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Could Poland Become Europe's Energy Powerhouse?

Could Poland Become Europe's Energy Powerhouse?

The idea seems patently absurd given that the country is dependent on outdated coal power and Russian gas imports to meet its domestic energy needs.

But in a field outside the northern Polish village of Lebien, 90 kilometers west of Gdansk, it's an idea people are taking very seriously. At first glance, it doesn't look like much: a fenced-in area, a rig, a small construction team.

But what matters is what is located 3 kilometers underground -- large deposits of shale gas. If these can be tapped and exploited, it could dramatically change Europe's energy equation, reducing the continent's dependence on Russian imports and thus eliminating a major source of Moscow's political influence over Europe.

The EU as a whole depends on Russia for 25 percent of its gas supplies. Poland is particularly vulnerable, with 65 percent of gas imports coming from Russia.

Karl De Mong is vice president of Realm Energy, one of 22 companies, mostly from the United States and Canada, which has been granted concessions for the exploration of shale gas in Poland.

"It is very possible that Poland could have gas on a large enough scale not only to displace Russian gas supplies but probably to displace coal-power generation as well,” De Mong says.

Biggest Reserves In Poland

So called "unconventional" gas supplies such as shale have grown from just 1 percent of U.S. domestic gas production a decade ago to roughly 20 percent today. The global shale-gas market in 2011 was worth $26.6 billion.
A recent report by the U.S. Energy Information Administration put the volume of technically recoverable shale gas in Europe at 17.5 trillion cubic meters. Poland is pinpointed as the country on the continent with the biggest reserves, with some 5.3 trillion cubic meters ready for immediate extraction.

Even if Poland can only extract 3 trillion cubic meters, analysts say, it would still have gas reserves of more than 200 times its annual consumption and more than 750 times the country’s current annual production.

Other European countries exploring shale gas include Austria, the Czech Republic, Hungary, Ukraine, and the United Kingdom.

Poland has granted 68 concessions that cover some 30 to 40 percent of the country's territory. The areas to be explored stretch from the Baltic Sea coast in the north to the Ukrainian border region in the southeast.

Most of the companies have already completed seismic surveys of their parcels of land to find out if the sediment is thick enough to drill in. Six wells have been drilled to give a clearer picture of the potential reserves and recently some companies have started to break rock down below by pumping water in to see if the gas in the sediment can be freed.

According to some estimates, production could start in two years.

Dramatic Results

David Messina, the executive director of BasGas, another company that has concessions in Poland, says it isn't realistic to produce shale gas in all of those areas. But even if a fraction of them work out, he says, the results would be dramatic.

“It is really going to be dependent on the economics, which we really don’t have a good understanding of yet," Messina says. "But if even 50 percent of some of the projections are accurate, then certainly within five to 10 years, Poland could be a gas exporter.”

And that is a possibility that has generated excitement at the highest levels in Warsaw.

“We believe, of course, that shale gas is not a silver bullet for Polish energy or also European energy," says Katarzyna Kacperczyk, deputy director of the Polish Foreign Ministry's Department for Economic Policy. "However, we do believe that once the production of shale gas starts, it will play a role in the Polish and European energy mix.”
And as De Mong explains, the government in Warsaw has gone to great lengths to see to it that companies exploring for shale gas do not run into any undue bureaucratic roadblocks.

“One of the things that Poland has within its control that...[it is] trying to use as a lever is the business environment," De Mong says. "They are trying to make the business environment accommodating to get this off the ground.”

Expensive, And Harmful

Extracting shale gas, however, is very expensive, with drilling costs running six to 10 times higher than conventional oil and gas. Ecologists also say it is harmful to the environment.

Shale gas is produced through a process called hydraulic fracturing -- or fracking. The process releases natural gas from shale by blasting the rock with sand, water, and chemicals. -- creating cracks through which the gas flows.
The process produces wastewater laced with toxic substances, which has raised the ire of environmentalists worldwide. New York state recently imposing a moratorium on shale-gas drilling due to environmental concerns. In May, France also banned hydraulic fracturing.

Kacperczyk stresses that the companies will follow all Polish and European regulations.

“We have absolutely no signs for any negative impact on the environment," Kacperczyk says. "On the other hand, this is also a big responsibility on the side of the companies. As in every industry activity, shale gas needs to obey rules and regulations. Companies need to implement the rules and regulations.”

The questions surrounding the impact of shale-gas drilling on the environment have led several EU member states to question the practice altogether. In addition to the French ban, the British government is facing growing pressure to investigate the safety and environmental impact of hydraulic fracturing after fears that it could have triggered two small earthquakes in Lancashire.

At the same time, there is widespread suspicion that Russia is using its considerable lobbying clout in the EU to bog down shale-gas exploration and extraction with excessive regulations.

Kacperczyk says each EU member state should be free to determine its own energy set-up.

“I think France can decide also independently what type if energy mix is best for France," he says. "In this sense, Poland has also a right to decide what energy mix is best for Poland. We have a different economic situation and we have a different energy situation. There are no two countries in Europe that are completely alike. That is why it is so important to have this diversity. We don’t need to replace each other. We need to be complementary to each other, and in this sense we also understand the energy solidarity in Europe.”

By. Rikard Jozwiak

Copyright (c) 2010. RFE/RL, Inc. Reprinted with the permission of Radio Free Europe/Radio Liberty, 1201 Connecticut Ave., N.W. Washington DC 20036.

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