History Against Hysteria: How to Europeanize American Shale Gas Success Story

If companies, authorities and communities compromise, Pomorze (Pomerania) and Lubelskie (Lublin) in Poland can become one of the first areas in Europe to experience a smaller scale version of American shale gas boom according to the Kosciuszko Institute.

In a report entitled “Impact of shale gas extraction on the socio-economic development of regions – an American “success story” and potential opportunities for Poland”, the Polish independent think tank presents the North American experiences and facts related to the development of the unconventional gas sector, drawing conclusions which can be applicable in Poland.

The project concentrates on two issues: how to earn public and political acceptance and what are the key factors for creating a strategy, that can lead to gas exploration and production success.

Win-win situation

The report notes that to repeat a success of American states and Canadian provinces, where a win -win situation has been achieved, the government, regional authorities, communities and companies in Poland must work together.

In the face of the European “anti-shale hysteria” the report advises that the key to repeat the "Rust Belt" success story in the "Polish Shale Gas Belt" is gaining the social acceptance and doing it as quickly as possible.

Companies are reminded in strong terms, that on the areas of exploration work, public consultations must occur prior to drilling.

The government is advised that a necessary condition for getting the approval of local communities is a conclusion of delayed works on new tax regulations, that should redistribute some part of new hydrocarbon levy to communes where production is taking place.

The tax system in Poland already secures share of CIT and exploitation fee for the local coffers. The report estimates, that per capita tax income in communes where gas production or gas storage areas are located, is not more than 5-15% higher than an average number for the region.

However, as the Institute observes, American experiences indicate that to gain an acceptance of local communities, some extra compensation for nuisances, damages and potential impact on local property values are necessary, at least at the stage of exploration. The report advises companies to cover some of local public expenses, i.e. for roads, libraries or parks.

Because the production stage brings in jobs and drives wage growth, the report indicates that when production commences, communities will become more likely to realize that benefits outweigh concerns.

Moreover, in the longer term – as the report notes - reduction of energy prices will bring savings for households, as well as for companies and industry.

History against Hysteria

Polish authorities are also advised to launch an information campaign on the national level.

According to the Institute, the campaign should provide a honest information on environmental impact, invoke energy security and independence from Russia. It should also make aware Poles of the long tradition of oil and gas production in the country, where the first European oil wells were drilled almost 160 years ago Ignacy Lukasiewicz.

According to the report, this long-established experience of oil and gas production, constitutes a good starting point to creating a proper environment for the development of shale gas in Poland.

To live up to the tradition, Poland should tie the gas sector to other industries and create synergy effects. In order to enhance links and create multiplier effect, the government should invest in infrastructure and support research and development, as well as production of drilling and other equipment.