Excessive and unclear regulations are scaring away foreign investors.
The Italian energy firm Eni is now the fourth of five early movers on Poland’s shale reserves to call it quits, and it’s hard to call this anything but a disaster for Polish shale ambitions. That’s a shame, because as the FT reports, for a little while there it looked like Poland might have been the first country in Europe to follow in America’s footsteps:
The US Energy Information Administration set off Poland’s shale frenzy in 2011 when it estimated possible reserves of 5.3tn cubic metres, the largest in Europe. Recent Polish estimates have been more conservative, in the range of 346bn to 768bn cubic metres. Poland uses 16bn cubic metres of gas a year, two-thirds of which come from Russia.
Unfortunately, Poland lacks the “wedding cake” geology that has made shale exploration so successful in America, which has stymied early exploration efforts. But while Eni blamed Poland’s geology with scuppering its plans, it’s not just the country’s geology that is causing problems: excessive and unclear regulations are scaring away foreign investors.
This underscores just how unique the American shale revolution has been. We’ve been extraordinarily successful at tapping shale oil and gas reserves for a huge number of seemingly disparate reasons—regularly-layered geology, a large pool of investors willing to take on the risks of shale exploration (and with the capital reserves to do so), the water resources fracking requires, the infrastructure to support drilling operations, mineral rights that gave locals the incentives to allow shale drilling, and a regulatory environment clear enough to assuage skittish developers.
Poland had the infrastructure and the public support to make this work, but lacking the other pieces to the puzzle it now seems incapable of even a pale imitation of American success. Poland’s problems will sow doubts in countries like the UK and China, which are desperately trying to play catch-up on shale themselves. Will any other country be able to produce shale energy in commercial quantities? So far, the answer seems to be no.