Operators and service companies alike are gearing up for what they believe is the next big swing in unconventional gas development.

The big question for the last couple of years has been where to go outside of North America. Today, all indications show that Poland is the likely candidate. With more than 90% of its gas being imported from Russia, Poland is actively pursuing domestic resource development. The country currently has an agreement with Russia to accept delivery of 11 Bcm per annum from 2012 to 2022. Although early estimates of development costs have been much higher than standard operations in North America, these prices may not hold true – at least in the long term.

On a recent visit to Warsaw, Poland, I met with a number of experts in the region who talked about Poland’s potential.

The European business model allows companies to acquire mineral rights for large concessions of land. The largest concessions in Poland are equal to about 290,000 acres and were acquired with work commitments to conduct a certain amount of seismic and to drill one or two wells. “This is pretty remarkable when compared with the cost of acquiring acreage in North America,” said James Elston, director, Palladian Energy Ltd.

Due to the size of each concession, well planning is expected to go much more smoothly than in North America, where lease lines often limit the extent to which laterals can be drilled, thereby limiting reservoir contact. On the other hand, shale development in Europe is very high risk. “This is certainly true for Poland, but it seems to be de-risking very rapidly,” Elston said. In Poland, there are around 15 million acres with shale gas potential – about five times the size of the Barnett. “Prior to ConocoPhillips’ drilling operations last summer, this area had a sum total of 20 wells that penetrated the shale,” he added. Compared to the large amount of drilling in most North American plays over the last 100 years, very little is known about the shale being surveyed in Poland. Relying on Soviet-era logs has been helpful, but most of the activity in Poland today revolves around gathering rock for analysis.

“Right now we’re in the phase of drilling science wells,” said Wolf Regener, CEO, BNK Petroleum. “When we go into development mode, then we’re going to want to bring in modern, North American-standard rigs that are built to EU specs.”

This could be a boon for the forward looking drilling contractor. “I think it is a tremendous opportunity for North American drillers who can address the different challenges there are in Europe,” Elston said.

In time, completions technology will be critical. “Were this market to take off, in terms of North American-style shale development, then equipment might become a problem,” said Mark Swift, area manager continental Europe, Halliburton. “Right now, there’s about 100,000 hp in Europe. Compare that to the US, where’s there’s around 1 million or 1.5 million. It’s massive. So it would not take much to make this (market) tight,” he said.

Halliburton has got an early start in Poland’s unconventional development and currently supplies about 40% of the available horsepower in Europe. “We don’t envision a problem in terms of supporting this exploration phase,” Swift said.

According to Elston, the winners in European shale development will be those he calls “AFE Black Belts,” those companies with the ability to attack the cost base from day one while maintaining high safety and environmental standards.

The opportunities are good in Europe, but it will require an aggressive commitment to move in people, equipment, and expertise over the next few years.