By Andy May
So, what happened to European efforts to develop the shale oil and gas industry as we are doing in the United States? Recent shortages, Putin’s invasion of Ukraine and high energy prices have proven that we cannot remotely prepare to produce without fossil fuels.
Equal Holman Jenkins As explained in the Wall Street Journal yesterday (Jenkins, 2022), the so-called “No. 1” hedge fund fought a noisy battle with ExxonMobil for a board seat to help lead the company out. from fossil fuels. Not much, except that it makes Chris James, the billionaire founder of Engine #1, even richer. The news media were able to guess his cause and send ExxonMobil’s stock price down to $30. James bought his ExxonMobil shares very cheaply and now they have more than doubled in value, today at $78, in less than two years. Is he trying to get rid of fossil fuels or just trying to get richer?
Obviously Europe should develop its potential rich shale reserves, but they didn’t, why? I was a shale physicist in a past life and I can attest to the expense and complexity of discovering, evaluating, and developing shale gas and oil. Difficult, but not impossible, and certainly more rewarding and beneficial than wind and solar energy despite the distorted numbers you may have seen in the mass media. The news media claim that wind and solar are irreplaceable having low LCOE (regulatory-converted cost of electricity generation) or LACE (regulatory translated avoidable cost of electricity generation) than all fossil fuels, but they do not report details revealing these calculations to be complex lies because EIAas the EIA admits in fine print:
“The LCOE values for wind and solar technologies are not directly comparable to the LCOE values for other technologies with similar average annual power factors. Therefore, wind and solar technologies are presented separately as irreplaceable technologies. Hydropower resources, including facilities where reservoirs allow for more flexible daily operations, and hybrid solar in general have substantial seasonal and daily variation, respectively, available. The EIA found them to be immutable to discourage comparisons with technologies with more consistent seasonal and day-to-day availability. [fossil fuels and nuclear]. ”
US EIApage 6
In other words, solar and wind, and to a lesser extent hydroelectricity, may not be there when you need them, their availability dependent on the weather, season and time of day. The LCOE does not cover the cost of backing up these sources with fossil fuels or nuclear, it just assumes that redundancy will be available when needed. Second, LCOE and LACE include the value of large wind and solar subsidies in their calculations, further skewing their figures, since there are unsubsidized in the United States for fossil fuels. For a more accurate assessment of the relative costs of different power sources, see discussion thisit clearly shows that wind and sun can’t compete with fossil fuels, which is what real experiments in California and Germany have also shown us.
Shale gas and oil in Poland
Our main source is a peer review paper via Professor Andreea Maierean in the magazine Energy discovery (Maierean, 2021). She concluded that due to political, social and technical factors, multinational energy corporations working in Poland had to abandon efforts to develop Polish shale fields.
She points out that American landowners profit from the production underneath their property, but not in Poland and the rest of Europe. Fossil fuels and other lucrative subsurface minerals in Poland are owned by the government, so local property owners have no incentive to allow exploration and production on their land , and is highly discouraged to do so. In the US, there is sometimes a division of property ownership where one person owns the mineral rights to the ground and the other person owns the surface rights. Under US law, surface owners cannot prevent mineral owners from accessing their minerals, however, surface owners must be compensated for access to the land and damages. In Europe there is no such law or principle, while there the surface rent is usually paid, the surface owner has more power to prevent mineral owners, usually the government, from accessing their minerals.
Another advantage of the United States is decentralization. Local and state governments control energy regulations in most of the United States. In Europe, minerals are often owned and controlled by national governments, which tend to be more restrictive.
Besides the legal advantages in the United States, the United States also has an advanced and widespread hydraulic drilling, evaluation and breaking industry. European countries have some access to these technologies and services, but not at the scale or cost required for shale extraction. European environmental groups, maybe sponsor part of Russia according to NATOmanaged to apply enough pressure to prevent hydraulic fracturing in most European countries.
There are two main reasons why multinational oil and gas companies have abandoned efforts to develop shale gas there. The main reason is access and infrastructure. Horizontal well 2,000 meters cost less than four million dollars in the US, but more than eleven million dollars in Poland. Poland also has very few pipelines and they are not in the best drilling locations, which combined with Poland’s ban on gas burning and test wells makes a proper exploration effort nearly impossible.
The second reason is a combination of public protests against drilling and regulations prohibiting proper testing of wells. During 2012 and 2013, Polish farmers protested and resisted Chevron’s drilling crews and successfully stopped their exploration efforts near Żurawlów, Poland (Szolucha, 2019). In the end, Chevron had to abandon their exploration efforts.
Shale exploration is very different from conventional oil and gas exploration. In shale you already know where the resource is, the point is to find a location inside the shale so you can grow the resource economically. This means drilling, finishing, and producing several wells until you find places and techniques where drilling, breaking, and production is economically viable. In conventional fields you explore the reservoir first, then start producing it, in shale you have to do both at the same time. Furthermore with shale, the trial period is longer, usually six months, while the trial of a discovery is typically completed in a day or two. There is usually no need to crack the tank for a conventional well, and the product can be stored in the tank. Not so with shale.
Poland simply doesn’t have the necessary infrastructure or regulations to realize their shale potential. Some people think that shale is not productive anyway, and this is true for sites that have been drilled, the organic content of the shale is low, and the shale is too plastic to fracture properly, at those locations. However, other sites, where drilling is not permitted, may already be active.
Poland may have between 350 and 5,300 billion cubic meters of resilient natural gas, the large estimated range due to the lack of good geological data, and therefore to the lack of drilling and testing. Poland’s natural gas consumption is about 21 billion cubic meters in 2020 to put these numbers into perspective (Johnson & Boersma, 2013).
A Polish geologist warned the Polish Senat (the upper house of the Polish parliament):
“Let’s not make this matter public! The European Union is not going to get in the way of our shale gas project, but we will [to] ourself. Talking about taxing resources, threatening them is a violation of Poland’s national interest… Laws can be made in secret, etc.
Anonymous Polish geologist.
He prepared a slide depicting Gazprom (a giant Russian bear) playing chess with the European Union. The cartoon summarized how many Polish geologists think about the main threats to the shale gas project (Szolucha, 2019). I couldn’t find the cartoon or his name, but Figure 1 shows a similar point, which is the word Korea Times.
Although the land area (required land area) of shale oil and gas development is much smaller than that of solar and wind installations, it is larger than required for with conventional oil and gas fields. The continuation of shale mining requires more wells and almost continuous drilling, until Poland and the rest of Europe revise their regulations to accommodate shale development, which will not occur. The problem with European shale gas and oil production is not technical, geological or financial; it’s all government regulation and public will. Perhaps the only way to achieve that is to transfer government-held subsurface mining rights to existing surface rights holders.
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