San Leon Finds Oil In Long-abandoned West Poland Area

WARSAW - San Leon Energy PLC, a hydrocarbon exploration company with projects in Europe and North African, has found conventional oil in an area of western Poland abandoned decades earlier by the country's state-controlled oil and gas company.

Poland has been extensively explored for hydrocarbons by PGNiG SA, in which the Polish government holds a controlling stake, but small independent exploration companies like San Leon, many with North American know-how, are carving out a niche for themselves, drawn by the promise of replicating the U.S. shale gas boom in central Europe.

Entrepreneurial independents that go after the smaller fields larger companies ignore could help Poland diversify its sources of energy away from its former communist-era oppressor, Russia.

San Leon said Thursday that its Lelechow-SL1 well, the first of a two-well exploration program on the Nowa Sol Concession in Poland near the German border, found oil and will be completed for near-term commercial production.

The company will now begin testing to determine how many barrels of crude can be produced a day, said John Buggenhagen, San Leon's exploration director.

"This is an area [PGNiG] hasn't worked for a long time, it's in the middle of where PGNiG worked in the 1950s and 1960s," Mr. Buggenhagen added. "There's lots of oil and gas left to be explored [in Poland] that has long been forgotten."

Final completion of the well will incorporate an electrical submersible pump to continue to clean out the well and maximize oil flow rates during production, the company said.

San Leon expects to resume testing of the well in the next few weeks pending final completion of drilling operations. Well completion is being designed for near-term commercial production from the well.

"People say [doing exploration work in Poland] is difficult," Mr. Buggenhagen said. "The company willing to fight through the environmental approvals and get regulator permissions wins."

The Polish government hopes to replicate the energy bonanza the U.S. is currently experiencing, especially since it offers the chance to free Poland from imports of what it sees as over-priced natural gas from Russia. But official high-level declarations jar with the day-to-day bureaucratic challenges those drilling test wells face in the former Soviet satellite country that made the jump to a market economy 23 years ago.

Copyright (c) 2012 Dow Jones & Company, Inc.


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