An overview of fracking in the EU

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The European Union lacks a common policy on fracking. Some countries are convinced supporters while others have banned it for safety and environmental reasons. This disagreement between the member states prevented the passing of a Directive regulating shale gas exploitation, resulting in the European Commission being restricted to adopting certain “recommendations“.

Recently the European Parliament published a briefing document highlighting the fracking policies of the members states. There are three groups: those that support fracking, those against, and those that still don’t know if they support or not. The UK is a very particular case, because it lies on both sides of the divide.  The following summarises the report:

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England (UK).  The British Government is in a “dash for gas”, despite some of the governing coalition MPs supporting a ban on fracking due to its environmental and health impacts. During the parliamentary debate, the Government accepted a Labour amendment that banned fracking from 40% of the shale gas areas previously offered for exploration.

Northern Ireland (UK).  The Stormont Executive has issued four exploratory licences that include the possibility of fracking. Two of them are still active. Drilling is about to take place in Ballinlea, near the Giant’s Causeway, and in Carrickfergus, beside a water reservoir near Belfast. Another licence was terminated by the Government but it is still open for new companies to apply.

Poland. This country has the largest resources in Europe, according to the US Energy Information Authority. However, the first exploration wells have shown disappointing results, and prompted some operators e.g. Chevron and Exxon, to leave Poland.  New laws to facilitate fracking have been passed but in June 2014 the EU Commission “opened legal proceedings against Poland, on the grounds that the new law infringes the environmental impact assessment (EIA) directive by allowing drilling at depths of up to 5000 metres without having assessed the potential environmental impact.”

Denmark. Despite being one the main promoter of renewable energies in Europe, Denmark approved exploratory drilling in 2014.

Spain. Spanish government supports shale gas development after putting a break on renewable energy development. Some of the regions have tried to ban fracking, but the Constitutional Court have declared that those moratoriums are unconstitutional.

Lithuania. The European Parliament report shows that this Baltic country “is the process of introducing “investor-friendly shale gas regulations”, but companies like Chevron “pulled out the country citing an uncertain legal framework”.

Romania. This country lifted an earlier ban in 2013 and is supportive of shale gas. The reports point out the “Chevron started exploratory drilling in  in May 2014”.

 

Countries against

Bulgaria. In January 2012 this country imposed a moratorium on fracking and revoked licences for shale gas exploration.

France. In 2013 French Constitutional Court upheld a ban on fracking approved two years before. France has some of the largest estimated shale gas reserves in Europe but President François Hollande has promised to maintain the ban on fracking as long as he is in office.

Scotland (UK). In January 2015 the Scottish Government called for a moratorium on fracking.  “This moratorium will continue until such time as the work I have set out to Parliament today, including a full public consultation and a full public heatlth impact assesment, is completed”, Scottish Energy Minister Fergus Ewing said. Moreover, Scotland is expecting to get control over minerals rights in the enlargement of Home Rule promised after the independence referedum last year.

Wales (UK).  The Welsh Assembly called the Government to do “everything within its power to prevent fracking from taking place in Wales until it is proven to be safe in both an environmental and public health context.” The Welsh Government wants to achieve the same level of control over mineral rights as Scotland.

 

Maybe 

ireland-is-not-for-shale

Ireland. Our country declared a moratorium on fracking in 2012, when the Government decided not to issue any licences until the completion of a 2-years research program. Three licensing option were granted in 2010, but no decision will be made until 2017, when the research is finished.

Germany. The biggest European economy still doesn’t have a policy on fracking. The president of the Federal Environmental Agency said that “as long as there are no firm statements on the risks of this technology and how they can be controlled, there should be no fracking activity in Germany for the purpose of shale and coalbed gas extraction”. “But fracking has not been prohibited“, she remarked.

Netherlands. The European Parliament report points out that “shale gas exploration in the Netherlands gas been suspended, while a study to be completed in 2015 on its environmental and social effects is carried out.

Deborah Rogers: The economics of fracking

Deborah Rogers – Founder of EnergyPolicyForum and critic of Fracking

Deborah Rogers is an expert in the economics of shale gas and an advisor to the Obama administration.  Speaking at the 2030 Vision conference in Carrick-on-Shannon this month, she made it clear that the shale gas industry in the US is now in deep trouble.  The basic reason for this is that initially it was assumed that shale gas wells would behave much like conventional wells (tapping into an underground reservoir of gas) with a lifetime of 20 years.  All production and cash projections were based on this assumption, which turned out to be hopelessly optimistic.  In fact, the average productive shale gas well has a lifetime of 3 – 5 years only.

Deborah Rogers at 2030 Vision conferenceBased on those initial projections, everyone jumped on the bandwagon and some leasing companies made fortunes. Drilling companies went into huge debt, encouraged by investment banks that made millions in fees.  Initially easily accessible gas was produced.  However, the wells started drying up far sooner than anticipated and the companies continued to drill more and more wells to meet their production targets, motivated by the cost of loans taken out.  They cannot stop, resulting in a glut of gas and the price has plummeted. The selling price of gas at present is roughly half the cost of production, so all shale gas companies are losing money.

“The whole thing doesn’t make sense”, said Ms Rogers.  “Many of the big players have written down their assets, including BP, Encana and Chesapeake. The Marcellus shale gas reserve estimates are down by 80%.  The recovery efficiency for the five major shale gas plays averages 6.5% compared with 75–80% for conventional gas fields.  The biggest companies, e.g. Exxon-Mobil, are now selling their assets.  Is the shale gas bubble soon going to deflate?”

“In the meantime, the drilling frenzy continues with collateral damage in the form of air pollution, ground water depletion, road damages and potential aquifer ruination”, she continued.  “This is immense and will only continue to rise as more and more wells need to be drilled. None of these impacts are at present covered financially by the gas companies – in other words, profits are to be privatized while costs and negative impacts will be borne by the people. “

“2030 Vision – The Future of Energy in Ireland” conference was organised by Good Energies Alliance Ireland (GEAI) to look at the choices of energy sources that Ireland has to make in the future.  Speakers included Eamon Ryan, Leader of the Green Party, who gave an inspirational talk on the potential of renewable energy sources, in particular wind energy, to substitute for hydrocarbons.  The conference was part-funded by Leitrim County Council through the Agenda 21 programme.

Link to Deborah Roger’s presentation at 2030 Vision Conference: http://bit.ly/GJjt2Q

Profile of Deborah Rogers

Deb RogersDeborah Rogers lives in Texas, US. She has worked as a financial consultant for several major Wall Street firms, including Merrill Lynch and Smith Barney. Ms Rogers was appointed as a primary member to the U.S. Extractive Industries Transparency Initiative (USEITI), an advisory committee within the U.S. Department of Interior, in 2013 for a three year term. In May 2013, she was invited to testify before the Senate Committee on Energy and Natural Resources. She was appointed in 2011 by the Texas Commission on Environmental Quality (TCEQ) to a task force reviewing placement of air monitors in the Barnett Shale region in light of air quality concerns brought about by the natural gas operations in North Texas. In June of 2012, she was invited to speak in Rio de Janeiro at the International Society for Ecological Economics in conjunction with the United Nations Rio+20 world summit

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