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Licences in Poland

As at December 31st 2017, PGNiG held 48 licences for exploration and appraisal of crude oil and natural gas deposits, vs 53 licences as at January 1st 2017.

In 2017, 33 proceedings to extend, change or convert licences were closed (with a total of 21 concessions converted). 40 proceedings to approve additional works in geological projects were also completed. As at December 31st 2017, proceedings to convert 4 licences and extend 2 licences were still pending at the Ministry of the Environment. 17 additions to geological projects also await final approval.

 

As at December 31st 2017, PGNiG held a total of 213 production licences in Poland.

In 2017, no new licences were granted to PGNiG, 26 licences were changed and 12 licences expired.

Results

As at the end of December 2017, formation test results were obtained from 22 boreholes (12 exploration wells and 10 appraisal wells), including 3 wells where drilling was completed in 2016.

Work performed

Throughout 2017, PGNiG was involved in crude oil and natural gas exploration and appraisal projects in the Carpathian Mountains, Carpathian Foothills, Sudetian Monocline, and Polish Lowlands, both on its own and jointly with partners. Drilling work in areas covered by licences awarded to PGNiG was performed on 33 boreholes, including 12 exploration wells, 10 appraisal wells and 11 production wells. In 30 of the wells the target depth was reached, including in 11 exploration wells, 10 appraisal wells, and 9 production wells.

Wells drilled in 2017:

production wells
exploration wells
appraisal wells
reconstruction, intensification, test, liquidation
exploration and production licences

In 2017, 14 wells, including 5 exploration and 9 appraisal wells, were drilled with positive results. 8 wells failed to yield a commercial flow of hydrocarbons and were therefore abandoned. In 2017, 9 production wells were classified as positive. In 2017, workovers, enhanced recovery treatments and tests were performed on 8 research (core) boreholes, 4 exploration wells, 2 appraisal wells, and 2 production wells.

New fields in the Sanok area hooked up in 2017 include: new elements in the Husów-Albigowa-Krasne field: Siedleczka-4, Siedleczka-5K, Siedleczka-6K wells; in the Przeworsk field: Przeworsk-17, Przeworsk-18, Przeworsk19K, Przeworsk-20, Przeworsk21K, Przeworsk-22 wells; in the Lubliniec-Cieszanów field: Lubliniec-14, Lubliniec-15 wells; in the Pruchnik-Pantalowice field: Pruchnik-28, Pruchnik-29K, Pruchnik-30K wells; and in the Przemyśl field: Przemyśl-258K well. New fields in the Zielona Góra area hooked up in 2017 include: Radoszyn-2, Radoszyn-3, Radoszyn-4K and Radoszyn-5K wells, Miłosław E (Miłosław-4K well – as part of a long-term production test), and in the Brońsko field: Brońsko-23, Brońsko-27 and Brońsko-28 wells. In 2017, the Porażyn and Brzeźnica deposits were removed from the list of mineral deposits in Poland.

No. of production facilities Sanok Zielona Góra
Gas production facilities 18 10
Oil production facilities 5 1
Oil and gas production facilities 13 7
Total 36 18

With its oil production volume in Poland close to 800,000 tonnes in 2017, PGNiG is one of Poland’s leading producers of crude oil. As regards domestic gas production, PGNiG’s share is approximately 90%.

Production of natural gas in Poland

mcm 2017 2016 2015 2014 2013
High-methane gas (E) 1,315 1,400 1,454 1,457 1,550
PGNiG Zielona Góra Branch
PGNiG Sanok Branch 1,315 1,400 1,454 1,457 1,550
Nitrogen-rich gas (Ls/Lw as E equivalent) 2,524 2,481 2,513 2,570 2,661
PGNiG Zielona Góra Branch 2,467 2,422 2,441 2,490 2,574
PGNiG Sanok Branch 56 59 72 80 87
Total (as E equivalent) 3,839 3,881 3,967 4,027 4,211

Production of crude oil in Poland (including condensate and NGL)

thousand tonnes 2017 2016 2015 2014 2013
PGNiG Zielona Góra Branch 747 719 719 742 766
PGNiG Sanok Branch 40 44 46 47 49
Total 787 763 765 789 815
* including condensate and NGL

Production of other products

thousand tonnes 2017 2016 2015 2014 2013
Propane-butane 38 37 35 32 30
LNG 22 26 25 30 32
mcm 2017 2016 2015 2014 2013
Hel 3 3 3 3 3

Collaboration with other entities

In 2017, PGNiG conducted joint operations with other entities in licence areas awarded to PGNiG, FX Energy Poland sp. z o.o., LOTOS Petrobaltic S.A., and ORLEN Upstream sp. z o.o. Furthermore, PGNiG was engaged in exploration work with other entities in Pakistan and Norway.

Collaboration in Poland

Under licences held by PGNiG, work was continued in the following areas:

  • ‘Płotki’ – under the joint operations agreement dated May 12th 2000; licence interests: PGNiG (operator) – 51%, FX Energy Poland sp. z o.o. – 49%; 3D seismic surveys were completed in the Radliniec licence area and commenced in the Mechlin licence area.
  • ‘Płotki’ – ‘PTZ’ (the Extended Zaniemyśl Area) – under the joint operations agreement dated October 26th 2005; licence interests: PGNiG (operator) – 51%, FX Energy Poland sp. z o.o. – 24.5%, Calenergy Resources Poland sp. z o.o. – 24.5%. At present, PGNiG is awaiting decision of the Ministry of the Environment to terminate the licence.
  • ‘Poznań’ – under the joint operations agreement dated June 1st 2004; licence interests: PGNiG (operator) – 51%, FX Energy Poland sp. z o.o. – 49%. The construction of the Miłosław E gas production facility continued. Drilling of the Miłosław-5K/H exploration well was completed, achieving commercial flow of gas, and drilling of the Kotlin-3 exploration well was started. 3D seismic surveys in the Taczanów licence area were also completed.
  • ‘Bieszczady’ – under the joint operations agreement dated June 1st 2007; licence interests: PGNiG (operator) – 51%, Eurogas Polska sp. z o.o. – 24%, and Energia Bieszczady sp. z o.o. – 25%; on July 20th 2015, ORLEN Upstream sp. z o.o. acquired a 49% interest in licence blocks 437, 438, 456, 457, 458 and in parts of licence blocks 416, 417 and 436 held by Eurogas Polska sp. z o.o. and Energia Bieszczady sp. z o.o., thus becoming a party to the joint operations agreement. The processing and interpretation of 2D seismic data (Hoczew-Lutowiska) was completed in the area. Drilling of the Pisarowce-1 well (depth: 1,700 m) and the Poraż Południe-1 well (depth: 3,000 m) was completed. 2D field seismic surveys in the Barycz-Paszowa seismic area were completed. In 2017, geological data processing and interpretation was carried out for two seismic areas: Barycz-Paszowa (2D) and Wańkowa-Bandrów (3D). In November 2017, works were started to abandon the Niebieszczany-1 exploration well.
  • ‘Sieraków’ – under the joint operations agreement dated June 22nd 2009; licence interests: PGNiG (operator) – 51%, ORLEN Upstream sp. z o.o. – 49%. Formal and legal work connected with the development of the Sieraków oil field is under way;
  • ‘Kamień Pomorski’ – under the agreement of August 14th 2013; licence interests: PGNiG (operator) – 51%, LOTOS Petrobaltic S.A. – 49%. In August – October 2017, a negative Stawno-1 well was drilled – work to appraise future prospects for that licence area is under way;
  • ‘Górowo Iławieckie’ – under the agreement on joint operations of December 31st 2014; licence interests: PGNiG (operator) – 51%, LOTOS Petrobaltic S.A. – 49%. The Miłaki 3D seismic surveys were relaunched after suspension in October 2017;

Recoverable reserves in Poland in 2013−2017 (proven by PGNiG)

*Also included are reserve increases specified in the documentation approved by the Commission for Mineral Resources, without the decision of the Minister of the Environment.

Sales of key products

The main products sold by the Trade and Storage segment are crude oil, high-methane gas and nitrogen-rich gas. Other products, obtained in the process of crude refining, include crude condensate, sulfur, and propane-butane. Some of the produced nitrogen-rich gas is further treated into high-methane gas at the Odolanów and Grodzisk Wielkopolski nitrogen rejection units. Apart from high-methane gas, the cryogenic processing of nitrogen-rich gas yields such products as liquefied natural gas (LNG), gaseous and liquid helium, and liquid nitrogen.

Part of the natural gas extracted in Poland is sold directly from gas fields to customers outside the PGNiG Group (see table below) and within the PGNiG Group. Natural gas extracted and not sold in the upstream segment is transferred for sale to the Trade and Storage segment.

Domestic sales of natural gas produced by the segment outside the PGNiG Group

mcm 2017 2016 2015 2014 2013
High-methane gas (E) 30 53 52 33 36
Nitrogen-rich gas (Ls/Lw as E equivalent) 646 644 633 682 658
Total (as E equivalent) 676 697 685 715 694

As regards trading in crude oil extracted in Poland, in 2017 PGNiG continued its trading partnership with major Polish and foreign players in the fuel sector.

Crude oil* in Poland, PGNiG Group

thousand tonnes 2017 2016 2015 2014 2013
PGNiG Zielona Góra Branch 747 719 719 742 766
PGNiG Sanok Branch 40 44 46 47 49
Crude oil production* 787 763 765 789 815
Sales of crude oil* produced in Poland 791 753 772 780 809
* Including condensate.

Rail deliveries of crude oil (67% of sales) were made to the refinery of the LOTOS Group in Gdańsk and to Orlen Południe’s Trzebinia Production Plant (the ORLEN Group). In 2017, crude oil was also delivered by road to Orlen Południe’s Jedlicze Production Plant (5% of sales), and via the PERN pipeline − to TOTSA TOTAL Oil Trading S.A. (28% of sales). PGNiG sells crude oil at market prices.

Seismic surveys

In 2017, 335.17 km of 2D seismic surveys and 650.74 km2 of 3D seismic surveys were carried out. The largest 2D and 3D projects implemented in Poland during the year include Barycz-Paszowa 2D (288 km) as well as Robotycze-Fredropol 3D (246 km2), Kramarzówka 3D (146 km2), Mechlin 3D (110 km2), and Taczanów 3D (56 km2).

Underground gas storage facilities

PGNiG’s Exploration and Production segment’s gas system includes two storage facilities for L group gas (Daszewo UGSF and Bonikowo UGSF), whose main role is to regulate the operation of the nitrogen-rich gas system and store gas from nitrogen-rich gas production facilities.

Key parameters of underground gas storage facilities.

Underground gas storage facilities (UGSF)

Working capacity Maximum withdrawal capacity Maximum injection capacity
mcm mcm/day mcm/day
Bonikowo 200 2,4 1,7
Daszewo 30 0,4 0,2

Exploration, appraisal and extraction of coal bed methane

As part of the exploration, appraisal and extraction project for methane deposits in the Geo-Metan coal bed, in 2017 work was completed in two wells (Gilowice-1 and Gilowice-2H) in the area of ​​the Upper Silesian Coal Basin. The works were approved by the decision of the Minister of the Environment of June 24th 2016.

In 2017, research and test works were performed to determine the potential of gas flow from coal beds after hydraulic fracturing in the Gilowice-2H well. Field tests yielded satisfactory production results – about 880 thousand m3 of gas were extracted with an average gas yield in the final test stage of approximately 3.7 m3/min), confirming the effectiveness of the reservoir stimulation works carried out. At the end of Q1 2017, PGNiG secured an exploration, appraisal and production licence for coal bed methane, covering almost 19 square kilometres. The licence area covers the rural municipalities of Miedźna, Bojszowy, Pszczyna and the rural and urban municipality of Brzeszcze. The test production from coal beds yielded promising results, and extracted gas proved to be of very good quality (97% methane). More drilling is planned in these areas in early 2018.

Foreign operations

Natural gas production abroad

mcm 2017 2016 2015 2014 2013
High-methane gas (E) 548 517 573 419 340
in Norway 548 517 573 419 340
Nitrogen-rich gas (Ls/Lw as E equivalent) 150 59 52 58 25
PGNiG Pakistan Branch 150 59 52 58 25
Total (as E equivalent) 698 576 625 477 365

Sales outside the Group

mcm 2017 2016 2015 2014 2013
High-methane gas (E) 24 1
in Norway 24 1
Nitrogen-rich gas (Ls/Lw as E equivalent) 149 56 51 56 25
PGNiG Pakistan Branch 149 56 51 56 25
TOTAL (measured as E equivalent) 149 80 52 56 25

Crude oil*

thousand tonnes 2017 2016 2015 2014 2013
Production in Norway 470 555 664 418 283
Sales in Norway 479 593 619 389 297
*Including NGL.

Norway

PGNiG UN holds interests in exploration and production licences on the Norwegian Continental Shelf in the Norwegian Sea, in the North Sea, and in the Barents Sea. Jointly with partners, the company has been extracting hydrocarbons from the Skarv, Morvin, Vilje, Vale and Gina Krog fields and working on the development of the Ærfugl (formerly Snadd) and Skogul (formerly Storklakken) fields. In the other licence areas, the company is engaged in exploration projects.

The company’s main asset is the Skarv field, which has been developed using a floating production, storage and offloading (FPSO) vessel. Since 2017, PGNiG UN has been extracting hydrocarbons from the new Gina Krog deposit, which was developed using a new platform in the North Sea. The other fields (Morvin, Vilje and Vale) comprise a group of wells connected to the existing production infrastructure. In 2017, PGNiG UN together with its partners launched two investment projects at the Ærfugl and Skogul fields. The preferred scenario provides for drilling three new production wells and launch of production in 2020.

In 2017, the company produced a total of 470 thousand tonnes of crude oil with other fractions (measured as tonnes of crude oil equivalent) and 548 mcm of natural gas from the Skarv, Morvin, Vilje, Vale, and Gina Krog fields. The extraction volume was affected by the temporary shutdown of two of the fifteen wells in the Skarv field and a downtime in the Vale field in the second half of the year. The impact of these events was partly offset by higher production from other fields and improved consistency of hydrocarbon flows from other wells in the Skarv field.

In 2017, PGNiG and its partners continued the development of the Gina Krog field, which included the drilling of production wells, tests of production installation, and technical acceptance. An FSO unit was installed near the field to serve as an oil storage facility. All these works led to the launch of production from the Gina Krog field at the end of June 2017.

In 2017, PGNiG UN recorded an increase in proven reserves in Norway, from 78 mboe at the beginning of the year to 83 mboe at the end of 2017.

In 2017, PGNiG UN recorded an increase in proven reserves in Norway, from 78 mboe at the beginning of the year to 83 mboe at the end of 2017 as a result of a positive re-evaluation of resources in the Ærfugl and Vilje fields and the acquisition of the Skogul field. In line with the PGNiG Group’s Strategy, PGNiG UN analysed other projects that may lead to further increases in production volumes. In the first half of 2017, PGNiG UN acquired a 35% interest in the Skogul field (licence PL460) from Aker BP ASA, securing 3.55 mboe of the field’s recoverable reserves. PGNiG UN also acquired a 20% interest in the PL433 licence, which covers the Fogelberg condensate and gas field (the transaction is awaiting approval by the Norwegian authorities). The PL433 licence is operated by Spirit Energy (formerly Centrica), which holds a 51.7% interest, and Faroe Petroleum, with an interest of 28.3%, is the project partner. The licence holders decided to drill an appraisal well in 2018, based on which a decision is to be made whether to proceed with field development. According to the data provided by the Norwegian Ministry of Oil and Gas, the estimated recoverable reserves in the Fogelberg field are 64 mboe.

In 2017, another APA 2016 round (Awards in Pre-defined Areas) was concluded, with PGNiG UN awarded interests in two new exploration licences:

  • a 40% interest (as the operator) in the PL887 licence area in the Norwegian Sea. The awarded acreage is located next to the Åsgard field; the licence partners are Concedo ASA, Skagen44 AS and Petrolia NOCO AS, with a 20% interest each;
  • a 30% interest (as a partner) in the PL891 licence area in the North Sea. The licence operator is ConocoPhilips (with a 40% interest), while the other partner is Aker BP ASA (a 30% interest).

Within two years, the licence partners are to carry out necessary geological and geophysical surveys to precisely estimate the oil production potential of the licence areas. After that period, drill-or-drop decisions will be made. The awarded licences have significant gas potential, which fits in with plans envisaging gas imports from Norway to Poland. Both licences are located close to existing production and pipeline infrastructure, which will make project work much simpler and faster. They are also located near the Skarv and Åsgard fields, respectively.

Jointly with its partners, PGNiG UN also continued work in other exploration licence areas. Among other works, the company evaluated the potential of the PL839, PL850, and PL838 licence areas. Based on the results of geological surveys and economic analyses, the company and its partners decided to release the PL703 licence and the operator licence PL799, with no wells drilled.

In 2017, PGNiG UN continued the efforts to enable imports of Norwegian gas to Poland. To this end, negotiations were continued with the transmission system operators in Poland, Denmark and Norway to construct a new infrastructural link between Norway and Poland (the Norwegian Corridor). PGNiG UN actively participated in the consultations launched by the operators and submitted a number of proposals regarding the legal and regulatory framework for that link.

PGNiG UN holds a diversified portfolio of production and exploration licences in the North Sea, the Norwegian Sea, and the Barents Sea, and maintaining this diversification is perceived as an important element of project portfolio management. As at December 31st 2017, PGNiG UN held interests in 18 exploration and production licences, including as the operator of two licences.

PGNiG UN’s production fields

Licence Operator Interest Type Planned activities
PL029C (Gina Krog) Statoil 29.63 %

(8% in the project)

Exploration/development Development (production to begin in 2017)/exploration
PL036D (Vilje) Det norske 24.243 % Production Production
PL036 (Vale) Centrica 24.243 % Exploration/Production Production
PL249 (Vale)
PL134B (Morvin) Statoil 6 % Production Production
PL134C (Morvin)
PL212 (Skarv) BP 15 % (11.9175 in the project) Exploration/Development/Production Production, development of the Ærfugl deposit, exploration, planned drilling in 2018
PL212B (Skarv)
PL262 (Skarv)
PL460 (Skogul) Aker BP 35% Development Development (production to start in 2020)
PL212E (Snadd Outer) BP 15 % Exploration Possible tie-back to Snadd
PL813 (Elli) Statoil 8% Exploration Expected DoD decision* February 2019
Op.PL838 (Tunfisk/Shrek) PGNiG 40% Exploration DoD decision* August 2018
PL839 (Nise/Storkobbe) BP 11.9175% Exploration Seismic data interpretation
PL850 (Ulv) Edison 20% Exploration DoD decision* February 2019
PL856 (Princesse) Capricorn 25% Exploration DoD decision* July 2018
PL887 (Novus East) PGNiG 40% Exploration DoD decision* February 2019
PL891 (Tunfisk South) ConocoPhilips 30% Exploration DoD decision* February 2019
*Drill-or-drop decision – a decision to either commit to drilling exploration wells or relinquish the licence

 

The Skarv field was brought on stream in December 2012. Currently developed with 16 wells connected with five subsea templates, which can support a further seven wells, adding much flexibility to Skarv operations going forward. The Skarv FPSO has a long useful life and can be an attractive production and transport hub for future discoveries in the region.

Ærfugl field – a gas and condensate field in the Skarv licence area. Six more wells are to be tied back to the Skarv FPSO and existing transport infrastructure. Production from the new installations is to start in 2020.
Skarv and Ærfugl reserves: 54.7 mboe, including 37.1 mboe of natural gas and 17.6 mboe of crude oil and NGL

The Morvin field was discovered in the Norwegian Sea in 2001. Oil is produced through two subsea templates (North and South). Tied back to the Åsgard B platform, the field has a stable and predictable production profile.
Resources: 1.2 mboe, including 0.4 mboe of natural gas and 0.8 mboe of crude oil and NGL

The Vilje field is located in the central part of the North Sea, close to the Alvheim and Heimdal facilities. The field is developed with three subsea wells linked by pipeline to the Alvheim FPSO vessel.
Oil reserves: 4.5 mboe

Gina Krog is an oil and gas field brought on stream in June 2017 with five wells. Subsequent wells will be drilled until 2019, allowing to increase production capacity. The field was developed using a platform and a floating storage and offloading (FSO) unit for crude oil transported by tankers for transshipment. Raw natural gas is sent to the Sleipner platform. After processing, the gas is exported to Europe via Gassled. Condensate and NGL will be transported to the Kårstø processing plant in Norway.
Resources: Reserves: 17.4 mboe, including 5.5 mboe of natural gas and 11.9 mboe of crude oil and NGL

Vale is a gas and condensate field discovered in the North Sea in 1991. Output from the Vale field is expected to rise in the coming years as a result of recent investments made in the Heimdal platform.
Resources: 2.0 mboe, including 1.2 mboe of natural gas and 0.8 mboe of crude oil

Skogul is on oil field situated in the North Sea near the Vilje field. The development plan assumes drilling one well connected to the subsea installation on the Vilje field, and then using the existing infrastructure, including the Alvheim FPSO platform.
Resources: 3.5 mboe, including 0.3 mboe of natural gas and 3.2 mboe of crude oil

Sale

Crude oil is sold directly from the fields to Shell International Trading and Shipping Company Ltd (crude from the Skarv, Vilje, Vale and Gina Krog fields) and to TOTSA Total Oil Trading S.A. (from the Morvin field). All fields except for Vilje also produce associated gas, which is transferred via a gas pipeline mainly to Germany, where it is collected by PST. The key sales markets are Norway, Germany and the UK.

Pakistan

PGNiG is engaged in exploration work in Pakistan under an agreement for hydrocarbon exploration and production in the Kirthar licence area executed between PGNiG and the government of Pakistan on May 18th 2005. The work is conducted jointly with Pakistan Petroleum Ltd. (PPL), with production and expenses shared proportionately to the parties’ interests in the licence: PGNiG (operator) – 70%, PPL – 30%. Exploration activities within the licence area have resulted in the discovery of two gas deposits − Rehman and Rizq.

Natural (nitrogen-rich) gas resources: 6.96 billion cubic metres (35.7 million boe) in the Rehman field and 2.44 billion cubic metres (13.7 million boe) in the Rizq field

 

6.96 billion cm
Natural (nitrogen-rich) gas resources in the Rehman field
2.44 billion cm
Natural (nitrogen-rich) gas resources in the Rizq field
150mcm
PGNiG’s share in the production from the Rehman and Rizq fields

Gas from the Rehman and Rizq fields is produced via facilities located in the Rehman field. PGNiG’s share in the production from the Rehman and Rizq fields, carried out using five wells in 2017, amounted to 150 mcm of gas (measured as high-methane gas equivalent).

In March 2017, PGNiG completed drilling the Rehman-3 well and in October – the Rizq-2 well. Currently, drilling of the Rehman-4 borehole, which started in November, is continued and preparatory work is under way for drilling the Roshan-1  and Rehman-5 boreholes. The Rehman-2 well was brought on stream in March 2017, while the Rehman-3 well in August. Work to hook up the Rizq-2 well is in progress, to be completed in Q1 2018. The first tests in the Rizq-2 appraisal well were carried out in October 2017. The initial flow rate achieved at the time was approximately 28 m³/min. After a hydraulic fracturing treatment performed in late November and early December 2017, the well flowed at a rate of around 128 m³/min.

Libya

Due to a rapid deterioration of the security situation in Libya in mid-2014, on August 12th 2014 PGNiG Upstream North Africa gave notice of a force majeure to the National Oil Corporation (NOC) and started to scale back its operations in the country.

In 2017, in agreement with NOC, PGNiG UNA carried on with measures to mitigate the impact of force majeure on the project: analysis of seismic data and verification of the prospectivity of licence LC113. The following assets were secured: offices, downhole equipment in the warehouse, and a warehouse of core samples from two wells that returned positive results (A1 and B1) from 2013 and 2014.

Iran

In 2017, PGNiG completed the preliminary development concept for the Soumar field (Technical Proposal), which was submitted to and approved by National Iranian Oil Company (NIOC) and Iranian Central Oil Fields Company. The company is analysing the possibility of further cooperation with the partners.

Seismic surveys

In 2017, the PGNiG Group carried out seismic data acquisition activities, mainly in Poland and abroad (Croatia, Myanmar (Burma), Egypt, Tunisia, Algeria, Germany, and Austria). The PGNiG Group companies performed contracts for seismic data processing and interpretation in Poland, Pakistan and Morocco.