Gas found at FX Energy prospect
A cheering of rig workers was followed by a scramble for cell phones. By daybreak on Monday 26, the fuel exploration industry, and a number of foreign investors, had received some of their best news for several years - they have a fresh supply of natural gas. According to one insider, it could be at a rate of about 250 cubic meters per minute.
That day, FX Energy, a Utah-based exploration company that holds rights to the land below Zaniemyśl, was one of Nasdaq's fastest climbers. From a close at $6 in the previous week, the price of the stock spiked to $8 within hours of the news, a 100 percent improvement on its position just three months ago. FX Energy, whose board was joined last year by North Sea gas hunter Richard Hardman CBE, has farmed out half of its 49 percent percent ownership of the Zaniemyśl prospect to UK based Cal Energy, a subsidiary of MidAmerican owned by investment wizard Warren Buffett's Berkshire Hathaway. Cal Energy brought finance, while FX Energy brought a new exploration model. The state-owned Polish Oil and Gas Company (POGC, or PGNiG), retains 51 percent of the prospect and has staff working shoulder-to-shoulder with the British and the Americans.
In spite of the excitement around the well, these are still early days. While there is no fire without gas, experts say that it could take ten days from initial gas flow to assess the extent of the reserves, and their projected commercial value. Indeed, Peter Youngs, managing director of Cal Energy Gas Group, told the Business Journal that it is "...corporate policy not to give any details on any drilling activity (be it in Poland or elsewhere) until we are confident of the results." His brother Robert Youngs, leader of the Cal Energy team at the Zaniemyśl rig, is equally poker faced. Nevertheless, observers are upbeat.
"We are optimistic about the initial test results of this well," says a press statement by David Pierce, president of FX Energy, a company with a normally cautious approach to the media. Dr Witold Weil, former vice president of PGNiG is even more forthcoming. "PGNiG experts participated in the initial testing for the well with Cal Energy, and from what they tell me I am positive about the commercial viability of this well." Dr Weil speaks of good early outflow and pressure data that, if confirmed, would suggest a large reserve, and emphasizes the ease of connecting this well to the supply network because of existing pipelines a few kilometers away.
"The gas could have a sustainable flow rate of 250 cubic meters per minute," adds Dr Weil. "It is seventy percent methane, the so-called 'sweet gas' which is clean and of high value."
According to PGNiG, joint exploration activity with FX Energy will continue throughout this year. Another two drills are likely to start in the Zaniemyśl area, while an entirely new prospect at Środa Wielkopolski will start in the spring, plus up to four other wells in the Fences areas. New technology, allowing 3D mapping of geological formations deep below previously impenetrable layers of rock, is said to be raising the chances of several more finds as well as maintaining the solidarity of the PGNiG-FX Energy partnership.
Paul L. Craig, Ph.D., president of the Alaska-based Trading Bay Energy Corporation, has been studying FX Energy for six years. "[FX Energy] have secured some of the most propitious properties in Europe that appear to be very under-explored," said Craig in an online interview. "They are capitalized sufficiently to move forward with their program of exploration. There is infrastructure through which to produce their gas and there is a market for the gas."
"The impact for Poland could be immense," says James Angelus, an American petroleum expert who has been based in Central and Eastern Europe for twelve years. "This news could have an unsettling effect on the old guard within Poland's oil and gas industry, [and lead to] a disruption of the cozy relationship between some of its management and Russian gas suppliers." Currently, Russian gas, most of it in the hands of the monopoly Gazprom, supplies 80 percent of Poland's gas needs. Angelus argues that the positive effects of the discovery could be that it will encourage the government to support foreign investment in exploration, which has been limited to only a fraction of the Polish landmass. This could "...hasten the privatization of the state-owned monopoly's [exploration and production] companies." The privatization of PGNiG will begin later this year. Geologists have estimated that there is up to 40 TCF (trillion cubic feet) of gas under Polish territory, a ball-park figure comparable to the reserves of the southern North Sea.
That day, FX Energy, a Utah-based exploration company that holds rights to the land below Zaniemyśl, was one of Nasdaq's fastest climbers. From a close at $6 in the previous week, the price of the stock spiked to $8 within hours of the news, a 100 percent improvement on its position just three months ago. FX Energy, whose board was joined last year by North Sea gas hunter Richard Hardman CBE, has farmed out half of its 49 percent percent ownership of the Zaniemyśl prospect to UK based Cal Energy, a subsidiary of MidAmerican owned by investment wizard Warren Buffett's Berkshire Hathaway. Cal Energy brought finance, while FX Energy brought a new exploration model. The state-owned Polish Oil and Gas Company (POGC, or PGNiG), retains 51 percent of the prospect and has staff working shoulder-to-shoulder with the British and the Americans.
In spite of the excitement around the well, these are still early days. While there is no fire without gas, experts say that it could take ten days from initial gas flow to assess the extent of the reserves, and their projected commercial value. Indeed, Peter Youngs, managing director of Cal Energy Gas Group, told the Business Journal that it is "...corporate policy not to give any details on any drilling activity (be it in Poland or elsewhere) until we are confident of the results." His brother Robert Youngs, leader of the Cal Energy team at the Zaniemyśl rig, is equally poker faced. Nevertheless, observers are upbeat.
"We are optimistic about the initial test results of this well," says a press statement by David Pierce, president of FX Energy, a company with a normally cautious approach to the media. Dr Witold Weil, former vice president of PGNiG is even more forthcoming. "PGNiG experts participated in the initial testing for the well with Cal Energy, and from what they tell me I am positive about the commercial viability of this well." Dr Weil speaks of good early outflow and pressure data that, if confirmed, would suggest a large reserve, and emphasizes the ease of connecting this well to the supply network because of existing pipelines a few kilometers away.
"The gas could have a sustainable flow rate of 250 cubic meters per minute," adds Dr Weil. "It is seventy percent methane, the so-called 'sweet gas' which is clean and of high value."
According to PGNiG, joint exploration activity with FX Energy will continue throughout this year. Another two drills are likely to start in the Zaniemyśl area, while an entirely new prospect at Środa Wielkopolski will start in the spring, plus up to four other wells in the Fences areas. New technology, allowing 3D mapping of geological formations deep below previously impenetrable layers of rock, is said to be raising the chances of several more finds as well as maintaining the solidarity of the PGNiG-FX Energy partnership.
Paul L. Craig, Ph.D., president of the Alaska-based Trading Bay Energy Corporation, has been studying FX Energy for six years. "[FX Energy] have secured some of the most propitious properties in Europe that appear to be very under-explored," said Craig in an online interview. "They are capitalized sufficiently to move forward with their program of exploration. There is infrastructure through which to produce their gas and there is a market for the gas."
"The impact for Poland could be immense," says James Angelus, an American petroleum expert who has been based in Central and Eastern Europe for twelve years. "This news could have an unsettling effect on the old guard within Poland's oil and gas industry, [and lead to] a disruption of the cozy relationship between some of its management and Russian gas suppliers." Currently, Russian gas, most of it in the hands of the monopoly Gazprom, supplies 80 percent of Poland's gas needs. Angelus argues that the positive effects of the discovery could be that it will encourage the government to support foreign investment in exploration, which has been limited to only a fraction of the Polish landmass. This could "...hasten the privatization of the state-owned monopoly's [exploration and production] companies." The privatization of PGNiG will begin later this year. Geologists have estimated that there is up to 40 TCF (trillion cubic feet) of gas under Polish territory, a ball-park figure comparable to the reserves of the southern North Sea.
