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Polish shale hits the rocks

There was a time when Polish policymakers thought the nation's shale gas exploration efforts might eventually decrease Warsaw's energy dependence on Russia. But as Jo Harper reports, the prospects are not so rosy now.

Poland is estimated to have between 350 billion and 780 billion cubic meters of shale gas under its surface, making it Europe's second largest potential producer after the UK.

But, unlike the UK, no well has yet produced shale gas in commercial quantities, and the prospects don't look good. In fact, after an outflow of several foreign majors, the only companies doing further drilling are state-run oil and gas company PGNiG and the country's largest refiner PKN Orlen.

PKN plans to go ahead with the fracking of two wells later this year, while PGNiG's Stara Kiszewa concession in northern Pomerania, in northern Poland, sees drilling start on June 6.

The results - expected after a week or so - could tell us if the country's once fabled shale future will be realized. If results are poor, then PGNiG will view the shale project as finished, the newly appointed CEO Piotr Wozniak told newspaper "Puls Biznesu."

Expectations low

"The chances of Poland delivering commercial shale gas are now zero. It's not really on the agenda," according to Greg Pytel, European Commission advisor and energy expert at the Sobieski Institute in Warsaw.

"Barring exceptional circumstances, no two wells fracked would ever prove a shale gas play," Pytel says, adding that the decision to end fracking has probably therefore already been made.

"No-one is expecting anything from this drilling," agrees Wojciech Kosc, an editor at Cleantech, an energy consultancy in Warsaw. "This looks like one in a million at this stage." He added that expectations had been over-hyped in 2011 and 2012 and reality is now asserting itself.

The mighty fall

It had all looked so promising only three years ago, when current European President Donald Tusk - then Polish prime minister - heralded the beginning of a new phase in Poland's perpetual search for independence from Russian gas and diversification away from domestic coal.

But the country now has an LNG terminal at Swinoujscie on the Baltic coast, importing LNG from Qatar. It has also been mulling its nuclear options and renewable energies have come to the forefront of plans to diversify energy sources. Currently, about 70 percent of Poland's gas is imported from Russia; for geopolitical reasons, Poland's leaders see this as problematic.

Police on the ground as protesters confront a survey crew

Environmentalists in Poland have staged protests against fracking, as they feared it would lead to higher greenhouse gas emissions and also pose severe pollution risks to groundwater

Shale gas, unlocked with US technological help and major investments, was intended to be a game changer.

But it hasn't turned out that way. The reason why is complex and multi-layered. There are geological issues at work, as well as environmental concerns and a powerful coal lobby. Some say suspicion of foreign firms added to regulatory and political opacity that stymied the nascent industry, seeing only local firms left to fight the shale corner.

"It is simply not working," says Antoine Simon, a campaigner at Friends of the Earth Europe. "The geology is not favorable, and I would expect the concessions to continue to decrease. Unless gas prices rise dramatically, it is now just a matter of years before all of Poland's shale projects are stopped,” he says.

False hopes

In the mid-2000s, the US shale boom prompted Poland's government to offer shale exploration licenses that went to local companies, as well as major international energy firms, including the US companies ExxonMobil and Chevron and French firm Total.

The excitement mounted in 2011 after an assessment from Advanced Resources International (ARI), a consultancy in Washington DC that was commissioned by the US Department of Energy to study Poland's shale gas resources. ARI calculated that Poland's shale gas plays held about 5,295 billion cubic meters (bcm) of technically recoverable gas, the most shale gas of any nation in Europe - the equivalent of 325 years of Poland's current gas consumption.

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The Polish Geological Institute (PGI) in Warsaw then made its own estimate in March 2012, calculating that Poland has 346–768 bcm of recoverable shale gas onshore - about one-tenth of ARI's figure.

"The Polish Geological Institute (PGI) plays games with these estimates," Pytel said. "They aren't reliable because they are rigged. Rigged not in the sense that they are professionally incompetent, but because the choice of assumption is to suit the outcome, i.e. to demonstrate that, after all, Poland doesn't really have attractive shale gas prospects. This outcome suited PGNiG and their mates at PGI," he adds.

Foreigners pulling out

The foreign pullout started when ConocoPhillips announced in July 2015 it was putting a halt to its shale gas exploration in Poland due to what it said were unsatisfactory results.

That basically left the rest of the field to Polish state-run firms - after Chevron, another US energy major, gave up looking for shale gas earlier in the year. Exxon Mobil, Total and Marathon Oil had already ceased their Polish shale-gas efforts over the previous three years.

ConocoPhillips said its subsidiary Lane Energy Poland had invested around $220 million (196 million euros) in Poland since 2009, drilling seven wells over its three Western Baltic concessions.

"Unfortunately, commercial volumes of natural gas were not encountered," Tim Wallace, ConocoPhillips country manager in Poland, said.

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