Wednesday, September 5, 2012
Poland has seen many changes in the last 30 years – democracy has come to the country, Poles have embraced capitalism the nation has forged relationships with multi-national corporations and it has entered the European Union.
At the same time, there has been a growing focus on finding for cleaner forms of energy.
Just to be compliant with European Union standards, Poland needs to have at least 15 percent of its energy generated by unconventional sources by 2020. Currently, Poles rely heavily on coal but the country is looking for alternatives to power the lives of the country’s 38 million people.
Poland's first nuclear power plant is in the works and windmills and solar energy projects are also being developed. But what Poland is banking on, more than anything, is shale gas extracted through hydraulic fracturing, or fracking.
However, before that can happen on an industrial scale, the country needs to draft legislation that will regulate the shale industry – legislation that is eagerly awaited by legislators, companies.
While Poles and multinational corporations await passage of the new law, other regulatory changes have been taking effect.
The law determining how drilling rights are distributed has changed and that keeps residents likes Tomasz Dobrowolski, a partner at K & L Gates in Warsaw busy. Dobrowolski said the new system brought more stringent regulations when it comes to granting companies the right to search for shale gas.
"Most of the concessions [drilling contracts] that have been granted were granted under the old legal regime which did not require a tender [bidding] procedure to be applied," he said. Bidding for the rights to drill is now the standard.
In Poland, landholders do not own the mineral rights to their land, it is the government that is allowed to profit from gas, oil and mineral extractions. Companies that already have drilling contracts were grandfathered in and the contracts will not have to be put out for bid.
Poles that are critical of shale gas drilling say they are not just worried about fracking and the associated environmental pitfalls. They are also worried about the government's ability to control the industry. Recently, government officials were charged with accepting bribes for handing out licenses to exploration companies. Activists say that shows that even those regulating the industry cannot be trusted.
Piotr Wozniak, Poland’s Deputy Minister for the Environment said his office is ashamed of the scandal but things have changed.
"It was an incidental case I think, anyway after this case, we restructured departments and offices in a way that this will never happen again. I think it was a little too loose, slightly more control is never bad in the office," he said.
Government officials continue to work on the law- which will address everything from taxation of shale gas and how much oversight to which companies and local governments are subject, to water usage and noise regulations at well pads.
Martin Zieba is the General Director of The Polish Exploration and Production Industry Organization, which represents the gas companies.
The organization doesn’t believe the companies should be taxed. Zieba said bearing all of the costs associated with the exploration should be enough investment in the nation.
"If the taxation will be to expensive for them they will probably find some other markets where the shale gas is also available and the taxation is more optimistic for them," he said.
He said too many rules and regulations, coupled with the relatively high cost of drilling into Poland’s deep shale deposits might chase the companies away.
In the meantime, Polish officials continue to take input from stakeholders as they draft legislation that will carry the nation into the future.