San Leon Nears First Commercial European Shale Gas in Poland

Jan 23, 2014 3:03 am ET

Jan. 23 (Bloomberg) -- San Leon Energy Plc, the natural-gas explorer backed by billionaire George Soros and Blackrock Inc., said one of its Polish wells “moved a long way” toward producing Europe’s first commercial shale gas.

Natural gas from shale formations flowed at at as much as 60,000 cubic feet per day during tests at the Lewino vertical well in the Baltic Basin in the north, Dublin-based San Leon said today in a filing.

“This is the most encouraging vertical shale well test in Poland to date,” Chairman Oisin Fanning said in the statement. “We have moved a long way towards cracking the code towards commercial production from our unconventional plays.”

Poland, ranked as Europe’s biggest holder of shale gas by the U.S. Energy Information Administration last year, has sought to revive exploration after foreign investors including Marathon Oil Corp. and Talisman Energy Inc. withdrew amid regulatory constraints and government plans to increase taxation.

The country can expect news on this first commercial gas flows early this year, Dennis McKee, the chief executive officer of United Oilfield Services Sp. z o.o, the nation’s largest provider of hydraulic fracturing services, said in an interview this month. United Oil Services provided hydraulic fracturing services in Lewino.

San Leon had not finished clean-up of the well when it achieved the gas flow rate. It estimated a potential flow rate of 200,000 to 400,000 standard cubic feet per day if the clean- up of fracturing fluid from the well was completed. That’s equivalent to as much as 4 million cubic meters per year, or 0.03 percent of the country’s fuel use.

The company will drill and hydraulically stimulate a horizontal well in the Lewino area to test “the entire vertical extent of the Ordovician interval with each frac, and prove commercial flow rates,” it said. In the U.S., horizontal wells typically yield between seven and 30 times the production rate and recovery of vertical wells in the same formation.

San Leon became the sole owner of three permits in northern Poland after Talisman’s exit, including the Gdansk West license where the Lewino well is located. Lewino produced gas “almost immediately after clean-up and has been continuous when the well is open,” the company said in a Jan. 13 presentation on its website.

--Editors: Rob Verdonck, James Herron