Activities of PGNiG in exploration of unconventional hydrocarbon resources in Poland

Science for Industry: Necessity is the mother of invention Third Networking Event dedicated to the Polish experience in the field of shale gas exploration Activities of PGNiG in exploration of unconventional hydrocarbon resources in Poland Michał Makos

Main criterions for development of unconventional HC accumulation: High content of TOC (total organic carbon) Significant thickness of TOC-rich rock Proper thermal maturity for oil/gas generation Type of organic matter (kerogen) adequate to thermal maturity Fast burial of the source rock high subsidence in the basin Insignificant post-burial tectonic activity Main criterions for exploration of unconventional HC accumulation: Depth of pay zone location generally not deeper than 4500 metres Low level of tectonic deformation horizontal or nearly horizontal bedding Proper pressure in the basin overpressure is the best Proper porosity and permeability of the reservoir rock Proper brittleness of the reservoir rock Conventional reservoirs or at least HC shows confirmed in the basin

Classification schemes for unconventional resource systems Shale gas Shale oil Jarvie (2012)

PGNiG s concessions for shale gas exploration Wejherowo Kartuzy-Szemud Stara Kiszewa Górowo Iławeckie Blok 172 Blok 173 Blok 192 Blok 193 Kock-Tarkawica Wiszniów-Tarnoszyn Granice PGNiG s koncesji concessions Gaz Gas Ropa Oil! Otwory planowane w roku 2013 Tomaszów Lubelski

Wells drilled on PGNiG s concessions Pomerania Region Wejherowo concession: Lubocino-1 (02.2011) Lubocino-2H (11.2012) Opalino-2 (12.2012) Kochanowo-1 (07.2013) Lubocino-3H (12.2013) Opalino-3 (01.2014) Opalino-4 (04.2014) Tępcz-1 (06.2014) Kartuzy-Szemud concession: Borcz-1 (07.2013) Miłowo-1 (05.2014) Stara Kiszewa concession: Wysin-1 (03.2013) Górowo Iławeckie concession: No wells Research in progress Lublin Region Kock-Tarkawica concession: Wojcieszków-1 (12.2013) Central Poland Wiszniów-Tarnoszyn concession: Kościaszyn-1 (10.2013) Tomaszów Lubelski concession: Lubycza Królewska-1 (08.2012) Block 172 Block 173 Block 192 Block 193 No wells Research in progress

Wejherowo concession (No 4/2009/p) Validity 21.05.2012-30.04.2021 Exploration works carried out Opalino-SH1 Lubocino-4H Opalino-7W Opalino-6W Lubocino 3D Opalino - Lubocino 2D Kachanowo - Tępcz - Cząstkowo 3D Kochanowo-2H Tępcz-1 Well Depth [m] Seismic 2D [kmb] 3D [km 2 ] Lubocino-1 3 050 Opalino - Lubocino 2D 181,1 Lubocino-2H 3 980 Lubocino 3D 34/34 Lubocino-3H 3 572 Opalino-2 3 050 Opalino-3 3 070 Kochanowo-1 3 275 Opalino-4 3 100 Opalino 3D 30/70 Tępcz-1 3 380 Lubocino-4H 4 300 Opalino-6W 3 100 Opalino-7W 3 100 Opalino-SH1 4 300 Kochanowo-2H 4 500 Cząstkowo-1 3 400 Exploration works in progress Kochanowo-Tępcz- Cząstkowo 3D Planned exploration works 30/70 Cząstkowo-1 Wells and seismic carried out Wells and seismic in progress Planned wells and seismic

LUBOCINO PAD

LUBOCINO-1 EXPLORATION WELL Deep seismic line T0064307 KOŚCIERZYNA-GDAŃSK 2D (Geofizyka Toruń, 2008) Depth Map of the Top of Cm2 OPALINO-LUBOCINO 2D (Geofizyka Toruń, 2011) The drilling stopped at the final depth of 3051 m, after penetrating a 70 m thick section Middle Cambrian deposits.

The chronostratigraphic and lithostratigraphic section of the lower palaeozoic section in the lubocino-1 well (Z. Mikołajewski, 2013)

Geochemical logs of the parameters resulting from laboratory measurements

The degree of organic matter transformation Thermal maturity (Tmax) and hydrogen index (HI) plot by Silurian and Ordovician formations

Mineralogy QUARTZ, ARGILLACEOUS MINERALS AND CARBONATE CONTENT IN INDIVIDUAL MEMBERS AND FORMATIONS 25 Kwarc 0 100 75 formacja ze Słuchowa formacja z Kopalina formacja z Sasina formacja z Prabut 25 Kwarc 0 100 75 ogniwo z Jantaru formacja z Pasłęka formacja z Pelplina formacja z Kociewia ogniwo z Redy formacja z Pucka 50 50 50 50 75 25 75 25 100 0 Minerały Ilaste 25 50 75 0 100 Węglany 100 0 Minerały Ilaste 25 50 75 0 100 Węglany ORDOVICIAN SILURIAN

Głębokość [m] Głębokość [m] 2800 2200 2820 2300 2840 2400 Ludlow 2860 2500 2880 PASŁĘK 2600 2900 JANTAR PRABUTY 2700 2920 SASINO 2800 Wenlok 2940 2960 2900 Landower Ordowik 0 5 10 15 Porowatość całkowita [%] 2,4 2,7 3,0 0 5 0 1 2 Gęstość materiałowa [g/cm 3 ] TOC (%) Gaz całkowity [m 3 /t] 0 1 2 3 4 5 6 7 Przepuszczalność szczelinowa [md] Depth distribution of total porosity, material density, total organic carbon and total gas contents in individual members and formations (from desorption) in interval of 2800 2970 m Depth distribution of fractured permeability in interval of 2200-2969 m

CORE DESORPTION TOTAL, LOST AND RESIDUAL GAS CONTENT

Hydraulic fracturing First Silurian interval was fracked through 13 m Perforation 2894-2907m MD, Perforation 16 shots/m, phasing 60 0 Treatment fluid: CMHPG 20#, 1200m 3 Proppant: sand 100 mesh and proppant Bauxite 30/50 Average volumes of hydrocarbons and post frac fluids during tests: 285m 3 /24h gas 0,3m 3 /24h oil 0,22m 3 /24h water

Gas: associated with oil methane content increases with depth molecular composition associated with increasing maturity nitrogen does not exceed 15%, carbon dioxide concentration reaches 10% high energy content resulting from enrichment with heavy HC Oil: oil from the Lubocino-1 well originates from oil-generating, low-sulphur type II kerogen it is light oil (0.803 g/cm 3 i.e. 44.4 API) and has low sulphur content (<0.3%). oil was not exposed to any secondary processes such as vaporisation of lighter hydrocarbon fractions, water washing, biodegradation. maturity of the oil is high and corresponds to the final stage of the oil window geochemical properties of the oil from Lubocino-1 well are similar to those found in the fields of: Dębki, Białogóra and Żarnowiec

LUBOCINO-2H EXPLORATION WELL Depth Map of the Top of Ordovician Orstr OPALINO-LUBOCINO 2D (Geofizyka Toruń, 2011) The drilling stopped at the final depth of 3981 MD, tj. 2924,29 m TVD in Sasino formation.

Results of fracturing in the Lubocino 2H well (microseismic measurements) Pinnacle, Halliburton)

Perforation by jet on CT of the interval 3543-3545 MD, 1. attempt max Q = 376 l/min, max p = 433 bar, 2. attempt max Q = 580 l / min, pav= 450 bar 15 shots were jetted on 2 m interval High viscosity pills were pumped after jetting each of the three holes Fluid treatment water and friction reducer Average volumes of hydrocarbons and post frac fluids during tests: 500m 3 /24h gas 3.5m 3 /24h oil+water (30% oil) 19

OPALINO-2 WELL

OPALINO-2 EXPLORATION WELL OPALINO-2 OPALINO-2 The location of the OPALINO-2 well against the Preliminary Depth Map of the Cm2 Top, Opalino- Lubocino 2D, Geofizyka Toruń, 2011 The drilling stopped at the final depth of 3050 m, after penetrating a 100 m thick section Middle Cambrian deposits.

CORE PICTURES FROM THE TOP PART OF MIDDLE CAMBRIAN SECTION TIGHT SANDSTONES Interval 2947-2978m Porosity 3.5% Permeability 0.3mD Gas inflow with liquid HC (50 ml of gasoline) Interval 2983-3050m Porosity 6.5% Permeability 0.45mD Gas inflow with liquid HC 4-16 m 3 /min.

KOCHANOWO-1 WELL

KOCHANOWO-1 EXPLORATION WELL KOCHANOWO-1 KOCHANOWO-1 TĘPCZ-1 CZĘSTKOWO-1 Location of the Kochanowo-1 well against the depth map of the Cm2 Top (KOŚCIERZYNA GDAŃSK 2D, Geofizyka Toruń, 2008) The drilling stopped at the final depth of 3275m, after penetrating a 27 m thick section Middle Cambrian deposits.

The chronostratigraphic and lithostratigraphic section of the Lower Palaeozoic section in the Kochanowo-1 well (Z. Mikołajewski, 2013)

Geochemical logs of the parameters resulting from laboratory measurements oil wet gas dry gas immature

Mineralogy QUARTZ, ARGILLACEOUS MINERALS AND CARBONATE CONTENT IN INDIVIDUAL MEMBERS AND FORMATIONS Kwarc 0 100 Kwarc 0 100 50 25 75 50 formacja z Kociewia formacja z Pelplina formacja z Pasłęka ogniwo z Jantaru 50 25 75 50 formacja z Prabut formacja z Sasina formacja z Kopalina 75 25 75 25 100 0 Minerały Ilaste 25 50 75 0 100 Węglany 100 0 25 Minerały Ilaste 50 75 0 100 Węglany SILURIAN ORDOVICIAN

Głębokość [m] 2980 3000 1 3020 3040 3060 3080 3100 3120 3140 3160 3180 2 3 3200 3220 3240 4 6 7 5 0 10 20 Porowatość całkowita [%] 0 1 2 0 40 80 0 10 0 40 80 Gaz Nasycenie Nasycenie Nasycenie całkowity wodą bituminami gazem [m 3 /t] [%] [%] [%] Depth distribution of total porosity, material density, total organic carbon and total gas contents in individual members and formations (from desorption)

Kartuzy Szemud Concession (No 72/2009/p) Validity 10.12.2012-10.12.2014 Exploration works carried out Hopowo - Borcz 3D Borcz-2H Hopowo-1 Somonino - Przywidz 2D Miłowo-1 Well Depth [m] Seismic 2D [kmb] 3D [km 2 ] Borcz-1 3 759 Somonino - Przywidz 2D 281,95 Exploration works in progress Miłowo-1 3 800 Planned exploration works Borcz-2H 4 300 Hopowo - Borcz 3D 65,4/150 Miłowo 3D 16/40 Hopowo-1 3 800 Miłowo 3D Wells and seismic carried out Planned wells and seismic

BORCZ-1 WELL

BORCZ-1 EXPLORATION WELL Location of the Borcz-1 well against the depth map of the Cm2 Top (KOŚCIERZYNA - GDAŃSK 2D, Geofizyka Toruń, 2008 ) GŁĘBOKOŚCIOWY PRZEKRÓJ SEJSMICZNY T0164307 2D KOŚCIERZYNA-GDAŃSK (Geofizyka Toruń, 2008 The drilling stopped at the final depth of 3759m, after penetrating a 32.5 m thick section Middle Cambrian deposits.

The chronostratigraphic and lithostratigraphic section of the lower Paleozoic section in the Borcz-1 well (Z. Mikołajewski, 2013)

Geochemical logs of the parameters resulting from laboratory measurements oil wet gas dry gas immature

Depth distribution of total porosity Depth distribution of fractured permeability

Stara Kiszewa Concession No 1/2011/p Validity 11.01.2011-11.01.2017 Będomin-1 Więckowy-1 Będomin-3D Wysin-3D Wysin-2H Exploration works carried out Well Depth [m] seismic 2D [kmb] 3D [km 2 ] Wysin-1 4 040 Somonino - Przywidz 2D 281,95 Exploration works in progress Będomin-1 3 750 Wysin 3d 16/76 Więckowy-1 4 020 Wysin-2H 5 000 Planned exploration works Będomin 3D 16/40 Somonino - Przywidz 2D Wells and seismic carried out Wells and seismic in progress Planned wells and seismic

WYSIN-1 WELL

WYSIN-1 EXPLORATION WELL GŁĘBOKOŚCIOWY PRZEKRÓJ SEJSMICZNY K0100903 KOŚCIERZYNA-GDAŃSK 2D (Geofizyka Toruń, 2008) WYSIN-1 Location of the Wysin-1 well against the depth map of the Cm2 Top (KOŚCIERZYNA - GDAŃSK 2D, Geofizyka Toruń, 2008 ) The drilling stopped at the final depth of 4040 m, after penetrating a 54.5 m thick section Middle Cambrian deposits.

The chronostratigraphic and lithostratigraphic section of the lower palaeozoic section in the Wysin-1 well (Z. Mikołajewski, 2013)

Geochemical logs of the parameters resulting from laboratory measurements oil wet gas dry gas immature

Głębokość (m) 3650 3700 1 3750 3800 2 3850 3900 3 3950 4000 0 7 14 0 1 2 0 50 100 0,0 0,5 1,0 1,5 0 50 100 4 5 6 9 7 8 Porowatość całkowita [%] Gaz całkowity [m 3 /t] Nasycenie wodą [%] Nasycenie bituminami [%] Nasycenie gazem [%] Depth distribution of total porosity, material density, total organic carbon and total gas contents in individual members and formations (from desorption)

Well to well correlation

Results of isotope analysis OCCURANCE OF GAS AND OIL IN SHALE: THERMOGENIC GAS WITH CONDENSATE DIVERSITY OF ISOTOPE COMPOSITION REFLECTS INCREASING TRANSFORMATION RATIO Bernard plot for samples from: LUBOCINO-1, OPALINO-2, KOCHANOWO-1, BORCZ-1, WYSIN-1 wells Plot of gas quality depending on carbon and hydrogen isotope composition in methane LOW TEMPERATURE THERMOGENIC GAS ON WEJHEROWO CONCESSION HIGH TEMPERATURE THERMOGENIC GAS ON SOUTHERN CONCESSIONS

Górowo Iławeckie Concession No 47/2001/p Valid to 31.12.2017 Exploration works planned for 2014 Planned exploration works well Depth [m] Seismic 2D [km] Żelazna Góra - Dębowiec Warmiński 2D 200 Żelazna Góra - Dębowiec Warmiński 2D Górowo Iławeckie Works planned for 2014

Rock-Eval data Dębowiec Warmiński 2 well Sp/ Sw Pridolian Wenlokian undivided Sla Pasłęk shale O3 Orneta marl Morąg lime. Ok/ Oln Sasino shale Kielno lime. 44

Maturity trend against the top of Ordovician (Poprawa, 2011) 45

Concessions 172 nr 10/2010/p, 173 nr 11/2010/p, 192 nr 12/2010/p, 193 nr 13/2010/p Valid to 23.02.2015 Exploration works planned for 2014 Planned exploration works Well Depth [m] Seismic 2D [kmb] Mystkowo-1 4 500 Płock-Sierpc- Płońsk 2D 343,92 200 (2014) Blok 172 Blok 173 Blok 192 Mystkowo-1 Blok 193 Planned wells and seismic

Kock Tarkawica Concession No 52/2001/p Valid to 31.12.2016 Planned works - 2014 Exploration works carried out Well Depth [m] Seismic 3D [km 2 ] Wojcieszków-1 3 150 Planned exploration works Wojcieszków-2H Wojcieszków 3D 16/40 Wojcieszków-1 Wojcieszków-2H Wojcieszków 3D Kock-Tarkawica otwory i prace sejsmiczne w realizacji otwory i prace sejsmiczne planowane

WOJCIESZKÓW-1 WELL WOJCIESZKÓW-1 The drilling stopped at the final depth of 3094 m, after penetrating 17.5 m thick section of Cambrian deposits. Location of the Wojcieszków-1 well against the depth map of the Ordovician Top

WOJCIESZKÓW-1 ordowik landower wenlok LUBOCINO-1 PG Total gas NEGR Tgas % [m3/t] TOC % Total gas [m3/t] Tgas % TOC % C4 % ludlow dolny w wy mielnickie wenlok 5,7% 2,2 3 md. 1 m 3-10 % 0,0015 6,4 md śr.1,3 md 28 m landower 3-10 % 0,01 22 md śr. 5,1mD 5 m 11 m ordowik 12 m 2 m kambr 1.5% 2% TOC %

Quality of the potential source rocks based on Rock-Eval analysis excellent very good good medium poor 50

Upper Devonian another unconventional target??? Fammenian thickness ~1650 m Fammenian thickness~1600 m Fammenian thickness~1400 m SW NE Lublin IG-1 Mełgiew-1 Linia 4 Kock IG-2 7 Location of the regional seismic lines 8 1 2 3 Linia 4 Linia 5 4 2 5 6 3 4 7

Geochemical analysis Rock-Eval Kerogen type and thermal maturity of the Devonian section

Wiszniów Tarnoszyn Concession, no 3/2009/p, valid to 05.02.2018 Tomaszów Lubelski Concession, no 7/2011/p, valid to 27.04.2017 Carried out nazwa otworu głębokość [m] sejsmika Lubycza Królewska-1 3 504 zdjęcie 2D [kmb] zdjęcie 3D [km 2 ] Wiszniów-Tarnoszyn Kościaszyn-1 3 900 Majdan Sopocki-1 3 100 Planned Kościaszyn-1 Majdan Sopocki-1 Lubycza Królewska-1 Tomaszów Lubelski otwory i prace sejsmiczne zrealizowane otwory i prace sejsmiczne w realizacji otwory i prace sejsmiczne planowane

KOŚCIASZYN-1 WELL Kościaszyn-1 Kościaszyn-1 3828 m MD Location of the Kościaszyn-1 well against the depth map of the Ordovician Top The drilling stopped at the final depth of 3828 m, after penetrating a 29 m thick section of Cambrian deposits.

KOŚCIASZYN- 1 WELL Upper Silurian Gaz całkowity [%] TOC=0,84% TOC=0,99% TOC=1,26% TOC=0,7% Lower Silurian TOC=2,28% TOC=3,32% Ordovician Cambrian Gaz z desorpcji [%] Gaz resztkowy [%] Gaz tracony [%] Total gas [%] C 4 [%] Content of carbonate rocks [%]

Thermal maturity trend for lower Silurian and upper Ordovician potential source rocks

Summary PGNiG explores on 11 concessions with potential for unconventional resources Fifteen drilled wells, two wells are in progress, another wells are planned Two horizontal wells drilled Most of wells drilled in the Pomeranian Basin (11) Two 3D seismic realised, two more are in progress and two more are planned Three 2D seismic realised and two more are planned The main target is the Lower Paleozoic complex of shaley deposits (Llandoverian + Caradocian) Another target is the Middle Cambrian tight sandstone We do not exclude the Upper Devonian carbonates as the another potential target TOC up to 10% in the Lower Paleozoic source rocks Geochemical factors indicate good and very good potential for HC generation from the Lower Paleozoic source rocks Thermal maturity indicates potential for shale oil and shale gas Thickness of the source rock exceeds 20 metres in the Pomeranian Basin and is much lower in the Lublin Basin The Lower Silurian source rocks contain organic matter composed of oil-prone, type-ii kerogen Geochemical characteristics of desorbed gas indicates its thermogenic character Geochemical characteristics of oil from the Lubocino-1 well indicates that the Silurian/Ordovician shales could have supplied conventional reservoirs in the Middle Cambrian sandstone Single test in the Lubocino-1 well indicates underpressure conditions in this part of the basin. This finding, however, needs confirmation in another wells Clay content in the shaley intervals is between 25% and 70%. Layers rich in smectite are the most significant obstacle for hydraulic fracturing process The average effective porosity of the Lower Paleozoic shale is around 6%. Its permeability is between 0.0001 and 0.1 md Good source rock with good petrophysical properties is confirmed The most significant problem is a technology of reservoir completion

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