MISSION POSSIBLE UNCONVENTIONAL HYDROCARBONS IN THE FUTURE

POLISH ENERGY MIXSławomir Brodziński

Under-Secretary of State, Chief National GeologistMinistry of the Environment

Poland

Polish present energy mix

2Source: EU Commission, Energy Statistics, update: Jun-15

Energy security – high ratio of hydrocarbons dependency

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High dependency on import of hydrocarbons - High dependency on import of hydrocarbons - 88% of oil, 65% of natural gas.88% of oil, 65% of natural gas.

Hydrocarbons are a significant component of EU Hydrocarbons are a significant component of EU primary energy mix – 54% and EU electricity primary energy mix – 54% and EU electricity generation mix - oil and natural gas are generation mix - oil and natural gas are responsible for 21% of electricity produced in EUresponsible for 21% of electricity produced in EU

Overrall energy dependency ratio 53,4%Overrall energy dependency ratio 53,4%

Indigenous production of conventional Indigenous production of conventional hydrocarbons in EU is fallinghydrocarbons in EU is falling

Higher hydrocarbon dependency than EU average - Higher hydrocarbon dependency than EU average - oil 91% and natural gas 74%.oil 91% and natural gas 74%.

Hydrocarbons are a significant component of Hydrocarbons are a significant component of Poland’s primary energy mix – 37% but in Poland’s Poland’s primary energy mix – 37% but in Poland’s electricity generation mix – only 5,5%.electricity generation mix – only 5,5%.

Energy dependency ratio 25,8% - one of the lowest Energy dependency ratio 25,8% - one of the lowest in EU.in EU.

Production of unconventional hydrocarbons would Production of unconventional hydrocarbons would suport Poland’s energy security.suport Poland’s energy security.

EUEU PolandPoland

Source: EU Commission, Energy Statistics, update: Jun-15

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Poland’s Energy Policy 2050 – Aug’15 draft

Main goals

Improvement of Poland’s energy security

Growth of economy’s competitiveness and energy efficiency

Minimalisation of the energy sector environmental impact

3 Scenarios

Sustainable

Alternative – nuclear

Alternative – natural gas + Renewables

Why unconventional hydrocarbons are a viable alternative for Poland?

Enhancing energy

security

Environment-friendly source of energy due to low CO2 emission of

natural gas

Feasible potential

5

UHC in Poland: shale gas, tight gas, coalbed methane

Energy security – limited reserves of conventional hydrocarbons in Poland

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No deposits Reserves Production

Natural gas 291 128 bcm 5,25 bcm

Coalbed metane

58 86,8 bcm 0,29 bcm

Crude oil 85 23,52 mt 0,92 mt

Source: Minerals Yearbook of Poland 2014

Feasible potential – shale gas

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According to the 2012 research by the Polish Geological Institute – National Research Institute (PGI-NRI) recoverable shale gas resources range from 346 Bcm to 768 Bcm.

Which is equivalent of 35-65 years of cumulative gas consumption on Polish market.

Feasible potential – tight gas

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According to the 2015 geological survey of PGI-NRI, the most promising areas for tight gas exploration in Poland are Pomorze and Wielkopolska regions.

Total natural gas volume in those areas most probably ranges from 1528 bcm to 1995 bcm and the recoverable resources are estimated to be between 150-200 bcm.

Feasible potential – coalbed methan

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More than 90% of coalbed methane resources are located in the Upper Silesian Coal Basin (230-250 bcm). The remaining 10% is divided between the Lublin Coal Basin (15bcm) and the Lower Silesian Coal Basin (2-5bcm).

Environment-friendly source of energy

10

Exploratory operations, inc.

hydraulic fracturing have no permanent and significant effect

on environment

Exploratory operations, inc.

hydraulic fracturing have no permanent and significant effect

on environment

Based on the survey conducted

by PGI-NRI

Based on the survey conducted

by PGI-NRI

for 3 years starting from „0” level till complete

reclamation of area

for 3 years starting from „0” level till complete

reclamation of area

inc. baseline monitoring of 7 shale gas exploratory boreholes

inc. baseline monitoring of 7 shale gas exploratory boreholes

Why Poland can achieve its unconventional hydrocarbons goals?

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UHC in Poland: shale gas, tight gas, coalbed methane

General public opinion

support

General public opinion

support

Experience Experience

Scientific researchScientific research

Qualified public

administration

Qualified public

administration

General public opinion suport

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UHC in Poland: shale gas, tight gas, coalbed methane

Source: Public opinion survey by CBOS - May’13 and TNS Poland - Aug’13

UHC exploration and protected areas

13

UHC in Poland: shale gas, tight gas, coalbed methane

Polish unconventional hydrocarbons experience

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The current hydrocarbonThe current hydrocarbon conventional and conventional and unconventionalunconventional concessions concessions are marked are marked dark greydark grey,, concessions applications concessions applications light light greygrey and 2016 tender areas and 2016 tender areas redred..

40 shale gas 40 shale gas prospecting prospecting and and exploration exploration concessions concessions issued issued

13 new 13 new applications applications for shale gas for shale gas concessions concessions submitted submitted

70 exploration 70 exploration shale gas wells shale gas wells completed, completed, including 16 including 16 horizontal horizontal

29 frackings 29 frackings executed, executed, including including 12 horizontal 12 horizontal treatments and treatments and 4 DFIT 4 DFIT (Diagnostic (Diagnostic Fracture Fracture Injection Test)Injection Test)

Scientific research

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Environment•The environmental risk assessment of the prospecting, exploration and production of unconventional hydrocarbons – report published in 2015, guidances tbp in 2015

•„BLUE GAS” 10-year shale gas R&D programme for industry and academia started in 2012

•White Book of Mineable Resources Protection initiative

Resources•Assessment of shale gas and shale oil resources of the Lower Paleozoic Baltic-Podlasie-Lublin Basin in Poland – 2012

•Assessment of tight gas resources – 2015

•Assessment of shale gas and oil resources – tbp in 2015

Economy•Report on economic effects of shale gas (joint project of Poland and United Kingdom)

Qualified public administration

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Ministry of the Environment

– concession authority

Ministry of the Environment

– concession authority

State Mining Authority –

mining operations supervision

State Mining Authority –

mining operations supervision

Chief Inspectorate for Environmental Protection

Chief Inspectorate for Environmental Protection

General Directorate for Environmental Protection

General Directorate for Environmental Protection

Polish Geological Institute – National Research Institute –

geological survey

Polish Geological Institute – National Research Institute –

geological survey

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2014 Geological and Mining Law amendment

GML amendment aimed to:•Assure that the Polish law is consistent with the Hydrocarbons Directive (case C–569/10)

•Ensure the energy security

•Accelerate the hydrocarbons exploration

Main legal changes:•One license instead of three

•Introduction of qualification procedure

•Obligatory tender procedure for hydrocarbons

•Joint execution of license by several entities (under cooperation agreement)

•Shortened licensing and environmental procedures

•Strengthened environmental and license obligations monitoring

•Increased benefits for each level of self-government

THANK YOU FOR YOUR ATTENTION

All photographs courtesy of polskielupki.pl