Shale Gas in Poland: Different Conditions Seem to Foretell Failure

With the number of concessions falling, more companies dropping out, and the general negative reaction to the new Polish rules, shale gas here seems to be an illusive dream.  The depth to the Polish reserves is greater than almost anywhere is the United States. You cannot own the mineral rights in Poland and must make expensive accommodations with the government. The number of exploratory wells is a very, very tiny fraction of what was done in the United States before commercial development was feasible. The major international firms have left the market.

Reliance on shale gas in the Polish national energy plans (and dreams) seemed naive from the get go to experts.

This wishful thinking continues right up to the plans for the 2050 energy blueprint. Something that reminds us that these national planning documents are frequently about as probative as Stalin's Five Year Plans. They do seem to come from the same socialist tradition!

With Polish coal-fired power units struggling to even keep output at a pace to replace retiring plants' capacity, you really have to ask realistically where new electricity will be coming from. The Government's plans for nuclear power plants now seem to really entirely on the use of spiked rates to users to subsidize the much higher cost of nuclear energy production [itself a great irony since Tusk supported nuclear energy as a "cheaper" alternative]. All, of course, has been signaled to be illegal state aid by the European Commission in their preliminary communication on a similar British plan. The chances that the Polish Government and its state-owned utilities could successfully negotiate the numerous hurdles to building a nuclear power plant in Europe at this point have gone from slim to pretty much zero based on the Commission's position and past precedent. The nuclear energy plans would never have accounted for a very high percent of the total electricity supply in any event.  

While most European countries are meeting their growth in energy capacity by renewables, the current Polish Government seems to largely be oblivious to the reality on the ground in Europe. There is a good deal of lip service paid to renewable energy, maybe more so after new polls show that it is the most popular form of energy with Polish voters, but the government is nevertheless engaged in a multiple-year campaign to delay necessary reforms in the RES system.  The delays mean more RES support is going to the state-owned utilities under an illegal scheme, which in turn are raided to pay dividends to the state treasury, often at the expense of capital reinvestment.

There is every indication that the whole Polish Government obfuscation of energy policy will be going up in smoke in 2015. Actions by voters, investors and the European Commission will change the dynamics in dramatic ways. As wishful thinking over shale gas and other options meets reality, Poland will get into the mainstream of changing energy developments in Europe


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