ConocoPhillips Announces End Of Search For Shale Gas In Poland
Low commercial value and growing environmental opposition are cited as reasons.
Houston-based ConocoPhillips (NYSE:COP) has reached the conclusion that shale gas exploration in the Poland is just not worth the hassle, becoming the latest in a string of US oil majors to leave the Central European country. Lane Energy Poland, a subsidiary of ConocoPhillips, has managed to drill at least seven new wells at three of its concessions located at the Western Baltic Basin.
Reuters stated that Lane Energy has invested more than $220 million, since it commenced commercial operations in the country in 2009. The charges related to the withdrawal of its operations are expected to be estimated at around $90 million in pretax, whereas after tax, it is expected at around $30 million.
Like many of the oil majors that had left, ConocoPhillips country manager in Poland, Tim Wallace, has said that the company has not encountered high commercial values of shale natural gas in the region. CEO Ryan Lance also had a bleak assessment of the drilling evaluation almost a year ago.
All the other companies also left for the same reason despite pinning high hopes for a mild chance of striking the jackpot. These include Chevron Corp, Exxon Mobil Corp, Total SA, and Marathon Oil Corp., whom had withdrawn their comical operations almost three years ago.
Another reason cited is that there is strong opposition amongst environmentalists, particularly in Poland, of the devastating impact that shale oil drilling will have on the environment in Europe, something that the continent itself prides in, which is the one reason why companies in Europe do not commit themselves to invest due to these factors among others.
Even before these oil and gas companies made their way into the country, there was already strong opposition amongst environmentalists, who warned about the consequences for the exploration of shale gas.
The move come as a blow to the Polish government’s hope to wean itself away from its dependence of Russian gas imports, which meets 60% of its energy demands, that is subject to volatility that occurs between Ukraine and Russia over the payment of bills. It had also hoped to have its first commercial shale gas production come online by the last quarter of 2014 just before the winter season, but only state-controlled companies PKN Orlen (PKN.WA) and PGNiG (PGN.WA) are drilling. There is no certainty that Poland will have a stable gas supply in the coming winter to go through the cold weather.
ConocoPhillips’s stock price ended the day at $64.06, a gain of 0.06% from the previous day.
