The budding Chinese-Polish shale cooperation

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17 December 2014, Oil, Gas

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Chinese shale determination

In only a few years China has become the third country extracting shale gas in commercial quantities. According to the Chinese news service Xinhua, China will extract 1.5 billion cubic metres of gas this year - almost 8 times more than in the previous one. In addition, a new tax on extracting oil and gas is to be implemented but, interestingly, its amount will depend on the place and difficulties of hydrocarbons extraction.

Despite the above-mentioned progress, China is still not self-sufficient when it comes to gas. However, their shale gas deposits are estimated to be the largest in the world so it’s easy to understand the drive to take advantage of that fact. Building relationships and cooperation with other countries exploring shale gas seems to be showing China’s position and engaging in foreign projects allows their engineers to gain experience and for the country to develop their own industry. The fact that Sinopec was recently fined for not meeting their investment commitments with regards to shale, only shows China’s determination to succeed.

Learning and growing through cooperation

After developing a cooperative relationship with the USA, China has begun to produce its own materials and technology very quickly. Recently, a partnership between the Polish Ministry of Environment and the Chinese Ministry of Land and Resources was agreed on as a result of a Polish delegation to China. At this stage Poland can offer only an exchange of experiences, but this could lead to a more substantial cooperation in the future. Especially since, when it comes to shale, both countries share serious plans, big resources and, still, little experience.

How do they compare?

As much as might be expected - or hoped for - based on the budding partnership, according to Paweł Mikusek, Spokesperson for the Ministry of Environment of Poland, it’s still very early days and until an official memorandum is prepared, no official partnership can be called existent. When asked about the reason for Poland’s much slower progress in the area of shale gas exploration he said:

“Differences in favour of China are visible from the geological perspective (shallower wells than in Poland) and in the environmental laws (less strict than in Poland). There is also the fact that in China, the companies looking for shale gas are large, national bodies that possess the financial resources that cover the cost of exploration.”

Poland’s recent work on the hydrocarbon bill might help with the latter problem as it will make it much easier for companies to obtain operating licences, making it more worthwhile to invest. But the geological problems will have to be dealt with by applying some Polish ingenuity. Hopefully, the Blue Gas competition will provide some interesting innovations (one of them being the DIOX4SHELL project) to make shale extraction cheaper and easier, since the Polish shale rocks have their own quirks and foreign operators in Poland find those difficult to deal with.

Getting over the false start

Obviously the ‘shale revolution’ takes time. The USA had years of research and exploratory drills before they could even start extracting on a large scale, while China had the geological and legal advantage. Now that Poland is working out its legal issues and investing in shale innovation, things should start moving forward with a little more vigour. Whether Poland might share its new shale technologies with China remains to be seen. As for the Polish Ministry’s expectations when it comes to the future of shale gas in Poland, Mr Mikusek said:

“The first report regarding the deposits, based on the exploratory drills performed by licenced operators, will be prepared by the Geological Institute in 2015. With regards to the Ministry’s expectations: we would hope for the shale gas to become an integral part of the energy sources in Poland.”

The ‘new’ shale gas explorers

The hopes for energy independence and the possibilities that the shale gas presents are a big drive all over the world. The focus is currently still on Europe because everyone wants - or needs - to stop relying on Russian gas, but it doesn’t take long to see that the drive for self-sufficiency is evident on all continents. And China, despite so little experience, seems to be leading the way among the ‘new’ shale gas explorers, so relationships based on cooperation might be a big boost to the industry. We will have to wait and see whether the cooperation between China and Poland is effective and brings any results, but for now everyone seems to be hopeful.

Author: Zuzanna Marchant - Central and Eastern Europe Shale Gas and Oil Summit 2015 - www.CeeShalegas.com



 


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