Poland’s Shale Prospects Dim Again, Sanctions Ground Russian Low-Cost Carrier – Transitions Online

Poland’s Shale Prospects Dim Again, Sanctions Ground Russian Low-Cost Carrier

Plus, Bulgaria finally chooses between Russia and the West for a new nuke project, and more Lithuanians embrace NATO troops on their soil.

by Piers Lawson, Ioana Caloianu, Jeremy Druker, and Barbara Frye

4 August 2014

1. More bad news for Poland’s shale industry


In another blow to initially buoyant expectations about Poland’s shale gas reserves, Polish Environment Minister Maciej Grabowski has told Reuters that fewer wells would be drilled in 2014, significantly reducing an estimate he made just several months ago.


Maciej Grabowski

Grabowski put the number of exploratory wells at around 80 to 85, while in June his projection was 100.


The development of shale gas reserves has been a priority in Eastern Europe, which relies heavily on Russian energy giant Gazprom for its supplies. The EU has been trying to break Gazprom’s vertical monopoly in the region and Ukraine has been aggressive about shale exploration in efforts to free itself from expensive Russian gas.


With the conflict in Ukraine and the ramping up of sanctions against Russia, the urgency has only increased in recent months.


Back in the heyday of overly enthusiastic expectations, Foreign Minister Radoslaw Sikorski surmised that Poland could have the energy powerhouse potential to become “the next Norway.”


Polish President Bronislaw Komorowski said during his election

campaign in 2010 that “if we find out that we have enough shale gas, we want to have the right to renegotiate the deal with Russia, or maybe we will step aside from it.”


According to Reuters, the U.S. Energy Information Administration in 2011 estimated Polish shale gas reserves at 5.3 trillion cubic meters, which would have been enough to cover domestic demand for a few hundred years.


But even the government had to drastically cut the numbers within a year, with the new estimate at about one-tenth of that figure. Big commercial companies, such as ExxonMobil and Total, have apparently given up for now, and exploration also hit a snag in 2013, when the European Court of Justice ruled that production licenses issued by the government without open tenders violated EU competition rules.


Despite all this, earlier this year natural gas and oil company San Leon announced that test results at wells in northern Poland showed potential for commercial production.


Grabowski insisted that commercial production would commence this year. “However, extracting gas on an industrial scale, and clearly perceptible to the economy, is not a matter of this year or next,” he said, according to Reuters.


The American Interest, a conservative U.S. publication and proponent of shale exploration, bemoaned the latest setback.


“This goes to show just how unique the American shale boom is. So many different factors need to come together, some natural and others not, for shale gas or tight oil to start flowing. Poland seems to have one of the few clear-headed energy policies in Europe, but so far it’s finding little reward.”


via Poland’s Shale Prospects Dim Again, Sanctions Ground Russian Low-Cost Carrier – Transitions Online.