saturation
within Middle Cambrian deposits.
The well was driled at the end of 2012 to the TD of
3050m. Around 300m of core was taken whichis
now subjected to the detailed laboratory analysis.
Preliminary analysis results suggest better
parameters of Lower Paleozoic rocks for
unconventional oil/gas exploration than in the
nearby Lubocino-1 well. Opalino-2 well was logged
with all necessary tools to get the reservoir
characteristics as accurate as possible.
Middle Cambrian horizon was tested and the
inflow of gas (85% CH4) was recorded.
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WYSIN-1 WELL
Wysin-1 well
Wysin-1 well is the first exploration well designed to recognize the Lower
Paleozoic potential for unconventional exploration on Stara Kiszewa
License.
The well was spudded at the end of March 2013.
Wysin-1 well is a vertical well and is going to be drilled to the total depth of
3990m TVD. Drilling will be finished in Middle Cambrian deposits.
Around 370m of core is going to be taken that will be subjected to the
detailed laboratory analysis. The well will be logged with all necessary
tools to get the reservoir characteristics as accurate as possible.
LUBYCZA KRÓLEWSKA-1 WELL RESULTS
Lubycza Królewska-1 well, on Tomaszów Lubelski concession, was spudded on Mar. 26th 2012. The total depth of the well was at 3530m. The well was going to drill 1300 m of Silurian and 250 m of Ordovician deposits while in fact it recognized 2055m of Silurian and 268m of Ordovician. The high changes between planned and actual stratigraphy were the result of the tectonic zone presence. Many technical problems with well drilling were encounterd. Nearly 800m of core was recovered and is now beeing subjected to the detailed laboratory analysis. The well was logged with all necessary tools to get the reservoir characteristics as accurate as possible.
WHAT IS THE RISK ASSOCIATED WITH EXPLORATION OF UNCONVENTIONAL GAS RESOURCES IN POLAND?
The risks associated with exploration of unconventional gas deposits in Poland include: • unrecognized geology – most of the archive wells come from 1970s and 1980s, what results in the absence of the most required data for shale prospectivity analysis (geochemical data indicating organic matter content and maturity, kerogen type etc.). Old geophysical measurements don’t give the possibility of reliable reservoir parameters estimation, • urbanization of the area – population density in Poland is quite high (122 persons/km2). What is more, the perspective zones for “shale gas” exploration are located within areas used for agriculture activities, • restrictive regulations on environmental protection – the concession owner has to take into consideration local Polish and European Union legal regulations, • large number of environmentally protected areas and objects – numerous concession areas are covered by National Parkas, Nature Preservation Areas as well as Natura 2000 zones. Exploration works are highly limited within these. Exploration should be provided according to Spatial Development Plan created by local authorities, • negative opinions from local authorities, especially from attractive touristic areas, • access to proper water resources – drilling and fracturing one horizontal well requires 8000-20 000 m3 of water, • very high capital cost (cost and number of wells, large production facilities), • cost of proper technologies,
SUMMARY AND CONCLUSIONS
Poland has the potentially largest resources of shale gas in Europe. The development of the unconventional gas/oil in Europe is still in the preliminary stage.
Exploration of unconventional gas/oil will not be easy but one should remember that such gas accumulations create opportunities for both Europe and for companies starting the exploration.
The existing evaluations of the shale gas potential in Poland are promising.
Further evaluation is ongoing and each month brings new data. The understanding of Palaeozoic formations increases with each drilled well.
It is very possible that Poland could have gas on a scale large enough not only to cover its demand, but probably to export gas or to replace coal-power generation as well.