European Commission: Let Market Decide
The European Commission is fully aware of unconventional gas opportunities in Europe. How they would influence any debate about them was another story.
In a policy panel discussion at the Unconventional Gas & Oil Summit in Warsaw, Poland, Michael Schuetz, Policy Officer, Directorate-General for Energy at the European Commission said he had visited a shale gas site in Poland.
Of the 30 exploratory drillings that had taken place in Europe, he noted, more than two thirds of them had been in Poland.
“What is our position on unconventional gas?” he posed the question to the European Commission. “In the end the market will decide. Unconventional gas or any other source will find its place in the marketplace.”
The Commission was also examining the existing legal framework for unconventional gas. According to him, existing EU legislation covered virtually all steps of unconventional fuel development, but given the many questions from stakeholders and citizens, there was a need to check exploratory steps and, if necessary, improve them.
Mr. Schuetz said that said the EC had asked its in-house think tank to complete literature studies on the effects of unconventionals on the European energy market. “Regardless of what happens with unconventionals in Europe, worldwide developments will have a huge impact on the gas market.
“More important for the energy market will be the export policy of the US,” he added.
“Since we are in a world market,” said Mr. Schuetz, “stopping unconventional fossil fuels in the EU will not take away the challenge of climate policy. By restricting indigenous suppliers of fuels, we will not solve the problem of greenhouse gas reductions.”
He said that in the Roadmap 2050, which had recently been published, gas was important.
“But without carbon capture storage (CCS) gas can only have role as a backup for renewables. We need to also develop renewables and investigate the possibilities for further research on CCS, because of CO2. The Commission will remain committed to its ambitious carbon reduction policy, but will look forward to possible indigenous gas production and also further LNG imports,” concluded Schuetz.
Pawel Poprawa, Chief Specialist & Head of the Petroleum Geology Laboratory at the Polish Geological Institute, offered his perspective.
He explained that Poland was a very coal-based country, having 60-70% of its needs met by coal/lignite, but dependence on coal was not favored by EU.
“One of the alternatives we are considering is gas, as the lowest gas consumer per capita. The gas which we get on our markets is from one source, Gazprom. In case of oil, import is 100%. One of the strategies in Poland is to increase domestic resources of gas and oil,” he said, explaining that Poland’s shales could be a viable source of gas and oil.
According to him, the regulatory framework in Poland had so far been in line with EU regulations.
In terms of obstacles, Poprawa mentioned the underground storage of flowback water, which because of the high brine content, was not allowed to be injected in Europe.
It was necessary to ensure that shale gas explorers in Poland had a regulatory framework and policies that they understood, according to Greg Houlahan, Commercial Counselor, Senior Trade Commissioner at the Embassy of Canada in Warsaw.
He offered to give the Polish government models from Canada to make the policies understandable for North American companies operating in Poland. “It’s a model that’s worth exploring, but not the only one in the world,” he commented.
“When developing a legal framework, of course we believe it’s got to be a transparent process, epitomize resource utilization and reduction so there’ no wastage. It’s got to protect the public and must be done in a sustainable manner to reduce environmental impacts,” said Mr. Houlahan.
“All of that said, our companies coming here are telling us they want to be able to ensure that they can explore and produce on a level playing field and know what the rules of the game are. They don’t want to see a tax burden or royalty regime that’s going to penalize them before they even know what’s in the ground.”
He reiterated that the market would determine what was economically viable to do, but that enterprises wanted to make those decisions for themselves.
“If we are to encourage shale gas policy in Poland, at ground level we need to determine what the community really needs,” said David DeBenedetti, Partner at the DeBenedetti, Majewski, Szczesniak Law Firm, who said it was important that investors had a level playing field for exploring unconventionals in Poland.
He explained: “The tax regime needs to reflect political realities but not discourage investments. The business community understands that the tax needs to be reasonable, understanding the relative difficulty in extraction compared to say Norway. Tax exempt zones would decrease the risk at the business level, along with other exemptions.”
“It can be done without damaging the environment,” Mr. DeBenedetti said of shale gas exploration in Poland. “All players have to leave the environment undamaged.”