Chevron is the latest oil major to call it quits on Polish shale formations, announcing recently that it would be packing up operations and leaving empty handed. The New York Times reports:
Among the international oil companies, Chevron made the largest commitment to shale efforts in Europe, focusing on the east. It drilled several exploratory wells in Poland and Romania, while also signing agreements in Ukraine and Lithuania. […][S]o far Poland has added up to a costly learning experience. Sixty-eight wells have been drilled in search of shale resources. But none are in production, according to Grzegorz Pienkowski, a director of the Polish Geological Institute in Warsaw.In an interview, Mr. Pienkowski said that the rocks that drillers encountered proved to be difficult to work. Unlike shale formations in the United States, which are fragile and easily fractured because of calcium carbonate content, Polish shale was plastic and difficult to fracture. In addition, some of the structures had clay material that swelled upon encountering water, gumming up the flows.
There’s no doubt that falling oil prices pushed Chevron’s hand in making this decision. Every oil firm on the planet is taking a long hard look at their capital expenditures and deciding where it can cut costs in the face of plunging revenues.But Poland’s fledgling industry was in trouble long before Chevron’s announcement. It seems that Warsaw has been unable to replicate nearly every factor that contributed to fracking’s success in the United States. Complicated geology, under-built infrastructure, a smaller pool of investors willing to risk the up-front costs, opaque regulations, and a lack of mineral rights that has inspired virulent local protests have all frustrated nearly every Polish shale suitor.On the one hand, this highlights how extensive and how unique America’s shale success really is, while on the other it spells big trouble for Europe’s shale hopes. Poland was once seen as Europe’s best chance at its own shale renaissance, which makes Warsaw’s troubles that much more worrying for policymakers across the Atlantic keen on reducing energy dependence on a belligerent Moscow.