Poland pushes for shale with promise of $1.57 billion investment and new energy policy

Belvedere palace - Polish president's office
Source: DollarPhotoClub

Poland – currently a country that is the most advanced when it comes to shale exploration in Europe – will spend $1.57 billion in shale gas investment by 2016, the country’s treasury minister Wlodzimierz Karpinski said Wednesday.

“Polish energy security and independence is a government priority,” Karpinski told parliament as he outlined the government’s energy policy priorities until the end of its term next year, according to a treasury ministry statement.

“It’s based on the search for our own raw materials and the maximum use of national resources. We want to take advantage of this opportunity for energy independence, which in Poland may derive from shale gas reserves, and that’s why state companies will invest not less than Zloty 5 billion ($1.57 billion) in unconventional exploration to 2016,” he added.

With the new Hydrocarbon Bill signed by the president, The Polish Ministry of Economy is now undertaking an extensive public consultation process into the Government’s proposed future energy policy, updating its existing framework introduced in 2009.

Published on 14 August, it outlines a comprehensive approach to the country’s energy priorities to 2050, highlighting three clear objectives:

  1. Achieving favourable conditions for the sustainable and balanced development of the Polish energy sector,
  2. Contributing to the development of the economy and ensuring the security of the country’s energy supply; and
  3. Meeting the needs of businesses and private households

Speaking on behalf of Shale Gas Europe, Marcus Pepperell said: “Europe faces an energy paradox and Poland is at the forefront of this debate. Coal continues to account for 16% of Europe’s energy supply. Its share is rising through increased domestic production as well as increased imports which rose by an additional 9% regionally in 2013 compared to 2012.”

Poland is the second largest coal producer in Europe, behind Germany. In 2012, coal constituted 55% of the country’s consumption, with the remainder represented by oil (26%), natural gas (15%), and renewable energy sources (4%), according to the BP 2013 Statistical Review. Poland also imports natural gas primarily from Russia, Norway, and Germany.

Poland’s domestic production of coal and gas is decreasing, requiring further imports of these resources from abroad. The draft policy framework highlights the potential to increase and diversify the amount of energy produced domestically by further investing in more renewable energy, developing a nuclear programme, and introducing potential new domestic energy sources such as shale gas.

“Europe is working hard to cut its greenhouse gas emissions by 2030. Member States with potentially significant shale gas reserves like Poland have a real opportunity to reduce the use of more carbon intensive fossil fuel in power generation, and decrease their dependency on imports by further developing these indigenous sources” Shale Gas Europe concluded.

When it comes to shale gas, estimates by the US Energy Information Administration in 2011 that Poland had potential reserves of 5.3tn cubic metres, the biggest in Europe, sparked hopes it could be set on the same path as oil-rich Norway. The EIA has since revised its estimates down to 4.2tcm – but it is still above even the most conservative estimate put forward by the Polish Geological Institute (PGI) suggesting reserves of between 346bn-768bn cubic metres.

Onshore reserves alone are estimated at about 230bcm. Even this number would be enough to supply Poland with gas for decades to come.

The exploration of Polish shale has not gone smoothly, though. Several large exploration companies have left Poland quoting difficult geology and disappointing results. Those who have left have found some success  – such as San Leon on its Lewino well in the north of Poland – but exploration work is still at a too-early stage to determine whether Poland becomes a shale success story.

The first phase of the consultation process for Poland’s draft energy policy will close on 1st September.

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