Tags: fracking | gas | drilling | Poland

Europe Nears First Commercial Shale Gas Production

Thursday, 23 Jan 2014 11:15 AM

Europe passed a “major milestone” on the way to starting commercial shale gas production as San Leon Energy Plc, the natural-gas explorer backed by billionaire George Soros and Blackrock Inc., said testing at one of its Polish wells was successful.

Natural gas flowed from the vertical Lewino well in a shale formation in the Baltic Basin in northern Poland at as much as 60,000 cubic feet per day during tests, Dublin-based San Leon said today in a filing. The company will start drilling a more productive horizontal well there no later than July, said Dennis McKee, the chief executive officer of United Oilfield Services Sp. z o.o., which worked on Lewino.

“We’re confident we can show real commercial flow rates,” San Leon Chairman Oisin Fanning said in a telephone interview from London. “If you can prove the shale play in Poland, it will open up in other countries.”

Countries including Poland, the U.K., Ukraine and Romania are keen to develop shale gas resources as a way to lower energy costs and reduce imports. Europe must get a grip on energy prices to protect growth and reduce the cost gap with the U.S., where a shale-gas revolution has slashed prices, European Union Energy Commissioner Guenther Oettinger told a conference in Berlin Jan. 21, via a video link from Brussels.

Poland, ranked as Europe’s biggest holder of shale gas by the U.S. Energy Information Administration last year, has sought to revive exploration after foreign investors including Marathon Oil Corp. and Talisman Energy Inc. withdrew amid regulatory constraints and plans to increase taxation.

Best Frack

The results from the Lewino well are a “major milestone in the process of commercialization of shale gas in Poland”, McKee told reporters at a briefing in Warsaw. San Leon may bring the well to commercial production by October, after it conducts flow tests, he said. United Oilfield Services is the nation’s largest provider of hydraulic fracturing, also known as fracking.

“This is the best vertical frack to date. There’s read-across to the whole of the Baltic Basin,” said Fanning. “This is good for San Leon, and it’s good for everybody drilling in Poland.” Shares in San Leon were 9.3 percent higher at 4.35 pence ($0.07) at 10:17 a.m. in London, after rising as much as 13 percent earlier.

San Leon had not finished clean-up of the well when it achieved the gas flow rate. It estimated a potential flow rate of 200,000 to 400,000 standard cubic feet per day if the clean-up of fracturing fluid from the well was completed. That’s equivalent to as much as 4 million cubic meters per year, or 0.03 percent of Poland’s fuel use.

Horizontal Well

San Leon will drill and hydraulically stimulate a horizontal well in the Lewino area to test “the entire vertical extent of the Ordovician interval with each frac, and prove commercial flow rates,” it said in a statement. In the U.S., horizontal wells typically yield between seven and 30 times the production rate and recovery of vertical wells in the same formation.

San Leon became the sole owner of three permits in northern Poland after Talisman’s exit, including the Gdansk West license where the Lewino well is located. Lewino produced gas almost immediately after clean-up and has done so continuously when the well is open, the company said in a Jan. 13 presentation on its website.

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Europe passed a "major milestone" on the way to starting commercial shale gas production as San Leon Energy Plc, the natural-gas explorer backed by billionaire George Soros and Blackrock Inc., said testing at one of its Polish wells was successful.
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2014-15-23
Thursday, 23 Jan 2014 11:15 AM
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