This Is One Of Those Articles In Which The Punch Line Sneaks Up On You

The Oil Drum has a nice essay this morning. Be sure to read to the very, very end.

In this regard it is well to remember the case of Poland, where the presence of gas-bearing shales led to predictions that the industry would “transform Europe.” But then the results of the well tests came in, and the volumes of natural gas available were reduced by up to 90%. Although 40 wells have been drilled, to date none are reported to have produced commercial quantities of natural gas, although in only four cases was there fracking of the horizontal well section. Three major oil companies have backed away from committing to the program, and that initial enthusiasm is now considered to have been a “bubble,” while Chevron is seeing more protests over their planned fracking tests.

This collapse of hope for a potential resource has led the Polish Government (responsible for ensuring that the country has enough fuel at a viable price) to move back toward the greater use of lignite as a power source. Coal is the fuel for the power stations that produce 90% of the country's electricity, and lignite is readily and cheaply available. Prices for lignite (a brown coal that is softer and not yet fully geologically morphed into the harder black coal most envisage when coal is discussed) are quoted as giving a price of $2.00 per gigajoule, roughly a fifth of the cost for black coal. The country has large deposits of lignite, much of which is available for surface mining, at relatively low financial cost.

The government decision underscores a point that I have made a number of times, namely that as other fuel costs increase, more and more countries will move to the use of coal where it is domestically available and relatively inexpensive in financial cost to produce.