Price estimate could weaken Poland’s shale gas prospects - bank

19 April 2012 17:53  [Source: ICIS news]

LONDON (ICIS)--A Polish Geological Institute (PGI) estimate that shows a break-even price for shale gas in Poland could be much higher than in the US and may weaken the outlook for exploiting gas deposits in the country, investment bank Wood & Company said on Thursday.

The bank responded to analysis from the institute which noted that the break-even price for shale gas in Poland is probably about $9/MMBtu, compared to $2-10/MMBtu in the US.

“While we believe it is too early to talk about shale gas economics in Poland, particularly in light of the unknown fiscal regime [that will apply], this may be yet another comment that could cool down some overly positive expectations regarding Polish shale gas prospects,” said Robert Rethy, a Wood & Company analyst.

The cost of drilling a shale gas well in Poland is $10-15m, compared to $3-10m in the US, according to the PGI.

European shale basins also tend to be smaller and more “tectonically deformed” than in the US, the institute’s analysis said.

In March, Wood & Company said the financial markets were not yet able to reliably assess the value of Poland's shale gas reserves, following a PGI assessment that the country’s recoverable shale gas reserves were most likely between 0.35 trillion cubic metres (Tm³) and 0.77 Tm³. It said that this is only around one-tenth the 5.3 Tm³ estimated in April last year by the US Energy Information Administration.

By: Will Conroy
+44 20 8652 3214

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