Saturday, April 3, 2010

The New Hot Thing: Shale Gas

Everyone is bulging in their pants talking about shale gas (at least that the idea I get while cruising the Interscape.) But it's not just those blogging on the Interbutts or politicians giving sound bites, there is real action going on.

The big news is that companies such as ConocoPhillips and Marathon Oil have bought leases to explore potential new gas sources in Poland. The natural gas exists in beds of shale, not just in a porous material. The rock is fractured to let the gas escape and be extracted by a well. It was, up until recently, not very economical to extract gas this way; however, newer techniques, such as horizontal drilling, have led to an explosion of exploitation of shale gas reserves. Shale gas has been mined in the US for some time now, and it's looking to export the expertise to the rest of the world.
As the cost of oil climbs, natural gas is almost constantly getting cheaper. Europe has a ravenous appetite for natural gas, which it uses for heating. Europe is particularly at the mercy of Russia, which exports most of its gas that way through Ukraine. Every winter, it seems like, Ukraine and Russia play a game a chicken, where Russia threatens to shut off the gas (which it did in the winter of 2008-2009) unless Ukraine pays higher prices and stops stealing it for their own use. Countries in Central and Eastern Europe are particularly vulnerable to Ukraine and Russia's game over energy. States such as Bulgaria, Serbia, and Romania are usually the first feel the pinch when the valves close.
Since Russia can be a pretty big dick about it, Europe is constantly looking for new energy supplies. Pipelines through the Caucus Region and through Turkey are particularly prized. It would be even better if Europe could produce the gas themselves. In steps the USA with its massive energy companies who have been doing this thing for some time now. The companies are looking beyond US borders for even bigger prospects in places you might not think.
Poland will be the first to start seeing if it has what every sovereign state covets: a massive energy supply sitting under their pasty, white tushes. Ukraine, seeing that its neighbor is expecting a windfall right near the border, is positively euphoric about the possibility of finding one of their own. No more having to bicker with Russia about gas (or bicker as much, as these gas finds probably won't fulfill their needs.)

The whole thing is though, is that no one really knows if there is gas there and how much. Everyone knows that Poland has coal (coal and gas often go hand-in-hand) but coal is dirty, can be dangerous to mine, and isn't the moneymaker that gas can be. Natural gas is used in industry, for heating, used to generate electricity, is used pumped into oil wells to force the oil up, and can help enrich fertilizers. To be short, gas is gaining importance rapidly, and Poland could (or could not) become a player in the field.


student SGH said...

Another post on it can be found here. I don't know who's the author of the blog and the blog itself is shoruded in mystery.

PolishMeKnob said...

Yes, that blog is surrounded in mystery.

I explained how everyone and his mother is now writing about shale gas in Poland (and Ukraine), so I thought I'd also write an article.

student SGH said...

"shrouded in mystery" - sorry for the spelling error.