The ORLEN2030 strategy takes into account the consistent development of its own gas fields, which in the perspective of a decade will meet 20% of the ORLEN Group's needs. The launch of the first-ever Bystrowice natural gas mine in the history of the company in Podkarpacie is an important step closer to this goal.

GRI Disclosures:


  • Goal 9


  • 103-1
  • 103-2
  • 103-3

units  Canada Poland
UPSTREAM  2P oil and gas reserves million boe 162.8 8.6
Upstream  million boe per year 5.7 0.4
Average production  ‘000 boe per day  15.6 1.1
Production structure (liquid/gas)  % 47/53 0/100
Wells (net)* number  9.0 2.0
Licences number  14
* Number of new wells in 2021 adjusted for interests held by other partners.


Our international team of experts from Poland and Canada has the necessary competence and experience to carry out PKN ORLEN’s mission and vision of hydrocarbon exploration and production through efficient management of a diversified portfolio of assets. 

The ORLEN Group’s strategy assumes continuation of upstream operations through cautious and balanced development of the portfolio of upstream assets, with a particular focus on gas fields.  

The project activities were conducted in 2021 on the basis of objectives of the ORLEN Group Strategy until 2030, which provides for maximising the value of assets and hydrocarbon production, prioritising selected exploration and appraisal projects, and launching production in areas under development. For the segment’s operations in Canada the assumption of self-financing of investments was maintained. 

At the end of 2021, the ORLEN Group held, on its own or with a partner (PGNiG), 14 exploration and appraisal licences in Poland, covering a total area of almost 9.4 thousand sq. km. and spread over six provinces, with 2P reserves of 8.6 mboe. The ORLEN Group holds 100% interests in ten licences, 49% interests in four licences and 49% interests in parts of two licences within a separate licence area. 

In Alberta, Canada, the ORLEN Group is a recognised operator and holds exploration and production assets covering a total area of approximately 341.4 thousand acres (approximately 1.4 thousand sq. km.) gross, and approximately 266.8 thousand acres (approximately 1.1 thousand sq. km.) net, i.e. calculated based on the size of interests, and with 2P reserves totalling 162.8 mboe. 

Information on market trends in the upstream area can be found in the `Market Environment` section. 

Operations in Poland

The ORLEN Group conducts exploration and production activities in Poland via its subsidiary, ORLEN Upstream Sp. z o.o. (in December 2019, ORLEN Upstream acquired FX Energy Poland Sp. z o.o.).  

The company’s operations in 2021 included hydrocarbon production and exploration. Currently, PKN ORLEN produces gas domestically in cooperation with PGNiG S.A. (the Płotki Project) and on its own (production from the Bystrowice field as part of the Miocen Project, commenced at the end of December 2020).  

The ORLEN Group’s total annual output in Poland reached 1,100 boe per day. The main project activities in Poland were conducted in three oil provinces.

In the Kraków Oil Province, work was performed under two projects. As part of the Miocene Project, production from the Bystrowice field continued and work was carried out to optimise the level of hydrocarbon extraction. At the same time, exploration work was undertaken, including drilling of the Pruchnik-OU1 and a production test (analysis of reservoir data is currently underway). In the Carpathian Project, cartographic work was carried out in the Osiek Jasielski-Gorlice-Grybów area and the documentation was prepared for boreholes drilled as part of the project in previous years. In June 2021, an application was filed with the licensing authority to extend the Block 435 licence (a decision of the Ministry of Climate and Environment is pending). 


In the Gdańsk Oil Province, the Edge Project activities were ongoing in five existing licence areas and an analysis of geological data from the Koszalin-Polanów and Debrzno-Człuchów licences acquired in February 2020 was made. In connection with exploration work planned for the coming years, an application was submitted to the licensing authority for extension of four licences, i.e. Unisław-Gronowo, Bysław-Wudzyn, Chojnice-Wilcze and Brda-Rzeczenica (a decision of the Ministry of Climate and Environment is pending). Throughout 2021, work continued on the development of the Tuchola and Bajerze fields to enable the generation of electricity from nitrogen-rich natural gas; the work included the installation of generator sets, design work and construction of production facilities. In December 2021, the commissioning process began at both locations (including completion of preparations for continuous gas production). The connection of generators to the grid, final acceptance of the project and start-up of electricity generation are planned for January and February 2022. In 2021, interpretation and analysis of the Wilcze 3D seismic data were completed and work was underway on the processing and interpretation of the Koczała-Miastko 3D seismic data. Formal, design and administrative activities were conducted for future exploration drilling, and the documentation for boreholes drilled in previous years under the Edge project was prepared. In December 2021, following a technical and financial analysis, the company decided to relinquish the Debrzno-Człuchów and Koszalin-Polanów licences. 


In the Poznań Oil Province, work was ongoing on two projects implemented under a Joint Operations Agreement with PGNiG S.A. (the Operator). As part of the Płotki Project, the Bystrzek-1 well was drilled in the first half of 2021 (the well was abandoned due to lack of hydrocarbon flow). In November 2021, drilling of the Miłosław-7H well in the Miłosław E field commenced (the work will continue in 2022). As part of exploration work, an additional analysis of the Brzezie-Goluchow 3D seismic data was completed. Following analyses of the completed seismic work: Rusocin 3D and Boguszyn-Młodzikowo 3D, the location of the future well was selected and formal preparatory work for drilling commenced. With a view to developing reserves discovered in previous years, preliminary work began on selecting a contractor for the development of the Grodzewo-1 well, and work proceeded on the design documentation and legal documentation for the development of the Chwalęcin field. Under the Sieraków Project, an extended production test was conducted in the first quarter of 2021 to evaluate the production potential of the Sieraków-2H well completed in 2020. After the acquired reservoir data was analysed, the Preliminary Concept for the well development project was updated and approved. 

ORLEN Group’s upstream projects in Poland

orl_Polska EN orl_Polska EN

Source: In-house analysis.

Operations in Canada

In Canada, production operations are carried out via the subsidiary ORLEN Upstream Canada Ltd. (“OUC”).  

The company’s principal hydrocarbon assets are located in Kakwa, Ferrier and Lochend in the Province of Alberta, western Canada, and are primarily associated with production from unconventional hydrocarbon sources, such as tight oil and tight gas projects, with the use of horizontal wells and multi-stage hydraulic fracturing technology. The fields are mainly located in the Montney (Kakwa area) and Cardium (Ferrier and Lochend areas) geological formations, which are considered some of the best unconventional oil and gas formations in North America. 

In the Kakwa area, the company produces gas with oil condensate, in the Ferrier area – gas with a high content of natural gas liquids (NGLs) and oil, and in the Lochend area – oil with gas. The high output of condensate which, unlike other hydrocarbon feedstocks, is in high demand in the local market, is a source of material profits to OUC. The significant diversity of minerals produced in various regions provides the company with the flexibility to adapt to changing market trends. The assets in the Kakwa area are characterised by very high production well yields, while the assets in the Ferrier and Lochend areas offer low costs of well drilling and development and hydrocarbon production, with relatively high production volumes. In addition to those key assets, OUC owns a number of smaller production projects and licences located in various areas, including in the Province of Alberta and the Province of New Brunswick. 

Taking advantage of the hydrocarbon price rebound and the favourable medium-term outlook for oil and gas, the company decided to accelerate and increase the scope of its drilling programme in 2021. In the vast majority of cases, the projects were executed with the company as the operator.  

The 2021 capital expenditure programme focused on further drilling work in the key producing areas in the company’s portfolio, namely Ferrier, Kakwa and Lochend located in the Province of Alberta. All of the wells drilled were horizontal production wells that are typically subjected to multi-stage hydraulic fracturing prior to production commencement. The company uses state-of-the-art drilling and field development technologies, which enable it to drill horizontal wells of more than 6,500 metres in total length and perform 150 fracturing sections in a single well. This, combined with the high reservoir parameters of the assets, ensures cost-effective achievement of very good production results. 

Within the Ferrier area, drilling of four wells (3.00 net) began. In addition, five wells (5.00 net) were brought on stream after fracturing 

In the Kakwa area, drilling of four wells (3.25 net) began, while fracturing was performed on two wells (2.00 net), which were later brought on stream. 

Drilling of three wells (2.50 net) commenced in the Lochend area, of which one well (0.50 net) was fractured and brought on stream. 

In the Kaybob area, one well was drilled, fractured and brought on stream at one location where OUC holds a minority interest (0.23 net). 

Fracturing and production launch activities at the locations covered by the 2021 drilling programme, in addition to the planed development of additional sections, are included in the company’s 2022 investment project budget. 

During 2021, scheduled periodic repair and maintenance shutdowns were held at the company’s own hydrocarbon processing facilities (“Gas Plants”) in the Ferrier and Kakwa areas. 

Apart from drilling and fracturing operations, work was carried out to optimise production and reduce operating expenses, for instance by installing dedicated downhole equipment and performing various production enhancement operations in the existing production wells in the Kakwa, Ferrier and Lochend areas. Those activities helped increase the hydrocarbon production efficiency and reduce unit operating costs of hydrocarbon production. 

In March 2021, OUC signed a deep cut contract for the Kakwa area, which allowed it to expand its total production volumes and increase the share of the liquid fraction, which drives up operating margins. 

In all areas, pro-environmental measures were continued to reduce greenhouse gas emissions and meet all environmental requirements of the Federal Government of Canada and the Provincial Government of Alberta, including by reducing flaring, preventing methane emissions, conducting regular inspections and infrastructure adaptation projects, and upgrading equipment with an effect on emission volumes.

15.6 thousand boe/d

Average output in 2021

In 2021, the average output was 15.6 thousand boe/d, of which 47% were liquid hydrocarbons: crude oil and NGL, including condensate (produced in the Kakwa area), which had the largest share in revenue and profit from production.  

Excluding the indirect impact in the form of incremental production revenue and incremental earnings associated with the strong increase in hydrocarbon prices in 2021 driven by the rapid recovery in demand for crude and petroleum products in global markets following the 2020 lockdowns, the COVID-19 pandemic did not have any major direct impact on OUC’s operating and financial performance in 2021. The company continued the programme of preventive and remedial measures initiated in 2020, including the creation of a dedicated COVID-19 pandemic situation management team, and the implementation of detailed preventive plans and procedures to address the risk of COVID-19 infections and ensure continuity of organisational functions across all OUC units in the Calgary office and field facilities. Field operations were declared ‘essential service’ and were continued with control and prevention procedures in place. In addition, risk analyses were performed for all key business areas and preventive procedures were implemented. An online monitoring, planning, management, communication and information system was put in place to address COVID-19-related issues. 

On September 20th, an explosion and fire occurred at Plains Midstream Canada’s facility in the Ferrier/Strachan area that receives hydrocarbons produced by OUC. The situation was so serious that Plains declared a force majeure event, which had a major impact on OUC and all companies in the Ferrier region. The company was initially unable to produce hydrocarbons in the entire Ferrier/Strachan area until October 5th and, in addition, the Pembina fractionation plant providing deep cut processing services for hydrocarbons from the Kakwa area was shut down as a result of the incident. Pembina, too, declared a force majeure event, as its processes are interconnected with those of the Plains’ facility. From October 6th, production was gradually restored and hydrocarbons were transported by road and rail. Subsequently, on November 16th, OUC signed contracts for 100% of output from the Ferrier area to be transported by road or rail and resumed production at 100% of its capacity. Finally, the Plains plant resumed operations on November 24th. The company estimated its losses caused by the event at nearly PLN 11 million. 

DJI_0075 DJI_0075

Good reservoir properties of OUC assets and their location in a well-surveyed and developed area minimise the operational risks of the projects. The Western Canadian upstream market where the majority of OUC assets are located is a very mature one. With thousands of discovered and appraised diverse oil and gas reserves, several hundred thousand drilled oil and gas wells, a multitude of different types of production and exploration activities, and regulations tailored for oil operations, the region is covered by numerous high-quality geological surveys and offers very easy access to specialist data and expertise for exploration and production activities, which significantly reduces geological and operational risks. An extensive local oil and gas infrastructure, coupled with a dense network of pipelines, and a rich, competitive oilfield services market with access to the latest production technologies, ensures that exploration, development and production operations are conducted much faster, cheaper and more efficiently than in most other oil regions of the world. The market also offers well-developed operational and cost optimising solutions. On the other hand, the local market is in oversupply and often struggles with capacity constraints of export pipelines carrying hydrocarbons to external markets (located mainly in Eastern Canada and the US). A gradual reduction of the export pipeline capacity constraints and step-by-step expansion into new hydrocarbon sales markets are expected within the next few years. 

Seeking to achieve operational synergies and focus its investment projects on the most profitable areas, ORLEN Upstream Canada is keeping a watchful eye on the local market. During the year, selected assets located in OUC’s key business areas underwent a detailed technical and economic analysis. In the second quarter of 2021, the company decided to proceed with a minor transaction involving prolongation and expansion of its licence rights in the Lochend area, in the immediate vicinity of oil wells with the best economic indicators in the entire Cardium formation in Canada and in OUC’s portfolio. The transaction will make it possible to gradually increase investment activities in the area and significantly strengthens OUC’s negotiating position with partners. Also in the second quarter of 2021, the company completed the sale of five undeveloped sections with mineral rights located in OUC’s non-core assets in the Chime area, where no exploration or production activities are being conducted. The transaction was aimed at optimising the asset portfolio and focusing investments on the company’s key business areas. 

ORLEN Upstream Canada holds a 2.3% interest in Toronto Stock Exchange-listed integrated Pieridae Energy, which currently owns conventional gas producing assets (with average production of 38,700 thousand boe/d in the third quarter of 2021 and 2P reserves of 204 mboe at the end of 2020), as well as interests in six gas processing plants and approximately 3,800 km of pipelines in the Province of Alberta. Pieridae Energy purchased the assets from Shell in 2019; however, the procedure to formally transfer the rights to the assets onto Pieridae is still pending. It has been protracted by an investigation into concerns raised by the Alberta Energy Regulator with respect to Pieridae’s ability to pay future decommissioning costs and decommission the acquired wells and facilities, as is currently required for this type of transaction. However, until the proceedings are concluded with a final decision, the company may continue production from the purchased assets. Pieridae is also the operator of a project to build a stationary LNG export terminal to be located in Goldboro, on the east coast of Canada in the Province of Nova Scotia. The final investment decision has not been made yet, although the project is well advanced from a formal and design point of view and is supported by a strong macroeconomic rationale (low gas prices on the local market, high gas prices and growing demand for gas in Europe). Pieridae is currently considering installing a smaller floating LNG terminal at the same location. In addition, the company is currently evaluating potential strategic options, which include possible sale of the entire company, a merger with another company, or sale of the company’s assets. 

Assets in Canada 

orl_Kanada EN orl_Kanada EN

Source: In-house analysis.

Sales volume of the ORLEN Group Upstream segment [PLN million/’000 tonnes]


Sales 2021 2020 change %
Value Volume Value Volume
1 2 3 4 5 6=(2-4)/4 7=(3-5)/5
Crude oil 81 50 92 102 (12%) (51%)
Natural gas 339 413 187 463 81% (11%)
Other* 378 191 204 177 85% 8%
Total 798 654 483 742 65% (12%)
*Other – in volume terms the item includes NGL (Natural Gas Liquids) and in value terms it includes sales of NGL and revenue services rendered by the segment.


Production and sale of hydrocarbons in Canada were conducted through ORLEN Upstream Canada Ltd., and in Poland – through ORLEN ORLEN Upstream Sp. z o.o.  

In 2021, total sales in both markets reached 654,000 tonnes, a (12)% decrease year on year brought about by the deterioration of the macroeconomic conditions and the reduction of the investment project programme in Canada. 

Sales structure of the ORLEN Group Upstream segment 

See also

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