Its always interesting to read the progress other countries are making with shale gas development. In the case of Poland, their national auditing agency criticized the Polish government for the slow pace at which they are developing out the industry. Poland is in a unique situation whereby it great shale gas potential and currently depends on Russia for about 70% of its natural gas needs. In addition, Poland is building a LNG facility on their northeast coast to import natural gas for domestic consumption and potential transport to Ukraine – another Russian natural gas dependent.
Article: Polish auditors slam government for slow pace of shale gas development
Following up on our early and ongoing coverage of the far reaching geopolitcal and economic impact of shale gas (See HRN Sept. 2010 Natural gas to bring about far reaching geopolitical changes), Ukraine Prime Minister Mykola Azarov has stated in no uncertain terms that his country will cut imports of Russian natural gas by 66% within 5 years.
Azarov’s comments emphasize the Ukraine’s worsening relations with Russia and the failure to re-negotiate a controversial 10-year gas agreement signed in January 2009. At the same time it also emphasizes the growing importance of shale gas reserves within the Ukraine to reduce dependence on Russia for natural gas.
The Ukraine estimates it will import 40 billion cubic meters of natural gas from Russia in 2011. Extensive exploration has already been completed on Ukraine’s shale gas potential, and plans to start shale gas production within years. The hopes shale gas production will reduce natural gas imports 5 Bcm per year.
Estimates are that the Ukraine has between 1.5 trillion and 2.5 trillion cubic meters of shale gas according to statements in June based on preliminary results of a survey that had been financed by the US government. The US government have also been very supportive of Poland’s desire to develop shale gas assets. Support that was confirmed with President Obama’s visit to Poland earlier this year.
Source: Ukraine to cut gas imports from Russia by 66% within 5 years: PM
See Also: June 8, 2011: Poland Targeting Shale Gas With Exxon, Chevron to End Russian Dominance
For over a year, HRN has been writing about the far-reaching geopolitical impact shale gas will have on various parts of the world. Back in April 2010, we referenced a Times article that was picking up on the impact Poland’s shale gas reserves will have on eastern Europe and that country’s relationship with Russia.
See HRN: Natural gas to bring about far reaching geopolitical changes – Sept 2010
When U.S. President Barack Obama visited Poland for the first time last month, he offered to share US technology used to crack open the gas-rich rock formations. Obama has also offered this to China and others with potential shale gas reserves. Interestingly enough Poland has set out a time line to start producing significant natural gas from their shale deposits within the next decade. Bloomberg points out that this coincides with Germany’s announced timeline to close its 17 nuclear reactors. This is nothing more then coincidence as one would have to truly believe that Germany will close these reactors (HRN Opinion: This is simply a convenient deferral. Germany’s Chancellor Angela Merkel is simply trying to gain popular support. The public opinion of nuclear power in Germant is likely to change over the next ten years. The person in power in ten years is likely to keep them on a pro-nuclear policy).
Point here is that Poland is committed to shale gas, and moving forward with its development. As well as building an LNG port on the north shore of Poland. This will have significant impact on Europe, and in particular Russian relations with east Europe.
Bloomberg: Poland Targeting Shale Gas With Exxon, Chevron to End Russian Dominance
President Barack Obama waves as he arrives at College Green in Dublin May 23, 2011. Credit: Reuters/Stefan Wermuth
When President Obama visits Poland this coming Saturday, the huge potential of Poland’s shale gas reserves to make it more energy independent and have significant geopolitical and economic impact is at the top of President Obamas agenda.
Both Exxon Mobil and Chevron are leading exploration and development efforts to tap Poland’s shale gas reserves, that some experts believe are the biggest in Europe at 5.3 trillion cubic meters. Such a massive amount of natural gas would have huge geopolitical and economic impact to Poland who is dependent on Russia for natural gas.
Perhaps Obama’s eagerness to see American companies develop shale gas assets should be followed up with a more firm position in supporting futher development, and increased usage of natural gas in the U.S.
Horn River News: Natural gas to bring about far reaching geopolitical changes (Sept 2010)
Horn River News: Polish shale gas to decrease dependence on Russian gas (April 2010)
MORE: Reuters: Missile defense, shale gas top Obama agenda in Poland
In past articles we have looked at the far -reaching geopolitical impact of shale gas with new discoveries in eastern Europe. Now Eni SpA, Italy’s largest oil company has announced plans to throw their hat into the ring and explore for natural gas in Poland with technical support from Quicksilver Resources Inc.
Eni to Search for Shale Gas in Poland, Scaroni Says
By Alessandra Migliaccio and Chiara Remondini
Nov. 29 (Source: Bloomberg) — Eni SpA, Italy’s biggest oil company, plans to search for shale gas in Poland to make up for production declines in other European countries, Chief Executive Officer Paolo Scaroni said.
The Rome-based company “believes in” shale exploration even though extraction in Europe is more complex than in the U.S. because of population density and governments will have to grant exploration licenses, Scaroni told reporters today in Milan.
Drilling and fracturing rock formations to pump natural gas from shale rock is being encouraged as a way of helping Europe to diversify its energy sources. Poland had issued 58 licenses allowing companies to search for unconventional gas as of June 7, according to Ewa Zalewska, director of the license department at the Environment Ministry.
Eni will search for Polish shale gas using technology borrowed from U.S. partner Quicksilver Resources Inc, Scaroni said. Exploration will make Europe less dependent on supplies from Algeria, Norway and Russia, he said.
Related Horn River News articles:
Sept. 10, 2010 – Natural Gas to bring far reaching geopolitical changes
April 9, 2010 – Polish shale gas to decrease dependence on Russian gas
In past articles we have spoke about the dramatic geopolitical impact shale gas discoveries will have on the world. Probably one of the most profound regions to be impacted will be eastern Europe with the potential discovery of huge shale gas deposits in Poland (see Horn River News, April 9, 2010: Polish shale gas to decrease dependence on Russian gas)
Wood Mackenzie estimates that shale gas plays in Poland may reach 48 trillion cubic feet (1,36 trillion cubic metres) and if this proves to be an accurate number, then Poland would become self-sufficient for years to come. Currently, Poland imports as much as 72% of its natural gas needs.
Shale gas exploration and development in Europe is playing out like it did here in North America. Up till recently, the shale gas play in Europe has been about the “land rush” as various companies compete to acquire land licenses for exploration and development. Similar to the shale basins across North America, the land rush to acquire specific assets in the EU has been feverish and includes the participation of some of the world’s largest oil and gas companies.
But now EU shale gas has reached an important milestone in Europe. Conoco Phillips recently completed the first successful well and has a second one scheduled for completion in the coming weeks. These two wells may mark the first shale gas production in Europe, and be the beginning of a dramatic change in the geopolitical influences of Eastern Europe where countries like Poland are eager to dissolve their dependence on Russian natural gas and Russian political influence along with it.
For years, Russia has retained strong political influence over eastern Europe through the control of natural gas supplier Gazprom which supplies about 25% of Europe’s natural gas needs.
A substantial supply of natural gas in Europe from new shale gas discoveries would further add to the overall amount of natural gas competing for energy hungry European customers and perhaps put Russia in a rather uncomfortable position as they lose their past leverage and find themselves desperately fighting for customers. All of a sudden the shoe is on the other foot as it were…
With natural gas reserves potentially realizing a massive increase on a global scale in key areas of energy demand, there could possibly be one of the most dramatic transitions in the global energy mix underway (and we have not even mentioned the possibilities around methane hydrate… that is another story all together).
Natural gas will be the most important fuel source of the next century as it impacts both the global energy mix, and geopolitical stage.
HRN has reported numerous times how shale gas will change the geopolitical landscape of the world. More specifically, how new shale gas discoveries in Europe will reduce EU dependence on Russian natural gas, and reduce Russia’s influence on those that depend on Russian natural gas.
According to a recent London Times article Wood Mackenzie estimates that shale gas plays in Poland may reach 48 trillion cubic feet (1,36 trillion cubic metres). The deposits are said to similar to the Montney basin in British Columbia.
ConocoPhillips has plans to start drilling near the Polish coastal city of Gdansk in May in addition to Exxon-Mobil, Marathon, and Talisman Energy, who all have projects there. If current expectations are confirmed, Europe’s natural gas deposits would increase by 47% which would provide enough natural gas for Poland for some time and have a significant impact on that region’s dependence on Russian natural gas. Poland currently imports 72% of their gas from Russia.
Oisin Fanning, the executive chairman of San Leon Energy, a British company partnered with Talisman Energy is quoted:
“There is a landgrab under way. Poland is going to emerge as a significant gas producer and there is a lot of interest. All of the majors are coming in and Gazprom is looking at this with some alarm.”
Eager to diversify their energy sources and reduce their dependence on Russian gas, the Polish Government is offering attractive terms. Mr. Fanning is quoted:
“These are some of the best fiscal terms in the world. The Government is creating a very large commercial incentive to develop these deposits.”
Russia’s Gazprom will not lose much financially as natural gas will be sold to China who is eagerly increasing natural gas usage. However, the influence that Russia may have over Poland and other EU countries may be dramatically diminished without the leverage of natural gas during cold winter months in Poland.
Times Online: Dash for Polish gas could end Russian stranglehold
Posted in Uncategorized
Tagged ConocoPhillips, EU, Europe, Exxon Mobil, Gazprom, Gdansk, Marathon, Montney basin, natural gas, Oisin Fanning, Poland, San Leon Energy, shale gas, Talisman Energy, wood mackenzie
The Polish Environment Ministry says it has authorized U.S. oil company Chevron to explore natural gas (shale gas) deposits in eastern Poland. The license was granted for five years and enables Chevron to carry out seismic study and exploratory drilling up to 3,500 meters underground. The license covers 800 square kilometers in southeastern Poland. No financial details were released.
In the last two years, the Poland has granted 30 such concessions in Poland, to companies such as ExxonMobil, Lane Energy and Marathon Oil. Shale gas has fundamentally changed the natural gas market in North America, and a similar paradigm shift in Europe would be a welcome change for those countries that have depended on Russia for their natural gas supply.
Russia has downplayed the potential impact of shale gas discoveries in European countries, an expected response. But not only would alternative suppliers diminish Russia’s influence in the region, an increased supply of natural gas in Europe could have the same impact that shale gas has had in North America, whereby prices have traded in a lower range for a number of years which will impact Russia’s revenues.
Wall Street Journal: U.S. Firm Chevron Gets Gas Exploration License In Poland