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Poland’s Shale Boom Is Slow Going

James Munson , iPolitics

‘No matter what happens with the shale gas revolution in Poland, Poland’s economy will do well regardless’

Ottawa’s push to make an energy ally out of Poland may take a while. The eastern European nation, which has gained significant clout as Russia’s interventions in Ukraine have grown over the last several months, signed a joint statement on energy cooperation with Canada in mid-2012.

Since then, Poland’s push to develop its coal and shale gas resources has made it a friend to Canadian officials looking to put to rest restrictions on oilsands-derived fuel in the European Union. A more energy independent Europe would also reduce the union’s reliance on an increasingly belligerent Russia for fuel amid heightening tensions over Ukraine.

Just last week, Polish Prime Minister Donald Tusk, in an op-ed in the Financial Times, called for the creation of a joint European energy regulator to help spur development of domestic fossil fuels.

But beneath the rhetoric – both Canadian and Polish – around these plans, the boom is moving much more slowly than expected.

The Energy Information Administration, a U.S. energy analysis body, had to shrink its estimates for Polish shale gas to 148 trillion cubic feet last year, down from 187 trillion cubic feet in 2011.

“Shale gas operations have slowed since 2011, as ExxonMobil ceased exploration and Marathon announced that it would discontinue operations after unsatisfactory test-drilling results,” says the EIA’s latest analysis notes on Poland.

Also joining the exodus was Canada’s own Talisman Energy Inc. The Calgary-based firm held working interests in three licenses in northern Poland and drilled vertical wells in each of the three licenses, said Talisman spokesperson Brent Anderson.

The global firm left its stakes in Poland mid last year, “but our decision to exit Poland was driven entirely by our strategic priority to focus production in our two core areas of the Americas and Asia Pacific,” said Anderson.

Only 60 wells have been drilled in Poland in total, wrote Dariusz Manczyk, an economic advisor with the Polish embassy in Ottawa, in an email. There are currently plans for three more, he said.

In light of the oil companies that have left the country, the Polish government announced a new hydrocarbon law earlier this year. Previous plans to use a state fund to invest in joint ventures have been dropped and exploration will be tax-free until 2020, said Manczyk.

“We do not know the details, however the idea behind the proposed legislation is to give more incentives to business through, inter alia, simplifying administrative procedures in granting concessions,” he said.

The bill has been accepted by the country’s council of ministers and will soon be sent to the Polish parliament, he said.

As Foreign Affairs Minister John Baird travelled to Poland and other eastern European countries this week, Carleton University hosted a presentation by Warsaw-based World Bank economist Marcin Piatkowski on Poland’s economic growth since the end of the Cold War.

Poland, which has by far and away outdone its fellow former Soviet republics in raising its living standards, is interested in shale gas but is not depending its future growth on it, said Piatkowski.

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