July 16, 2012 / 12:37 PM / 5 years ago

PKN starts third shale well, plans horizontal drilling

WARSAW, July 16 (Reuters) - Polish oil refiner PKN Orlen started drilling its third shale gas well on Monday and announced plans to initiate horizontal drilling as part of the country's plan to develop shale resources to gain more independence from Russian gas.

The European Union member is making a large bet on shale gas which, apart from reducing reliance on Russia, could also help the country's coal-fired power system meet the challenges of an EU climate policy aimed at curbing CO2 emissions.

PKN and gas monopoly PGNiG, both state-controlled, are at the forefront of the shale gas push which -- according to Poland -- should allow production to start by the end of 2015.

PKN, which maintained its earlier plans to drill 5-7 wells in 2012, said the horizontal well was to be drilled at a partly explored licence in the southeast region of Lubelszczyzna.

"The results of analyses of rock samples are promising enough to make a decision on horizontal drilling in this location," it said.

The group holds eight oil and gas exploration licences in Poland. It is also preparing for offshore drilling in the Latvian part of the Baltic Sea shelf, the company said.

Poland has granted 111 shale exploration licences to U.S. groups Chevron and Exxon Mobil among others, even while countries such as Bulgaria and France have banned shale exploration pending further environmental studies.

It has continued its shale drive even after hopes were dashed it could become one of Europe's largest gas producer when it cut estimates of recoverable gas earlier this year.

Poland pegged its recoverable shale gas reserves at 346-768 billion cubic metres, compared with an earlier estimate of 5.3 trillion bcm by the U.S. Energy Information Association.

Last month, Exxon Mobil pulled out of exploration projects because it did not deem them economically viable, increasing pressure on Poland to rely more on state companies to fund the costly projects. (Reporting by Maciej Onoszko; Editing by Dan Lalor)

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