American Energy Firms Focusing on Shale Gas in Poland

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American Energy Firms Focusing on Shale Gas in Poland

By Robert J. Guttman

 

Poland, already one of the European Union’s most prosperous economies, sees a new energy source as a potential for an even more lucrative future.

American energy firms including Chevron, Marathon and ConocoPhillips are hoping to see a bright future with shale gas in Poland.

Poland is preparing to enact a new shale gas law in 2013.  Hoping to become “Europe’s shale gas pioneer” the new legislation is being prepared jointly by the Polish Environment Ministry and Finance Ministry.

The Polish Deputy Environment Minister Piotr Wozniak has stated, “The bill can be applicable as of 2013.  If we publish the draft this or next month, oil and gas companies will have a chance to prepare their business plans for next year based on transparent rules.”

On October 16th “Poland’s government proposed a new tax structure for its oil and gas sector, which will be based on both the value of a given company’s production volumes and its profits, with the total tax burden reaching 40% of gross profits.”

Poland will establish a 100% state owned company called National Energy Minerals Operator (NOKE).  “NOKE will pay out its net profit to the Polish budget and to a planned Hydrocarbon Generations Fund, which will make long-term investments,” says Marynia Kruk in the Wall Street Journal Europe.

In the U.S. states like Pennsylvania and Ohio are providing new jobs in the shale gas field and the discovery of shale gas is a huge “job creator”.

However, in Europe’s largest economy, according to an AICGS article , “The German Federal Ministry for the Environment recommended allowing fracking (extraction by hydraulic fracturing) only under very stringent regulations.  The U.S. and Germany have arrived at different assessments on fracking for the moment.

The lingering consequences of the recession in the U.S. and the financial crisis in Europe threatens to brush environmental issues to the side.  Employment becomes the main factor” on both sides of the Atlantic.

Poland will be looking at their European neighbors and the United States to see how they are balancing the enormous benefits of shale gas and the environmental concerns of fracking.  Poland will attempt a balance to provide what should be a bright future in the energy field in shale gas exploration for years to come.

BNK Petroleum based in Camarillo, California was one of the first U.S. energy companies to start exploring for shale gas in Poland.

Wolf Regener, CEO and President of BNK Petroleum told me , “We were one of the first companies to begin looking for shale gas in Europe.  Poland was attractive to us as the early data we were able to get showed us that it had the right rock characteristics to make shale gas work.  We have drilled five exploration wells in Poland so far and believe we have narrowed down part of the Baltic Basin to an area that we believe has an excellent chance of making economic shale gas wells.  We are currently waiting for approval from the government to drill a horizontal well which will hopefully prove this.”

Regener goes on to say that he feels there are similarities between shale gas in the United States and in Poland . He told transAtlantic  “We have only pursued projects where the rock characteristics are similar to successful U.S. projects.”

While the potential for future American investment in Poland could be quite significant in shale gas, U.S. firms have found plenty of profitable business opportunities already in Poland in the past two decades.

U.S. firms have nearly $30 billion worth of investments today in Poland and Polish firms have approximately $500 million invested in the United States.

Executives from a number of American and Polish firms met in at the New York Stock Exchange in mid-October for an exchange of ideas with senior government officials from Poland and the U.S. government to discuss future investment possibilities in Poland.

“This is not your parents’ Poland.  Today Poland is a tech savvy entrepreneurial green island in Europe,” relates Eric Stewart, the president of the U.S.-Polish Business Council, who along with the Polish Ministry of Foreign Affairs ,organized the inaugural U.S.-Poland Business Week October 10-12 conference at the New York Stock Exchange.

U.S. Under Secretary of Commerce Francisco Sanchez, one of the keynote speakers at the conference in New York, told the guests that “Since 1989, Poland has transformed from a country in economic despair to one that’s become a bright spot in Central Europe.  And, I’m proud that the U.S. has been a strong partner in Poland’s progress. Yet, we all know that there is a great opportunity to take our commercial relationship to the next level.

Sanchez continues by stating that “We are also proud that U.S. exports are playing a part in helping Poland meet its own goals and aspirations.  And there are still many more possibilities for partnership, whether it’s the modernization of taxiways and runways at Polish airports, diversifying energy supply, or the expansion of the Metro line in Warsaw.”

Under Secretary of State at the Polish Ministry of Foreign Affairs Beata Stelmach  similarly focused on the great strides Poland has made in recent years.  “We are proud to present a new, modern and innovative Poland,” she stated in her opening remarks.

In addition to discussing the possibility of increased investment by U.S. firms in Poland and vice versa, conference attendees also examined potential challenges to this growth.  Participants identified the current fiscal crisis affecting a number of European Union countries and the requirement of visas for Polish citizens visiting the United States as potential drags on bilateral investment.  Several guests at the U.S.-Poland Economic Forum also commented on Poland’s struggling insfrastructure and poor roads.

These challenges are not daunting to leaders or business people in either country, though.  Under Secretary of State Stelmach stressed that Poland is “determined to establish new channels of communication among government representatives and business leaders from our two countries.”

Commenting on the success of the recent U.S.-Polish Business Week series of conferences held in New York in mid-October, Eric Stewart says, “The U.S.-Polish special relationship in the military and political fields since the fall of the Berlin Wall is now moving into the same type of “special” relationship in the business and economic fields.”

Pointing out that Chicago has the second largest Polish population of any city outside Warsaw, Stewart feels Poland “a stalwart ally” and the U.S. have a great business future together.

BNK Petroleum CEO Wolf Regener feels the recent inaugural U.S.-Poland Business Week Conference “was an excellent forum to share and learn about companies experiences in Poland, dispel certain preconceptions and hopefully provide good information to those companies wishing to do business in Poland as well as Polish companies looking to do business in the U.S.  In addition it was a great opportunity to share issues with U.S. and Polish officials.”

And, on another positive note, Poland can take pride in the fact that they were awarded the Nobel Peace Prize this year along with their other 26 European Union colleagues. Hopefully, the glow of the prize will carry over into the economic part of the EU!

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