Monday, January 18, 2010

Shale Exploration in Poland

I'm still going through old articles, and I was particularly interested in an article in the Houston Chronicle about two companies, Marathon Oil and ConocoPhillips, and their pursuit of shale gas in Poland

I get pretty excited about shale gas in the U.S. for lots of reasons, both personal and as an American, but can you imagine how excited people in Poland must be about the prospect of becoming not only natural gas self-sufficient but a net gas exporter?  Poland imports 72% of its gas, the majority of which comes from Russia.  After a price dispute between Russian gas company Gazprom and Ukrainian gas company Naftohaz last January cut off gas supplies to a large part of Europe for more than a week, the idea of energy independence (at least natural gas independence) is even more acute in Eastern Europe.

Unfortunately, Poland's monopoly gas distributor is finalizing a contract with Gazprom of Russia to supply almost three-fourths of its gas until 2037.  If shale exploration is successful, there could at least be a legitimate spot market for gas in the country and a pretty good backup plan if there is another row between Russia and Ukraine, not to mention a boost to the economy through gas exports.

One big difference between drilling in the U.S. and other nations is land ownership.  In the U.S., while there are large swaths of publicly owned land, much of the land prospective for the new shale plays like the Haynesville and Marcellus are privately owned.  It is an expensive headache for producers to piece the land together for exploration, but it is a significant wealth creator for individual land owners.  The pain-in-the-ass factor is a benefit to independent producers who are scrappy and agile.  In Europe and Asia, there is significantly less private land ownership.  This allows big companies like Marathon or Exxon to work with the government or other large land owning concerns to get big leases.  This might enable production to start up faster, but it can be expensive to get these concessions and little economic benefit trickles down to the general population.

There are no guarantees of success.  The shale in Poland is far different in quality than that with which we are familiar, but the prospect for success is there.

1 comment:

Anonymous said...

Situation in Europe:;jsessionid=93EF8CA9EA75629F8137F084A4700DB8?$part=binary-content&id=2022464&status=300&language=en