Poland's quest for shale gas and energy independence: an examination of domestic and international hurdles.

• Author: Pigg, Ryan S.

1. INTRODUCTION II. OVERVIEW OF SHALE GAS DEVELOPMENT, TECHNOLOGY, AND EUROPEAN DEVELOPMENT ABROAD. A. Hydraulic Fracturing B. European Natural Gas Production and Shortage C. Poland's Shale Gas Initiatives III. ECONOMIC AND ENVIRONMENTAL CONCERNS SURROUNDING POLAND SHALE GAS DEVELOPMENT A. Economic Feasibility--Justifying the Lack of Data Concerning Production Capabilities B. Environmental Concerns: An evaluation of present environmental implications of hydraulic fracturing and European complaints IV. SETTING THE STAGE FOR POTENTIAL DISASTER THE EUROPEAN UNION'S ENERGY GOALS AND PLANS COMPARED TO THE ULTIMATE AND SWEEPING PLAN DEVELOPED BY THE POLAND PRESIDENCY A. The short, medium and long term priorities of the European Energy Strategy and the current sentiments of the European Council, Council of the European Union, the European Commission, and The European Parliament B. Poland state law compared to EU regulations C. Current Events regarding EU Shale Gas Regulation V. CONCLUSION I. INTRODUCTION

   Two years ago, shale gas discovery in Poland sparked the beginning of efforts by multinational corporations to exploit perhaps one of the largest organically rich shales in Europe--natural gas quantities capable of allowing the whole region of Eastern Europe energy independence. (1) Companies that have already invested in this potential energy have included Chevron and Exxon Mobil. (2) The only thing standing between investors and exploration are gas permits and a growing European public opinion about the environmental threats hydraulic fracturing potentially creates. (3)

   The extent of the contested gas reserves in Europe, and specifically in Poland, is largely unknown. (4) A report published by Advanced Resources International found three primary basins in Poland where the gas will likely be targeted. (5) These basins, the Baltic in the north, the Lublin in the south, and the Podlasie in the east are a part of the Lower Silurian-Ordovician shale. (6) All three of these regions display favorable characteristics for profitable natural gas extraction. (7) The report estimates that these reserves contain 710 tcf (trillion cubic feet) of unrisked shale gas, with a risked recoverable source of 100 tcf of that total amount. (8) While these reserves contain far less than the reserves found in America or Russia, the Lower Silurian shale still contains about six times Europe's entire conventional reserves. (9) Considering the fact that Poland could change its importer status to that of an exporter for the region, both the government and industry are anxious to take hold of this great opportunity for the energy sector. (10)

   While over 100 leases have been granted, (11) European consumers are conscious of the chemicals used in the "fracking" process and their effects on ground water. (12) These concerns will likely hamper developers, including the largest companies such as the ones discussed previously, in the extraction and sale of natural gas from Poland. (13) Similar environmental concerns have been raised in America. (14) Chesapeake Energy, one of the largest shale gas firms in the world, recently ceased operations in New York State after similar outcries were raised there. (15) European consumers are already showing to be less tolerant about hydraulic fracturing than Americans, despite the industry telling them that the process is safe. (16)

   These concerns are not local to Poland's constituency, in fact, other countries, including France, Germany, and Bulgaria, have all taken a firm position against hydraulic fracturing. (17) France even went so far as to pass a moratorium in the entire country, which bans the use of hydraulic fracturing because of its potential environmental damage. (18) While other countries have not gone to that extent, there have been signs indicating members of the European Union will seek to ban hydraulic fracturing throughout Europe via a stringent environmental regulation. (19) However, Poland has resisted these efforts, by threatening to veto any antifracking ban raised by the European Union veiled as an environmental regulation. (20) Previously, Poland held the six-month rotating presidency of the European Union, allowing it to unilaterally veto any regulation raised that would impede "unconventional" gas production, although no such veto became necessary. (21) However, with Ireland as the current president, (22) the European Commission currently looks to examine its options for diversifying energy supplies including production of unconventional gas while managing environmental risks. (23)

   The political and environmental concerns are only two of Poland's problems involving their efforts for domestic energy production. Unlike the United States, which has vast landscapes conducive to drilling lots of wells for production, Europe is much more densely populated. (24) This dense population will create difficulties in not only drilling the wells necessary to extract the shale gas, but also in mustering local support; support that many believe is necessary if Poland is going to challenge the European Union's ability to control their domestic energy policy. (25)

   To examine the possible outcomes of Poland's efforts for energy independence and their quest to become an exporter in the Eastern European market, this Comment will assess the legal, policy, as well as international, and environmental challenges associated with shale gas production. Part I provides an overview of the history of natural gas production in Europe, an examination of shale gas extraction itself and current exploration and development in Poland. Part II highlights the ongoing economic criticisms and environmental concerns, including water contamination, surrounding hydraulic fracturing projects.

   Finally, Part III will compare Poland's mining statutes and its potential "corporation friendly" legislation to the European Union's current regulations concerning shale gas affecting the unconventional gas production and the European Union's concern and focus on global climate change. With Poland already asserting power both in the local and international spheres, will Poland successfully convince other member-states that Poland's shale gas production should be controlled through Poland's already-existing mining regulation law, or will countries such as France use a grassroots campaign to harness the environmental concerns surrounding hydraulic fracturing to promulgate a EU environmental regulation that would ban the operations all together? The developments are still ongoing, but it is an international development worth watching.

2. OVERVIEW OF SHALE GAS DEVELOPMENT, TECHNOLOGY, AND EUROPEAN DEVELOPMENT ABROAD.

   1. Hydraulic Fracturing

      The primary method of extracting natural gas from typical shale gas reservoirs involves hydraulic fracturing stimulation, or "fracking," as they call it in the industry. (26) Hydraulic fracturing is a technology that was first used commercially in 1949 and is used to dramatically increase production of natural gas extraction. (27) Fracturing creates spaces in the rock formations below the ground to enlarge the pores within the rock itself. (28) Fracking is performed by "pumping fluid down a well at high pressure so that it is forced out into the formation." (29) The high pressure from the fluid creates cracks in the rock below the surface that form along the natural azimuth of natural fault lines in specific patterns. (30) The cracks created by the fracturing process allow resources, typically natural gas, to move freely from the rock pores to the wellbore. (31)

      Each fracking operation is designed specifically for a particular well. (32) Engineers select specific injection pressure, volume of the material to be used, and the "type of proppant to achieve a desired result based on data regarding porosity, permeability, and modulus (elasticity) of the rock." (33) Engineers can estimate the length and size of the fractures created by the process in three different ways: the hydraulic length (34) the propped length (35) and the effective length. (36) However, even with this data, it is impossible to know the direction and actual distances the hydraulic fracturing process will create. (37) In fact, no technique or technology can control the direction or size of the fractures created; the fractures will follow "Mother Nature's fault lines in the formation." (38)

      The process of preparing a tract of land for a well and bringing that well to completion is generally fairly short. (39) During site preparation, an entire tract of land will be cleared to accommodate the well, storage tanks, and any other materials necessary for production. (40) Typically, three to five acres of area must be cleared, in addition to any access roads for transporting materials to the site. (41) "According to the American Petroleum Institute (API, 2009a), the goal of well design is to ensure the environmentally sound, safe production of hydrocarbons.... " (42) Proper well construction is absolutely necessary to protect against both surface and subsurface environmental contamination. (43)

      Each well, including site preparation, takes a few months to begin operations. (44) Upon completion, the well can produce for twenty to forty years. (45) Site preparation typically takes four to eight weeks, and the actual rig work takes four to five weeks, "including casing and cementing and moving all associated auxiliary equipment off the well site before fracturing operations commence." (46) During the initial phase of development, the local community will experience disturbances due to the construction process. (47) These disturbances include noise, dust, diesel exhaust, and water disposal. (48) Depending on the type of tract and the area the tract is situated in, these disturbances can range from nonfactors to that of a nuisance. (49) While the construction process is large-scale, the actual producing well is quite small, in fact, the...