Poland: Oil companies’ expansion in the upstream sector

Onshore exploration

Polish Petroleum and Gas Mining Group (PGNiG) and ORLEN Upstream sp. z o.o. (a subsidiary of PKN ORLEN S.A., Poland’s largest oil company) have signed a letter of intent on further cooperation relating to the prospection, exploration and production of hydrocarbons in Poland. In the letter of intent the companies confirmed that they plan to join forces and collaborate in northern, southern and south-eastern Poland. The two companies have so far been working together at 15 locations, including on the production of natural gas from seven fields in the region of Greater Poland and on prospection and exploration work in other regions.

The representatives of both companies said that their aim is to maintain the high level of investments in the gas and oil production sector. The signed letter of intent enables the exchange of experience and geological data collected by these two companies as well as the sharing of technology that will for example lead to increased production and a reduction in costs.

PGNiG and ORLEN Upstream plan to make the final investment decisions regarding the cooperation areas specified in the letter of intent following a detailed analysis of the available geological data and joint resources.

Offshore exploration

The company LOTOS Petrobaltic S.A. has completed its first horizontal production well drilled at an angle of 87 degrees on the oil rig “Lotos Petrobaltic” located in the B8 Baltic oil field.

The company claims that the application of this method will enable better use of the field’s resources and that it allows the avoidance of many technical challenges while drilling the last section of the new borehole that could arise when using standard drilling methods. The production well is over 2.2 km deep and over 3 km long. The horizontal drilling needed to be very precise as the well was only 2.5 metres from other boreholes. Apart from the horizontal drilling, the oil rig has been performing further works in the B8 field.

The B8 field is one of the largest oil fields in the Baltic Sea and is situated about 63 km north of Cape Rozewie in the Exclusive Economic Zone of the Republic of Poland (the depth of the sea in this area is 81 to 84 metres). Its production potential is estimated to be about 3.5 million tonnes of crude oil. Its exploration was launched in September 2015.

According to data as of 31 March 2016, the crude oil and natural gas reserves of the company LOTOS Petrobaltic S.A. are estimated at over 64 million barrels of oil equivalent.

Further development

Onshore and offshore works with respect to the prospection, exploration and production of conventional and unconventional hydrocarbons in Poland will be continued as the Polish resources are very rich according to an evaluation of prospectivity for the possible presence of hydrocarbons prepared by the Polish Geological Institute - National Research Institute in 2015.

According to information from the Ministry of Environment there are plans to grant licenses for prospection, exploration and production of conventional and unconventional hydrocarbons in 2016 in 10 very promising locations across Poland. Initial invitations to tender have been published in the Official Journal of the European Union and in the Public Information Bulletin issued by the Ministry of the Environment; other invitations to tender will be published soon. The Ministry of Environment has already issued an announcement about the locations selected for tender procedures in 2017.