February 1, 2013

Slate Gas: “For” or “Against”?

Concerning the realization of the plans of slate gas production in Ukraine, which causes an activation of a number of Ukrainian political forces against the slate gas projects because of their being “ecologically dangerous”, more and more actual becomes studying the experience of other countries’ activity in this sphere.  In particular, one of such examples is Poland, which is a European leader in the aspect of prospecting for exploration and developing slate gas resources.

The reason for the mentioned above is political interests of Poland, that, like Ukraine, is trying to lower its energy dependence on Russia, as well as country’s having significant slate hydrocarbons resources. Thus, according to the estimations of the State Geological Institute of Poland (PIG), the resources of slate gas in the country make roughly up to 5.3 trillion cubic meters. Taking into consideration the average volumes of gas consuming in the country at the level of about 14.5 billion cubic meters a year, the mentioned above resources can answer the Polish needs in gas for more than 60 years. At this, the price of the Polish slate gas for the final consumers will be at the level of 200 to 321 US dollars per one thousand cubic meters, which allows it to compete with the Russian gas both, at the Polish market and the markets of  Baltic countries.

Considering the mentioned situation, Poland is realizing a number of large scale projects in the slate gas sphere with the participation of foreign countries ( first of all from the USA and Canada), which have the needed  technologies. In particular, in such projects have been involved lately American companies “Exxon Mobil”, “Chevron”,  and “Conoco Phillips”, as well as Canadian “Talisman” and “Nexen”.

At the same time, according to the Polish experts, judging from the experience of the USA, apart from achieving the main goal of getting alternative gas resources, the realization of the projects of slate gas production can have a number of other positive consequences, in particular, it will help create new jobs ( 120 thousand  to 190 thousand) both, in mining and in metallurgic, construction , machine-building branches, as well as in energy industry, trade and services. Besides, at the moment the incomes of the Poland’s regions in which the prospecting for exploration is taking place, have increased by 10 to 15 %, and the level of salaries has grown by 15 to 20 %.

At the same time, like any new thing, the realization of the technologies of slate gas in Poland is accompanied by a number of problems, which make the realization of the mentioned above plans more complicated. First of all this regards to Russia’s reaction to Poland’s transfer to slate gas, as well as resistance of Poland’s own business circles, strategically interested in preserving the positions of Russian gas at the Polish market.

The scheme of shale gas production
 The scheme of shale gas production. In 2005­-2006 Americans began to use the method of horizontal drilling and break barriers between the layers by injection into the bowels of a special fluid (called hydraulic fracturing)

A manifestation of this became a large scale information campaign on discrediting the of slate gas production technologies on the ground of their being “ecologically dangerous”, which is taking place both, in the whole Europe and in Poland. The result of this campaign has become banning the slate hydrocarbons production in Germany, France, Bulgaria and Romania, and the demands of some Polish political forces to forbid their production in Poland as well.

According to the Agency of Domestic Security of Poland, the mentioned above campaign was arranged by Russian special services by large scale bribing representatives of political, information and ecologic circles of the European Union. Besides, the Polish special services point out the increase of cooperation between the Russian “Rosneft” company and  the American “Exxon Mobil”, which includes the aspect of achieving agreements on the exchange of concessions in different parts of the world, as well as shared development of oil and gas resources in the Arctic, Siberia, and on the shelf of the Black Sea. From the said we can draw a conclusion about a possibility of Russia’s influence on the position of “Exxon Mobil” company in the aspect of realization of its energy projects in Europe, in Poland included.

At the same time, sufficient problems concerning the realization of the projects of slate gas production is a high cost of the prospecting for exploration and development at the beginning of the development of slate resources, insufficient prospecting for exploration of the resources of slate gas at the territory of Poland and absence of the needed technologies in the country.

Thus, averagely, the cost of a boring well for slate gas production makes about 10 million US dollars. Besides, realization of slate gas projects demands a new pipeline infrastructure for linking the slate gas industries to the existing gas transporting network of Poland. According to the calculations of the Polish experts, to reach the volumes of slate gas production at the level of about 6 billion cubic meters a year, by 2025 11 billion US dollars have to be invested, and then annually up to 1.5 billion US dollars must be spent to step up the volumes of production to 6.5 billion cubic meters in the period to 2035. At the present, neither the Polish state, nor individual Polish companies can give that money, so foreign investments need to be involved.

Additional difficulties are created by the non-perfection of the law base of Poland in the sphere of the slate hydrocarbons production, including:

Constant changes of the norms of nature protection;

Complication and time-consuming of the procedures of getting licenses for development slate gas resources and bringing to the country foreign drilling equipment; not sufficient transparence of the procedure of conducting tenders on making agreements on exploration and industrial development of  slate gas resources; problems of protection of the prospecting for exploration information being unsolved.

All this makes grounds for all sorts of speculations around the questions of slate gas production, and raises risks of work at the Polish market. In particular, the result of the mentioned above, has become stoppage of work in Poland of the American “Exxon Mobil” company after a number of unsuccessful drillings in the process of prospecting for exploration at the potential slate gas resources.

At the same time, as a result of Poland’s activity for protection of its own national interests in the energy sphere, the mentioned above problems are being gradually solved. Thus, the Polish government determined the slate gas production as the prior direction of the energy policy of the country. To support the projects in this sphere in 2013 year 500 million US dollars will be allocated.

The Polish side is also taking active measures in the political- diplomatic sphere, for persuading its European partners that  realization of slate gas projects is reasonable. In particular, Polish deputies o f the European Parliament  have begun the tradition of “round tables” on the problems of slate gas. Other European deputies are invited to them, as well as representatives of European countries’ governments, business circles and scientific institutions.

Besides, in 2012 the State Geological Institute of Poland publicized a report on the slate gas search in Pomorske voyevodstvo (region) of the country. According to the conclusions of the Polish experts, the mentioned above activity actually did not damage the region’s ecology. In particular, the air pollution in the region of the hydraulic splitting , as well as the concentration of methane in the ground waters did not exceed the norms.

Actually, the mentioned researches were the first ones in Europe, carried out at the basis of the data, received in the process of the practical slate gas production. Their results confirmed that the technologies that are used, do not carry any danger to the environment. So, all the groundless statements about  the development of the slate hydrocarbons  resources being “ecologically dangerous” have been disproved.

In order to remove the ecology question completely, Poland is planning to use perfected American technologies  of  clastic drilling of boring wells for slate gas, which will allow to decrease the area of the mining works from 2-1.2 thousand hectares to 50- 400 hectares. At this the terms of the withdrawal of the lands for preparation works and drilling will be up to 6 months, after which the recultivated areas will be returned to being used properly. 

The mentioned above has raised the interest to the work on slate gas production of both, foreign and other Polish companies. In particular, such an interest is shown by the Polish companies “Orlen”, “PGNiG” and “Lotos”, and the Canadian “Encana”.

Taking into consideration the Polish experience, the Romanian government has lately been gradually changing its attitude to the questions of slate gas production. Earlier it was against the realization of slate gas projects at the Romanian territory due to political and economic reasons. In particular, in prospecting for exploration an American “Chevron” company is going to be involved.

In the whole the mentioned above situation is opening favoring prospects for the development of the slate gas energy system both, in Poland, and in other European countries, which will allow them to considerably reduce their energy relying on Russia. At this the Polish side is showing interest in deepening its cooperation in this sphere with Ukraine.

Thus, in 2012 Polish Institute of Foreign Affairs publicized a report entitled “Prospects of production and exploitation of slate gas in Ukraine”, in which a conclusion was drawn about the necessity of increasing the cooperation between   Poland and Ukraine in prospecting for exploration of the powerful slate gas resource in the border reagion between the two countries. In particular, this may concern the exchange of information about prospecting for exploration and of technologies. According to the estimations of the Polish experts, the mentioned above will raise the competitiveness of Poland and Ukraine as slate gas producers.

So, the experience of Poland shows the groundless of the statements of Ukrainian opponents of slate gas, which in such a way are actually working for Russia’s interests, creating obstacles on the way of Ukraine’s gaining energy independence.