Poland To Develop Shale Gas Despite Environment Risk
Author: Gabriela Baczynska and Gareth Jones
Poland reaffirmed its commitment to developing its shale gas reserves on Wednesday despite French plans to ban drilling, but officials and industry experts said tough regulatory and environmental challenges lie ahead.
The U.S.-based Energy Information Administration (EIA) said last month Poland's technically recoverable reserves of shale gas are the biggest in Europe at an estimated 5.3 trillion cubic meters, though some experts are skeptical about the figure.
The U.S. and Polish geology agencies are due to present their own initial estimate of Poland's reserves in September.
"Using our own gas supplies does not only add to our energy security but also increases the competitiveness of the whole Polish economy," Foreign Minister Radoslaw Sikorski told a conference on Poland's shale gas outlook.
Sikorski said shale gas would feature in talks with U.S. President Barack Obama when he visits Warsaw on May 27-28. Big U.S. energy firms are at the forefront of efforts to tap shale gas deposits in Poland and some other European countries.
"We know some countries have followed initiatives aimed at banning shale gas but we should not be afraid. New technologies bring new risks but the technology is advancing," he added.
Last week, citing environmental concerns, France's lower house of parliament approved a bill that would ban shale gas drilling on its territory. The bill is due to be considered by the Senate in June.
The technique of hydraulic fracturing, or fracking, involves injecting water, sand and chemicals into shale rock formations at high pressure to force out oil and natural gas.
Opposition has centered over potential pollution from the large amounts of water and some detergent used in the process.
Only France has shale gas reserves on a similar scale to Poland in Europe, the EIA says.
NEED TO DIVERSIFY
Commenting on the French move, Richard Morningstar, the U.S. special envoy on energy for Eurasia, said it was not yet clear what stance the European Commission would take on shale gas but he said there was no need for moratoriums on drilling.
"It is essential that we establish a regulatory and environmental protection mechanism and this can be done in parallel with exploration and drilling," he said.
Unlike France, which derives much of its energy from nuclear power, Poland relies on heavily polluting coal for more than 90 percent of its electricity and is keen to diversify. It also wants to reduce its reliance on Russian gas imports.
"In three to four years' time we'll know for sure how much shale gas we have and we would only switch to industrial production in 10-15 years from now," Jacek Henryk Jezierski, Poland's deputy environment minister, told the conference.
Poland has granted 86 exploration concessions to some 25 companies, which have so far drilled seven shale wells but have not yet started fracking, Jezierski said. He estimated the cost of drilling one well at 45 million zlotys ($16.35 million).
Poland produces around 5 billion cubic meters (bcm) of conventional gas every year, with annual consumption at 13 bcm, and has confirmed supplies of 140 bcm.
U.S. giants such as Exxon Mobil and Chevron, have bought Poland's shale gas exploration permits along with Canada's BNK Petroleum, Italy's Sorgenia and other international and Polish firms.
Even if shale deposits are confirmed, Chevron said much remains to be done to develop gas infrastructure in Poland and to finalize the regulatory framework.
Chevron has four exploration concessions in eastern Poland as well as one open and three pending in Romania.
"We'll start drilling in Poland in the fourth quarter and continue through next year. This is a multi-well program, but we have not yet decided on the specific number of wells," said the company's manager for Poland, John Claussen.
"If we are successful, we would want to have an additional evaluation somewhere in 2013," he added.
Polish shale gas deposits lie deeper underground than in the United States and its much higher population density may also complicate plans to develop the reserves, experts say.
(Editing by Anthony Barker)