A recent report by the World Economic Forum on the future of the gas markets has highlighted the revolution that is currently happening in this sector.
The report started by saying: “What a difference a few years can make in one of the world’s major energy markets. Advances in the production of unconventional gas – shale gas, tight gas and coal bed methane (CBM) – coupled with growing LNG capacity have changed longstanding assumptions about natural gas markets around the world.”
Whilst the shale gas revolution is well under way in North America, it is in its infancy in Europe and Asia. The one country that stands to benefit from the shale gas bonanza the most in Europe is Poland.
The report acknowledges: “Poland has the largest potential for unconventional gas production in Europe,” and argues that “Poland could become a significant gas exporter and transform gas supply throughout Central Europe”.
The country, which has historically relied on dirty coal and gas from Russia to power itself, could even become a gas exporter.
So for many countries like Poland or Ukraine, they see shale gas as the technology that will rid them from years of dependency on Russian gas, with its threats and price hikes.
Earlier this week, the Financial Times picked up on this theme, interviewing one Polish farmer who said: “I hear about people who don’t want these kinds of things, but it gives us a chance to free ourselves from Russia,” she says. “We aren’t worried at all.”
A British company, called 3 Legs Resources, is currently drilling on the woman’s land. Elsewhere in the country the big giants such as ConocoPhillips, ExxonMobil and Chevron, are all joining in Poland’s dash for shale gas.
The FT even trumpets that “Gas could also help with Poland’s pollution problem. Currently, about 85 per cent of Polish electricity is generated by coal, which will become increasingly untenable thanks to EU restrictions on greenhouse gas emissions.”
But herein lies the rub. It would be madness for the Poles, in their desire to rid themselves from Russia and dirty coal, to exploit a technology that has known risks to drinking water, through the controversial technique called fracking.
Already in the US, where the film Gasland, has been a hit, there are consistent and widespread reports of water contamination. In France, the technique is currently banned due to pollution concerns.
Yesterday, a long awaited report by a panel of experts in the US delivered a warning to the shale gas drilling industry that they need to clean up their act.
“Overall, the impact on the environment has to go down,” said John Deutch, the Massachusetts Institute of Technology professor who led the panel, set up by President Obama. “If the public is not comfortable that these environmental issues are not being rigorously managed by regulators and industry, there is a threat to production.”
“An industry response that hydraulic fracturing has been performed safely for decades, rather than engaging the range of issues concerning the public, will not succeed,” the report concluded.
It also added that the effectiveness of current regulations “is far from clear.”
What this shows that despite the boom in America, many issues remain unresolved. So before it is too late, Poland and its neighbours should heed the warnings and learn from America’s mistakes.