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Poland Says Shale Reserves May Be 85% Below U.S. Estimate

March 21 (Bloomberg) -- Poland’s recoverable shale gas reserves are probably as much as 768 billion cubic meters, or 85 percent less than a U.S. Energy Department estimate from last year, according to the Polish Geological Institute.

The deposits are enough to cover as many as 65 years of demand and are equal to as much as 200 years of the country’s production, Deputy Environment Minister Piotr Wozniak said today in Warsaw at a presentation of the institute’s data. “These estimates would make Poland Europe’s third-largest holder of gas reserves,” he said.

The minimum estimate is 346 billion cubic meters and is based on an analysis by the institute of 39 wells drilled in Poland from the 1950s to the 1980s. Reserves may be as much as 1.9 trillion cubic meters assuming maximum productivity, the study shows. The Polish estimates are less than a forecast last year by the U.S. Energy Information Administration that the country had as much as 5.2 trillion cubic meters of shale gas.

“It’s a good, conservative estimate and as data from new wells will be available these forecasts may rise,” Wozniak said. The next report will be published in two years.

The forecast is still “substantial,” said Arkadiusz Wicik, a director at Fitch Ratings’ energy, utilities and regulation team for Europe, the Middle East and Africa.

“Shale gas in Poland could still be a game changer for the country’s energy sector despite the disappointing shale gas reserve estimate,” he said in a statement today.

Companies including Chevron Corp., Exxon Mobil Corp., Talisman Energy Inc. and Eni SpA are among the companies that plan to drill 127 wells in the eastern European country through 2017, Wozniak said today. Half of the new exploration wells are “disappointing” and the rest are “encouraging,” he said.

Prices ‘Highly Profitable’

Lower estimates of reserves won’t trigger a pullout from Poland by investors, Wozniak said.

“Prices of gas in Poland have reached an unbelievable level so any investment in making hydrocarbons available on the market is highly profitable,” he said.

Poland pays more than $500 a 1,000 cubic meters of the fuel from Russia’s OAO Gazprom, supplier of more than 60 percent of the nation’s gas, according to government officials. That compares with a price of 25 euros a megawatt-hour for next-month gas traded at the Netherlands’ Title Transfer Facility. That’s the equivalent of about $355 a 1,000 cubic meters. U.S. next-month gas futures on the New York Mercantile Exchange were at $2.312 a million British thermal units, or about $85 a 1,000 cubic meters.

Replicating U.S.

Poland’s commercial production is unlikely to emulate a drop in U.S. prices in the first five to 10 years because of higher break-even costs, different geology and the country’s gas market structure, according to Fitch,

“We do not expect that the success in the U.S., which led to about a 50 percent decrease in gas prices between 2008 and 2011, will be easily replicated in Poland,” Fitch said.

Poland’s recoverable shale oil resources are 215 million to 268 million metric tons, the institute said. Reserves may be as much as 535 million tons, assuming maximum output, it said. Shale oil could cover from 10 to 12 years of Poland’s oil consumption, the institute said.

The report does not cover so-called tight gas and coal-bed methane reserves.

To contact the reporter on this story: Marek Strzelecki in Warsaw at

To contact the editor responsible for this story: Lars Paulsson at

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