But the shift in Polish foreign policy -- and the focus on shale gas -- has come not only as a response to Russia, but also to prompting by the United States. In April 2010, the U.S. State Department launched the Global Shale Gas Initiative (since renamed Unconventional Gas Technical Engagement Program) to "achieve greater energy security, meet environmental objectives and further U.S. economic and commercial interests." The program, which aims to provide technical and regulatory assistance to selected countries, has become an administrative tool of U.S. foreign policy in the global battle over energy resources and the recalibration of political alliances. Despite the lack of a scientific consensus on the benefits and drawbacks of shale gas in the United States, the State Department has nonetheless initiated engagement programs all over the world, from Jordan to India to China; cooperation with Poland has been especially close.
Hoping to emulate the U.S. "energy revolution," Poland has come to rely on the United States to show the way. President Barack Obama, on his visit to Poland in May last year, made a special point of endorsing shale gas. After the failure of the Bush-era missile defense, a proposed antiballistic missile shield to be based in Eastern Europe, shale gas has become perhaps the most significant project in U.S.-Polish relations. And though much smaller in scale than the missile shield, both symbolize the same idea: a U.S. deterrent of Russian foreign-policy interests in Central and Eastern Europe.
Despite the project's importance, shale gas in Poland seems to be headed the way of the missile shield, which the Obama administration scrapped because of Russian objections in 2009. Difficult geology, an uncompetitive service sector, poor infrastructure, and lack of rigs have hampered development. Poland has a venerable oil and gas sector, but most of the transmission pipelines are based in the southwest, while major shale gas areas are in the northeast. Strict EU environmental laws, as well as unclear regulatory and tax frameworks have further eroded prospects. And while exploration has been going on for a few years now, only 33 wells have been drilled, with just eight of them fracked (at least 200 would have to be drilled in the exploratory stage, just to assess the actual size of reserves).
Preliminary results have not been encouraging, either: This summer, resource giant ExxonMobil withdrew from Poland after the failure of commercial gas flows, while its competitor ConocoPhillips decided not to exercise its 70 percent option in three concessions in northern Poland. Overall, costs per well have increased to $15 million, according to interviews with industry officials, roughly three times the cost in the United States.
Some, like Cezary Filipowicz, the business development manager of United Oilfield Services, a Polish shale-gas service company, have suggested that Poland should lower its expectations. "For many reasons -- resources, ecology, the areas where production is possible -- the revolution in gas supplies that happened in America will never happen in Poland. Whoever expects that we'll be an exporter of gas for the European market is dreaming," he says.
Unlike conventional gas, however, shale gas requires significantly larger number of wells and economies of scale for production to be economically viable. Without that, both industry representatives and energy analysts agree, it's hard to imagine costs coming down any time soon. Profitable, small-scale shale gas extraction is an oxymoron. Even the higher retail price of gas on the European market might not be enough to make up for production costs. Gazprom added another obstacle in October, when it significantly lowered the price of its exports to Poland, further limiting the country's financial incentives for developing shale gas. "If Polish shale gas is more expensive than the gas from Russia, then it's not viable to produce. That's the normal way of the market," says Marcin Zieba, general director of the Polish Exploration and Production Industry Organization, an umbrella association of shale gas companies.
Government officials optimistically prophesy production in a year or two, but a 2011 report from the International Energy Agency expects real development starting "no sooner than the early 2020s," in the best-case scenario. In a dynamic world, where political and economic changes occur so rapidly, that might be too long to wait. And even if production starts, there is the danger that increasing the share of gas in Poland's energy supply could lock the country in an even greater dependency on Russia, if Polish shale reserves prove short-lived.
Despite the economic and environmental realities, both politicians and the public in Poland continue to believe in the potential of the country's unconfirmed, unconventional resources. Whether the Polish government and private companies will manage to start production, or whether shale gas is just a foreign policy tool to needle Russia, boost U.S. presence in the region, and increase Polish visibility within the EU, remains unclear. The Flame of Hope, in the meantime, has begun to sputter out.