Monday, January 30, 2012

Shale gas in Europe at the crossroads: are the existing legal protections sufficient?

a web of wells drilling for tight shale gas across a landscape in America
A matrix of close surface wells for the production of 'tight' shale gas in the USA.

Opinions differ about whether existing environmental legislation is sufficient to regulate the current level of exploration of shale gas in the EU, with a new report prepared for the European Commission arguing that it is.

But this is at variance with another report submitted last summer to the EC, which called for "consideration to be given to developing a new directive at European level regulating all issues in this area comprehensively".

That report, Impacts of shale gas and shale oil extraction on the environment and human health also recommended that for fracking, "all chemicals to be used should be disclosed publicly, the number of allowed chemicals should be restricted and its use should be monitored.

"Statistics about the injected quantities and number of projects should be collected at European level," it added.

But, as there is no large-scale commercial exploitation of shale gas reserves in Europe there have, as yet, been no cases that suggest a requirement for new legislation, according to the new 'Final Report On Unconventional Gas In Europe' by law firm Philippe and Partners.

“It is a new technology and we do not have a specific legislation on shale gas, because it is so new," Maureen Holzner, the European Commission spokesperson on energy was quoted as saying.

She said that the new report confirms that, so far, Europe's existing laws can be satisfactorily applied. This may change if commercial exploitation takes off.

The current laws include the Water Framework Directive and the Groundwater Directive which would cover water protection issues. The Mining Waste Directive covers other pollution issues, and the use of chemicals is covered by REACH legislation, which applies to the use of chemical substances in any industrial process.

Shale gas in Europe

Exploitation of shale gas reserves in Europe is currently limited, partly because the economics of shale gas in the European Union are still highly uncertain, particularly in the current context of significantly depressed prices as a result of the gas glut.

Furthermore, Europe is more densely populated than the United States, which makes local opposition more likely. At the beginning of the year, thousands of Bulgarians protested against exploration for shale gas because of concerns that it could poison underground water, cause earthquakes and create serious health hazards.

The new study only applies to four countries: Poland, France, Sweden and Germany, and did not examine climate change legislation.

In Sweden, the Swedish Mining Inspectorate has granted one exploitation concession, but this has not led to any exploitation activities.

In France, there is a legal ban on hydraulic fracturing on the basis of the Prohibition Act.

In England, hydraulic fracturing was held responsible for earthquakes registering 2.3 on the Richter Scale in Blackpool last year.

In Germany, at least one company has performed hydraulic fracturing tests, and in North Rhine Westphalia, shale gas activities are suspended until the completion of environmental studies and analysis of their results.

Poland is the country most interested in exploiting shale gas because it wishes to free itself from dependence on Russian gas.

Hydraulic fracturing has taken place there already, and the country plans to begin commercial production in 2014.

A US Department of Energy survey last year said that the amount of gas trapped in shale in Poland could provide it with enough fuel to last for 300 years.

In all Member States, general mining or hydrocarbons legislation covers licensing/authorisation procedures for shale gas projects.

Other legislation related to property, spatial planning or commercial activities can also play a role.

Commercial secrecy and public confidence

Commercial secrecy prevents knowing exactly the constituent chemicals used in franking. This is the area of greatest concern.

It is known that toxic salts, mineral oil, ethylene glycol and glutaraldehyde, volatile organic compounds like benzene, xylene and phenols may be employed and could cause pollution.

In Europe, under REACH legislation, if operators prefer to keep their chemical use confidential, they are required to conduct their own assessment of chemicals used in hydraulic fracturing and report this to the European Chemicals Agency.

The Agency can then review the report and verify the suggested risk management.

But since the onus is on the mining company to do this accurately, it is open to accusations that it is not being transparent or completely honest. This severely impacts on public confidence.

Chemical accidents are also covered by the Seveso II Directive, under which operators need to notify and report on the substances at their disposal and being stored on their premises.

These obligations differ according to the quantity and characteristics of the chemicals.

The new report to the EC also acknowledges that in countries where different authorities regulate different aspects of the mining process, expertise levels and communication between them can be inadequate.

In particular, it can mean in some countries that the core permitting authority can give the go-ahead for a project where some environmental aspects of the operation may not be up to scratch.

Sweden is held up as an example where this is not the case, as applications are dealt with under the overall assessment of environmentally hazardous activities.

Ultimately, public confidence is seen as key to the future expansion of the industry in Europe.

This is certainly the case in the United States. “If action is not taken to reduce the environmental impact, there is real risk of serious environmental consequences causing a loss of public confidence that could delay or stop this activity," US energy secretary Steven Chu was told by advisers late last year.

There, environmental scientists are worried about illegal discharges. “You just know there's going to be still spillage and contamination," said Walter Schlesinger, President of New York's Cary Institute of Ecosystem Studies.

Last summer's EC report was firm about the need for more legislation to protect the environment. "The threshold for Environmental Impact Assessments to be carried out on hydraulic fracturing activities in hydrocarbon extraction is set far above any potential industrial activities of this kind, and thus should be lowered substantially," it concluded.

What is shale gas?

Shale gas is extracted from sedimentary rock formations that act as both the source and the reservoir for the natural gas.

For this reason it is characterised as a “diffuse” source of gas, i.e. stretching beneath a large area. Numerous wells therefore need to be drilled and analysed in order to sufficiently determine the potential of the shale formation.

If sufficient gas is determined to be present, many horizontal wells from a single pad are drilled.

At this pilot stage there will be hydraulic fracturing and micro-seismic surveys.

If sufficient reserves are found, then commercial exploitation may begin.

According to Mike Stephenson, head of energy science at the British Geological Survey in Keyworth, there is, as yet, no peer-reviewed evidence that frack fluid can leak into groundwater.

Much fracking occurs at depths below other layers of impermeable rock which would prevent contamination of groundwater, he says.

Badly managed fracking has been shown to be the cause of contamination in Wells in Wyoming, USA. This, however, involved a shallow sandstone reservoir rather than deeper shale reserves.

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