Shale exploration in Poland has occurred nearly exclusively in the Lower Silurian-Ordovician organically-rich shales, part of the Lower Paleozoic sedimentary basin that exists as a north to south-east band through the center of Poland.
Source: U.S. Energy Information Administration: Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States (June 2013):
The U.S. Energy Information Administration (EIA)’s 2013 World Shale Gas and Shale Oil Resource Assessment states that Poland’s four basins may contain up to 146 trillion cubic feet (Tcf) of technically recoverable shale gas reserves. On the other hand, the Polish national geological institute reported in 2012 that recoverable reserves were much lower—only between 346 billion cubic meters and 768 bcm.
While many had hoped for a boom in natural gas production in Poland, a combination of regulatory hurdles, regional unrest, low gas prices, and difficult geological conditions have caused the major oil and gas companies to leave the country. Reports indicate that, as of May 2016, exploration has not yet resulted in a single commercial well in Poland. One analyst recently opined that “[t]he chances of Poland delivering commercial shale gas are now zero.”
Poland is currently a large net importer of natural gas. In recent years, over 70% of natural gas consumed in Poland was imported, approximately two-thirds of which was supplied by Russia.
Realizing that unconventional natural gas development could replace its dwindling conventional gas reserves, the Polish government initially showed strong support for unconventional gas exploration, especially shale gas exploration. Poland has put in place very attractive fiscal incentives for shale gas development, which led many of the major oil and gas companies to seek out exploration opportunities in Poland. However, Poland has ceased to be one of the main destinations of choice for those companies looking to exploit Europe’s shale gas resources, and only the state-owned gas companies, PGNiG and Orlen, remain active in the country.
Statutory and Regulatory Framework
The competent licensing authority for granting concessions in Poland is the Minister of the Environment (MoE). Other relevant competent authorities in Poland include the State Mining Authority, the General Directorate for Environmental Protection, the Chief Inspectorate of Environmental Protection, and the National Water Management Authority.
The Geological Mining Law of 1994 established the legal framework for shale gas exploration and production in Poland until January 1, 2012, when it was replaced with the Geological and Mining Act of 2011 (“2011 GMA”) and its accompanying executive regulations. Unlike the former law, the 2011 GMA included regulations related to hydrocarbons, including procedures for granting concessions.
Under the 2011 GMA, a concession for shale gas exploration or production was typically obtained through a public procurement procedure (tender process). The winner of the tender gained a concession from the Minister of the Environment, and then signed a mining usufruct agreement with the Polish Treasury. Importantly, the 2011 GMA required a separate agreement and concession for both the initial prospecting and exploration stage, and for the later production phase.
The 2011 GMA was substantially amended by the Act of 11 July 2014 (2014 GMA). Under the new 2014 GMA, however, only one license is required for all stages of the process. This integrated license is intended to streamline the licensing process and encourage investors to carry out exploration activities to the fullest extent possible.
Polish law requires a decision on environmental conditions before an entity may undertake certain mineral exploration and development activities (including shale gas deposits). A decision on environmental conditions entails an Environmental Impact Assessment Procedure (EIA Procedure), involving the preparation and review of an environmental impact report, consultation with other authorities, and public participation.
Under Polish law, exploratory drilling is allowed up to the depth of five thousand meters without environmental assessment. The European Commission sent notice to Poland in July 2014 that the law in in breach of European Union (“EU”) Environment Impact Assessment Directive, which generally requires that project that may significantly affect the environment due to their nature, size, or location must be evaluated prior to the implementation. In April 2016, the EU regulators filed suit against Poland in the European Courts of Justice over the issue.
Last updated September 2016.