Exxon Kills Shale Gas Exploration in Poland (XOM, CVX, MRO, STO)

Both AP and Reuters are reporting this morning that Exxon Mobil Corp. (NYSE: XOM) is giving up on exploring for shale gas in Poland after two test wells failed to demonstrate commercially sustainable flows. Other major oil companies with licenses to explore in Poland include Chevron Corp. (NYSE: CVX), Marathon Oil Corp. (NYSE: MRO), and Norway’s Statoil ASA (NYSE: STO).

Poland was Europe’s great hope for enough shale gas to reduce the demand for Russian natural gas, which is imported by pipeline and costs about 5-6 times the price of natural gas in the US. Poland’s gas would never have replaced the Russian supply, but it might have offered some competition.

That may still be possible, but with Exxon’s departure it’s not a big stretch to guess that the other big guys won’t be far behind. It’s possible that some small independent wildcat firms will take up the challenge, but Exxon’s decision will make it really hard for the little guys to raise the financing required for exploration.

Paul Ausick