Thursday, February 9, 2012

Sounds Like Warsaw's Got a New Pact: Shale Gas Equals Freedom

 The EU is considering continent-wide fracking rules.
Poland will veto.

From Reuters:
Poland's shale gas play takes on Russian power

When Wieslaw Radzieciak took office as the mayor of Lesniowice in the gently-rolling farmland of southeastern Poland 26 years ago, the Soviet garrisons that dotted the county were a stark reminder of which superpower was in control.

The signs of Russian occupation have vanished but over the past year a new superpower has moved in, its presence spelled out on the distinctive logos plastered on the trucks used by U.S.-based oil services company Halliburton.

It's all part of Poland's ambitious goal to exploit Europe's biggest estimated deposits of shale gas. Beginning in 2014, Warsaw wants to tap an estimated 5.3 trillion cubic meters of recoverable reserves of gas - enough, according to the U.S. Energy Information Administration, to supply Poland with more than 300 years of its domestic energy needs.

But the shale gas push is about more than energy. Poland wants to break its reliance on Russian energy and reduce Moscow's power over Europe. That is one reason why Warsaw has welcomed U.S. oil majors such as Chevron, Exxon Mobil, Conoco and Marathon, even though it risks igniting tensions with Russia.
"If this thing comes true, if the American technologies deployed here at some point are really able to produce this gas, then this means a winning situation for the whole of Europe really," Radzieciak said in an interview in his small office filled with sports trophies, banners from local teams and a large map of Poland on the wall. "It would create more competitiveness on the gas market, which is now dominated by Russia, and one side would not be able to force anything unilaterally anymore."

Western European capitals are just as eager as Poland to diminish Russian influence over supplies. Russia currently supplies 25 percent of deliveries to the European Union. Daniel Yergin, a Pulitzer-prize winning author and energy historian who included a chapter on shale gas in his latest book "The Quest," sums up Warsaw's thinking: "They're motivated to develop it economically and they're motivated to develop it politically."

But Russian officials, publically at least, dismiss the challenge, arguing it will prove Russian gas is cheap.
"Oh, we're so thrilled that they are starting to produce shale gas!" Sergei Komlev, head of contract structuring at Russia's state-controlled Gazprom told Reuters last week. "Look, we do not believe in this myth of shale gas, that it is cheap gas. It is not true."

There is one good practical reason Poland has turned to U.S. companies to unlock its huge shale fields: American firms dominate shale gas technology.

The breakthrough came in 2003 when independent U.S. drillers, led by Devon Energy Corp, combined drilling at once-impossible angles, known as horizontal drilling, with hydraulic fracturing, or "fracking" - an older technology in which shale rock is cracked open by chemical-laced water blasted underground along with sand to prop the cracks open.