Fracking in Poland. Other Europeans fear fracking. Poland is steaming ahead

POLAND may have western Europe’s largest reserves of shale gas. A dozen global gas-exploration companies have promised to drill as many as 120 test wells over the next few years to find out. The prize could be trillions of cubic metres of gas. It is “a huge and expensive gamble”, says Tomasz Maj, the head of Polish operations for Talisman Energy, one of the exploration firms. The rewards could be vast. Shale gas could free the country from its dependence on coal, a dirtier fuel, which currently accounts for 95% of Polish power generation. It could also mean that Poland no longer has to rely on Russia, the neighbourhood bully, for most of its natural gas.

But the extraction of shale gas is controversial. It requires fracking: blasting fissures in subterranean rock and pumping in water and sand, and occasionally nasty chemicals, to force out the gas. France won’t do it. There is local resistance in the Netherlands. Yet other countries’ qualms may make fracking more attractive for Poland. If others won’t frack, they will probably buy Polish gas.

European energy policy is in turmoil. Germany decided to abandon nuclear energy. A referendum in Italy on June 12th also said “no thanks” to nuclear power. Reliable sources of energy are inadequate to meet future demand. Poland sees an opportunity.

“We’ll never be an oil state, but we could become a Norway,” says Andrzej Kozlowski of PKN Orlen, an oil company in which the government has a 28% stake. The Polish government is keen to attract firms with experience of fracking in North America, such as ExxonMobil and ConocoPhillips. It has awarded nearly 90 concessions so far. These are cheap, and production royalties will be low. But firms will be penalised if they fail to drill the promised test wells.

Oil-and-gas firms have been fracking on a large scale in Canada and America for over a decade. In May a delegation of Polish geologists and officials visited Canada to wise up on social and environmental as well as technical issues. The government is also taking advice from GFZ, a geological institute in Potsdam, Germany, and from demosEUROPA, a think-tank in Warsaw.

Fracking is a completely new industry for Poland, so the government is anxious to get the rules right. Taxes must be low enough to encourage investment, but high enough to raise revenues. Getting neutral advice on the environmental risks is not easy. Fracking can damage the water table, disrupt communities and even cause earthquakes. (In Britain on May 31st Cuadrilla Resources said it was halting a fracking operation near Blackpool, pending investigation of two small earth tremors which it may have triggered.)

The French government imposed a moratorium on fracking on May 11th. In Britain, by contrast, a parliamentary committee was friendly to fracking. EU law allows member states to exploit their natural resources as they see fit, but subject to minimum environmental standards. The European Commission is due to roll out its long-term energy strategy in November, which could affect fracking. But Poland, whose six-month presidency of the European Council begins in July, is in a good position to influence what it says. On June 21st Poland was the only EU member to vote against a proposed tightening of carbon-emissions targets for 2020.

Talisman Energy Plans to Drill Its First Shale Well in Poland This August

Talisman Energy Inc., the Canadian oil and gas explorer, plans in August to start drilling its first well to evaluate potential shale deposits in northern Poland, according to the company’s manager for the country.


“We’re planning to finalize negotiations on the drilling contract in mid-February, and drill one well on each of our three licenses,” Tom Maj said in an e-mail. “Drilling on the first well would start Aug. 1 and the last one would be completed around the end of January 2012.”


Poland’s reserves of shale and tight gas may be as much as 3 trillion cubic meters, according to estimates by geologists and energy consultants, potentially making the country a net exporter of gas and reducing Europe’s dependence on Russia.


Shale development, where rock formations are horizontally drilled and fractured using water and other liquids under high pressure, is driving a surge in U.S. gas output and in Poland drew interest from companies including Exxon Mobil Corp. and Chevron Corp.


Calgary-based Talisman licenses to search for shale gas are in the Baltic basin in northern Poland.


According to Maj, the company would be interested in trading data from exploratory drillings with owners of licenses in the same area. ConocoPhillips, the third-biggest U.S. energy company, and its eastern European partner Lane Energy Poland own neighbouring licences as well as LNG Energy Ltd., a Canadian oil and gas explorer, and Polskie Gornictwo Naftowe i Gazownictwo SA, Poland’s dominant natural gas distributor known as PGNiG.


‘Trading Data’


“We are interested in trading data with Lane Energy and LNG Energy, as well as the PGNiG, which own neighbouring licenses,” he said.


Lane Energy last year drilled two vertical wells at its license in northern Poland and plans to drill a horizontal well in the same area in the second quarter of 2011, Kamlesh Parmar, Country Manager at Lane Energy Poland, said Dec. 2.


LNG Energy on Jan. 10 announced that it has started drilling its first shale gas exploration well within the Slawno concession area. The company said in a regulatory statement that its well is located less than 60 kilometers (37 miles) from one of the wells drilled by ConocoPhillips and Lane Energy. LNG Energy plans to drill two more wells on its two other concessions in Poland in 2011.