Chevron Corp. (NYSE: CVX) and Conoco Phillips (NYSE: COP) have been anxious to get their hands on Poland’s vast gas reserves that lie some 3 miles under the surface of the country’s nature reserves. The Polish government is about to make that easier.
This week, Poland announced it would ease environmental regulations that have been slowing exploration and development of its shale gas and making it too expensive. To wit, the completion of exploration wells has taken a hit because of the regulatory environment and missed forecasts by some 25%.
One of the main things slowing shale exploration down was the requirement for companies to seek new permits for every new step: drilling deeper than planned or drilling at a different angle. For the 113 licenses already awarded by Poland, it has been a permit frenzy
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The new rules allow companies to drill as deep as 5,000 meters with a single permit and then to re-apply for a new permit when production starts.
According to Poland’s Environment Ministry, the new rules will also see companies responsible for producing environmental impact assessments only for a specific drilling site rather than for the total license acreage.
But there’s more: New tax regulations have been in the works since early last year, courtesy of the Polish Finance Ministry. This would involve cap levies on hydrocarbon production at a total of 40% of profit.
Poland has enough shale gas to keep it afloat for the next five decades—and it would very much like to tap into this as an alternative to Russian gas.
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The three key players on the scene now are the state-controlled Polskie Gornictwo Naftowe i Gazownictwo SA (PNGIG), Chevron and ConocoPhillips who combined will likely sink upwards of $4.5 billion in wells over the course of this decade.
Up to 40 wells are planned for this year as a result of the easing of the regulatory environment and the pending new tax regime.
By. Charles Kennedy of Oilprice.com