1. MISSION POSSIBLE UNCONVENTIONAL HYDROCARBONS IN THE FUTURE POLISH ENERGY MIX Sławomir Brodziński Under-Secretary of State, Chief National Geologist Ministry of the Environment Poland

2. Polish present energy mix 2 Source: EU Commission, Energy Statistics, update: Jun-15

3. Energy security – high ratio of hydrocarbons dependency 3 High dependency on import of hydrocarbons - 88% of oil, 65% of natural gas. Hydrocarbons are a significant component of EU primary energy mix – 54% and EU electricity generation mix - oil and natural gas are responsible for 21% of electricity produced in EU Overrall energy dependency ratio 53,4% Indigenous production of conventional hydrocarbons in EU is falling Higher hydrocarbon dependency than EU average - oil 91% and natural gas 74%. Hydrocarbons are a significant component of Poland’s primary energy mix – 37% but in Poland’s electricity generation mix – only 5,5%. Energy dependency ratio 25,8% - one of the lowest in EU. Production of unconventional hydrocarbons would suport Poland’s energy security. EU Poland Source: EU Commission, Energy Statistics, update: Jun-15

4. 4 Poland’s Energy Policy 2050 – Aug’15 draft Main goals  Improvement of Poland’s energy security  Growth of economy’s competitiveness and energy efficiency  Minimalisation of the energy sector environmental impact 3 Scenarios  Sustainable  Alternative – nuclear  Alternative – natural gas + Renewables

5. Why unconventional hydrocarbons are a viable alternative for Poland? Enhancing energy security Environment- friendly source of energy due to low CO 2 emission of natural gas Feasible potential 5 UHC in Poland: shale gas, tight gas, coalbed methane

6. Energy security – limited reserves of conventional hydrocarbons in Poland 6 No depositsReservesProduction Natural gas291128 bcm5,25 bcm Coalbed metane 5886,8 bcm0,29 bcm Crude oil8523,52 mt0,92 mt Source: Minerals Yearbook of Poland 2014

7. Feasible potential – shale gas 7 According to the 2012 research by the Polish Geological Institute – National Research Institute (PGI-NRI) recoverable shale gas resources range from 346 Bcm to 768 Bcm. Which is equivalent of 35-65 years of cumulative gas consumption on Polish market.

8. Feasible potential – tight gas 8 According to the 2015 geological survey of PGI-NRI, the most promising areas for tight gas exploration in Poland are Pomorze and Wielkopolska regions. Total natural gas volume in those areas most probably ranges from 1528 bcm to 1995 bcm and the recoverable resources are estimated to be between 150- 200 bcm.

9. Feasible potential – coalbed methan 9 More than 90% of coalbed methane resources are located in the Upper Silesian Coal Basin (230-250 bcm). The remaining 10% is divided between the Lublin Coal Basin (15bcm) and the Lower Silesian Coal Basin (2-5bcm).

10. Environment-friendly source of energy 10 Exploratory operations, inc. hydraulic fracturing have no permanent and significant effect on environment Based on the survey conducted by PGI-NRI for 3 years starting from „0” level till complete reclamation of area inc. baseline monitoring of 7 shale gas exploratory boreholes

11. Why Poland can achieve its unconventional hydrocarbons goals? 11 UHC in Poland: shale gas, tight gas, coalbed methane General public opinion support Experience Scientific research Qualified public administration

12. General public opinion suport 12 UHC in Poland: shale gas, tight gas, coalbed methane Source: Public opinion survey by CBOS - May’13 and TNS Poland - Aug’13

13. UHC exploration and protected areas 13 UHC in Poland: shale gas, tight gas, coalbed methane

14. Polish unconventional hydrocarbons experience 14 The current hydrocarbon conventional and unconventional concessions are marked dark grey, concessions applications light grey and 2016 tender areas red. 40 shale gas prospecting and exploration concessions issued 13 new applications for shale gas concessions submitted 70 exploration shale gas wells completed, including 16 horizontal 29 frackings executed, including 12 horizontal treatments and 4 DFIT (Diagnostic Fracture Injection Test)

15. Scientific research 15 Environment The environmental risk assessment of the prospecting, exploration and production of unconventional hydrocarbons – report published in 2015, guidances tbp in 2015 „BLUE GAS” 10-year shale gas R&D programme for industry and academia started in 2012 White Book of Mineable Resources Protection initiative Resources Assessment of shale gas and shale oil resources of the Lower Paleozoic Baltic-Podlasie- Lublin Basin in Poland – 2012 Assessment of tight gas resources – 2015 Assessment of shale gas and oil resources – tbp in 2015 Economy Report on economic effects of shale gas (joint project of Poland and United Kingdom)

16. Qualified public administration 16 Ministry of the Environment – concession authority Ministry of the Environment – concession authority State Mining Authority – mining operations supervision State Mining Authority – mining operations supervision Chief Inspectorate for Environmental Protection General Directorate for Environmental Protection Polish Geological Institute – National Research Institute – geological survey Polish Geological Institute – National Research Institute – geological survey

17. 17 2014 Geological and Mining Law amendment GML amendment aimed to: Assure that the Polish law is consistent with the Hydrocarbons Directive (case C– 569/10) Ensure the energy security Accelerate the hydrocarbons exploration Main legal changes: One license instead of three Introduction of qualification procedure Obligatory tender procedure for hydrocarbons Joint execution of license by several entities (under cooperation agreement) Shortened licensing and environmental procedures Strengthened environmental and license obligations monitoring Increased benefits for each level of self-government

18. THANK YOU FOR YOUR ATTENTION All photographs courtesy of polskielupki.pl