Chevron has announced its intentions to close down its venture in Poland aimed at finding and producing natural gas from shale rock. Chevron made the largest commitment out of the international oil companies to exploring shale possibilities in Europe. The company had previously committed to exploring wells in Poland and Romania and signed agreements for exploration in Ukraine and Lithuania.
Shale gas and oil extraction often involve the technique known as hydraulic fracturing, or fracking, which is more expensive than traditional methods of drilling for oil. Fracking uses blasts of water, sand and chemicals to penetrate underground rock formations and unlock oil or gas. Environmentalist groups claim that fracking poses risks to soil, groundwater, and human health. The unique geological, environmental and political issues of Europe has caused issues for companies trying to jump-start the shale industry there.
In recent years, the development of shale projects in the United States has caused a renaissance in the American energy industry. The projects’ contribution to the energy market is one of the reasons for the global glut of oil that is depressing prices now. In recent years, several European countries have tried to enter the European shale oil and gas industry in efforts to replace the region’s dwindling fuel resources and reduce dependency on fuel from Russia and Middle Eastern countries. Europe is heavily reliant on imported fuel, paying huge sums to secure supplies.
On the same day that the company announced the cancellation of the Poland project, the company also reported that its earnings fell nearly 30 percent for the fourth quarter of 2014 when compared with a year earlier, dropping to $3.5 billion for the quarter. The company blamed lower oil prices for the drop in earnings. All oil companies are under pressure to trim spending now that the price of oil is nearly 60 percent below its peak.