Poland targets shale gas despite pollution concern

Poland is planning a major investment in shale gas, a potentially huge source of energy — and environmentally dangerous chemicals — to break free of dependence on Russian imports and boost its economy.

The use of shale gas, pioneered by the U.S. and Canada, is controversial for its impact on the environment and will be one of the main points on the agenda when President Barack Obama visits Warsaw on May 27-28.

Some U.S. states were forced to step up environmental standards after high levels of methane were found in tap water, while France recently put a similar project on hold.

But Poland seems undeterred by the risks, saying it cannot afford to ignore such a valuable reserve of energy.

Foreign Minister Radek Sikorski noted on Wednesday how volatile energy markets have become. Recent world events — particularly the instability in North Africa and Japan's nuclear disaster — have caused oil prices to soar, hurting the global economic recovery.

"Exploration of our own resources is our chance and our obligation," Sikorski said at a conference of experts on shale gas in Warsaw. Shale gas is "a chance to limit Poland's and Europe's dependence on imports."

U.S. Ambassador Lee Feinstein said developing shale gas industry will translate to energy security for Poland, as it does for the U.S.

A recent study by the U.S. Energy Information Administration estimates Poland's reserves at some 5.3 trillion cubic meters, enough to satisfy the country's consumption of some 14 billion cubic meters per year for decades. Now, some 70 percent of needs, or 10 billion cubic meters, is covered by Russian gas.

Companies with experience in shale gas extraction in the U.S. and Canada have obtained licenses to drill in the country.

Lane Energy Poland is drilling a third well in the north after promising results from the first two wells, said Commercial Director and Poland Country Manager, Kamlesh Parmar. One test rig costs up to 50 million zlotys, ($17 million).

To release the gas that has been trapped in porous rocks deep underground for millions of years, the companies drill deep wells to break the rock and pump huge amounts of sand- and chemical-laced water to prevent the cracks from closing. The technology is called hydrofracturing or fracking.

The huge amounts of water used may pose a problem for Poland, where there is no abundance of it.

Also, Poland's being four times more densely populated that the U.S. poses another challenge, Deputy Treasury Minister Mikolaj Budzanowski told the conference.

Meanwhile, environmental activists say the chemicals used can be harmful to the environment and humans — near some of the U.S. wells, dangerously high levels of methane were found in households' tap water.

Lawmakers in Texas, where shale gas is extracted on a large scale, approved last week the first U.S. law to require drilling companies to publicly disclose what chemicals they use.

In Europe, a spokeswoman for EU Energy Commissioner Guenther Oettinger said the potential role of shale gas will depend on whether producers will comply with European laws, mainly those on environment protection. European countries are watching the U.S. projects closely for tips on how to minimize risks, Marlene Holzner said.

France's lower house of parliament has recently taken a first legislative step toward banning shale gas extraction. Germany has some test projects, but there are concerns there as well about the environmental impact.

Analysts, however, say Poland cannot afford to ignore such a large source of energy.

"We have no other way out," says Andrzej Knigawka, head of ING Bank equity research. "From the point of view of our energy interests it would be wrong not to try to extract shale gas, knowing that it dramatically changed the energy balance in America" toward self-sufficiency.

Experts at the conference in Warsaw agreed that educating the Polish public about how the government intends to manage environmental risks will be important in the development of the shale gas project.