The shale revolution has largely been an American phenomenon. US geology is particularly suited to horizontal well drilling, and shale operations in countries like China and Australia have to contend with water scarcity. Europe’s shale has been blocked by the continent’s greens, and though the UK has made most of the region’s headlines recently for its contentious debate over fracking, Poland may be the closest to joining the shale bandwagon.
According to the Energy Information Administration (EIA), Poland has “some of Europe’s most favorable infrastructure and public support for shale development.” It also has a whopping 146 trillion cubic feet (tcf) of technically recoverable shale gas and 1.8 billion barrels of shale oil. As Ambrose Evans-Pritchard argues for the Telegraph, successful shale development in Poland could have profound implications for Europe’s energy future:
The geostrategic stakes are high. If Poland – now buttressed by Britain and Romania – can pull off its shale gambit, momentum will almost certainly become unstoppable in a string of other countries. “We think the price of gas is going to come down from $11 [million metric British thermal units] to around $6.50, and this will make a huge difference because high gas prices are killing Europe,” said Oisin Fanning, head of the AIM-listed driller San Leon Energy, which is exploring in the “Baltic Basin” near Gdansk.
It would head off looming disaster for Europe’s chemical, plastics and steel industries, now paying four times more for gas than US rivals, and forced to locate to a new plant in the Americas to survive. It would spell the end of the Kremlin’s great power “business model”, little more than an oil and gas racket when stripped bare. Russia’s soft empire would unravel.
Poland, in other words, could act set off a chain reaction across Europe if it successfully taps its shale reserves. But so far results have been disappointing. Three energy majors have deserted projects in the country, frustrated by a poor regulatory environment. Poland will need to iron out the permitting process for drilling to attract firms back, and continue to encourage exploratory well drilling.
Warsaw stands to gain much if it succeeds, as a domestic energy boon would help free it from the clutches of Moscow and the long-term, over-priced contracts it has with Gazprom. The rest of Europe would also benefit from an increase in drilling intensity in Poland. If the country acts as a proof-of-concept for fracking, the continent’s attitude towards shale might be swayed, which would be good news for both the EU’s future energy security and its economic health.
[Oil rig image courtesy of Shutterstock]