Poland Woos Shale Explorers in Last Bid to Get Financing

Poland appealed to foreign energy explorers in a last-ditch attempt to secure investment in Europe’s biggest shale-gas deposits after Exxon Mobil Corp., Marathon Oil Corp. and Talisman Energy Inc. quit the country.

Environment Minister Maciej Grabowski, appointed in November, met investors and told them he’ll remove regulatory hurdles in an effort to stem the exodus, according to Parker Snyder, president of industry body the Poland Shale Coalition.

“It’s a definitive departure from the previous leadership, that was at best neutral and at worst hostile to foreign investors,” Snyder said in an interview at a European gas conference in Vienna. “He is very open to dialogue. Things are definitely getting more positive.”

Poland, ranked as Europe’s biggest holder of shale gas by the U.S. Energy Information Administration, has sought to revive exploration after foreign investors withdrew citing regulatory and tax concerns and poor well results. Two months ago Premier Donald Tusk fired the deputy minister in charge of drawing up shale regulations and nominated Grabowski to take the reins.

The prospects for the shale industry in Poland, where the number of wells drilled fell about 50 percent last year, may be getting brighter after San Leon Energy Plc reported successful tests at a site last week. Poland could see its first commercial shale gas as early as this year, Grabowski said Jan. 9.

‘Key’ Year

“I’m really encouraged by San Leon’s discovery,” Kamlesh Parmar, chief executive officer of driller 3Legs Resources Plc, said at the conference. “Dialogue with the new minister and chief geologist has been extremely constructive. This year will be key for shale gas in Poland.”

The country is still far from winning the battle, according to Snyder, who called Grabowski’s ambition to have 200 wells in the next few years “wildly optimistic and not achievable.” So far only San Leon, 3Legs and BNK Petroleum Inc. have announced plans to drill this year, and only one well each. Italy’s Eni SpA has one Polish license left after letting two others expire.

The government must speed up the environmental-approvals process and make sure historical well data is freely available instead of treating it like a “state secret,” Snyder said, while acknowledging Grabowski’s efforts to bring investors back.

“It sets the tone that Poland is open for your dollars,” he said. “Trust has been undermined and he’s working hard to rebuild it and make the government a partner rather than adversary.”

San Leon Energy said Jan. 23 that its vertical Lewino well flowed at 60,000 cubic feet of gas a day. The Dublin-based explorer, a member of the Poland Shale Coalition, last year bought Talisman’s interest in the country’s Baltic basin.

Talisman, based in Calgary, said last January it was exiting the country following a change in strategy. Houston-based Marathon Oil said in May it would follow suit. Both pulled out after a similar announcement by Exxon in June 2012.

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