Newspaper article International New York Times

After Tests Disappoint, Eni Plans to Abandon Shale Gas Projects in Poland ; Decision Chills Hopes That Country Would Be a Model on the Continent

Newspaper article International New York Times

After Tests Disappoint, Eni Plans to Abandon Shale Gas Projects in Poland ; Decision Chills Hopes That Country Would Be a Model on the Continent

Article excerpt

The Italian energy giant has found that its drilling efforts have not produced enough natural gas to be commercially viable.

Eni, the Italian oil giant, is giving up on producing natural gas from shale rock in Poland, which not long ago was considered the most promising country in Europe for exploiting the new fuel source.

Eni has allowed two of its three shale gas exploration licenses in Poland to expire and is likely to allow a third to lapse, according to someone familiar with the matter who asked not to be identified because the company had not made a formal announcement.

The person said the main reason for Eni's loss of interest in the acreage it acquired in 2010 was that the rocks the company had encountered in its drilling efforts to date had not produced enough gas to be commercially viable.

Other companies, including Exxon Mobil, which ended Polish shale gas exploration efforts in 2012, and Marathon, which said it was leaving last year, have made similar comments about their initial drilling efforts.

"The geology has not worked out," said Paul Stevens, an oil analyst at Chatham House, a research institute based in London.

Mr. Stevens said the experience in Poland was an indication of how difficult it would be to replicate the United States shale gas boom in Europe or elsewhere. For one thing, he said, European governments have not been willing to make the necessary investment in research and development that helped American companies figure out how to extract natural gas and oil from impermeable rock formations.

The shale gas and oil bonanza in the United States has been led mainly by smaller companies. Having missed out on the early stages in the United States, the major oil companies rushed to lock up resources in Europe and elsewhere.

In Europe, the commitments were relatively small compared with the tens of billions of dollars that major oil companies spend each year. Once initial results proved disappointing, it has been easy for them to shift focus to places like Russia, where Royal Dutch Shell and Exxon Mobil have shale prospects with state partners.

The hot country for shale gas exploration in Eastern Europe is now Ukraine, where Chevron, Eni and Royal Dutch Shell have all acquired acreage. …

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