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The legal and regulatory framework for the EU’ shale gas exploration and production regulating public health and environmental impacts

Fig. 2 EU MS shale gas deposits map. Source: International Energy Agency KPMG, press reports (2012)

Abstract

Shale gas has now become a major competing source of energy in the international energy mix scenario. In the European Union, the “fracking” which is the technique of extraction shale gas is facing very strong opposition based on the associated potential health risks and environmental impacts which are not currently adequately regulated. The European Union Commission argues that the current regulatory system is enough for controlling the impacts of fracking on health and the environment.

 

Author:
Joseph Tawonezvi

Law Department, Robert Gordon University, Aberdeen, Aberdeenshire, UK
Received: 13 May 2016 / Revised: 8 September 2016 / Accepted: 11 October 2016 / Published online: 1 November 2016
©The Author(s) 2016.

However, this article shows that the EU shale gas regulatory framework is not, “fit for purpose”. It will critically evaluate current European Union shale gas regulations and offer some recommendations for improvement.

Abbreviations

  • ADR   Treaty of the European Union
  • BAT   Best available techniques
  • BCM   Billion cubic metres
  • CEU   Council of the European Union
  • CR   Commission recommendation
  • DG   Directorate General
  • EAP   Environmental Action Programme
  • EC   European Commission
  • ECHA   European Chemical Agency
  • ECJ   European Court of Justice
  • EIA   Energy Information Administration
  • EIA   Environmental Impact Assessment
  • EP   European Parliament
  • EP   Exploration and production
  • EU   European Union
  • FOEE   Friends of the Earth Europe
  • FPIC   Free, Prior and Informed Consent
  • HVHF   High-volume hydraulic fracturing
  • IEA   International Energy Agency
  • IOGP   International Association of Oil and Gas Producers
  • MS   Member States
  • NGO   Non-governmental organisations
  • NGPL   Natural gas plant liquids
  • NIMBY   Not-in-my-backyard factor
  • PSNR   Permanent Sovereignty over Natural Resources
  • REACH   Registration, Evaluation, Authorisation and Restriction of chemicals
  • REC   Reduced emission completions
  • SAC   Special areas of conservation
  • SEA   Strategic environment assessment
  • SG   Shale gas
  • SGEP   Shale gas exploration and production
  • TCF   Trillion cubic feet
  • TEU   Alternative dispute resolution
  • TFEU   Treaty on the Functioning of the European Union
  • UNECE   United Nations Economic Commission for Europe
  • UNESCO   United Nations Educational Scientific and Cultural Organisation
  • UNGA   United Nations General Assembly
  • USA   United States of America

1 Introduction

The objective of this paper is to analyse whether the European Union (EU) shale gas regulations are fit for purpose and able to protect the environment and human health against the effects of shale gas activities. A background of the shale gas technical features and environmental potential impacts is necessary to have an understanding of what is involved in high-volume hydraulic fracturing (HVHF) processes and the potential impacts to enable an assessment of the regulations that are applied in minimising or preventing environmental damages in the EU.

In analysing the current regulatory framework for the shale gas fracking activities in the EU, it was necessary to review the EU primary legislation on shale gas industry, the legal principles influencing the legislation and the composition EU legislative bodies and their roles and the efforts the EU has been so far putting in terms of improving the regulations relating to shale gas exploration and production.

An analysis of secondary legislation relevant in permitting and operational fracking activities in the EU is also important in assessing the effectiveness and weaknesses of various provisions that regulate the potential impacts likely to cause serious environmental damage and health impacts. The environmental regulatory management systems and applications of EU member states pursuing shale gas activities will also be analysed. These reviews and analysis form the bases of the conclusions and recommendations that may contribute to the improvement of regulatory weaknesses identified.

1.1 The Background

The exploration and production (EP) involving hydraulic fracturing is currently for hydrocarbons that are unconventional including gas deposits. There is intensive public discussion going on in the European Union (EU) focusing on the potential environmental and health effects that can be brought about by carrying shale gas extraction by fracking. Shale gas extraction has become a controversial and very competitive resource in the energy mix worldwide. The United States of America (USA) is now advanced on commercial production and already reaping large economic benefits which inter alia includes the expansion of natural gas plant liquids (NGPL), manufacturing chemical, primary metals and replacing the petroleum-based naphtha7 feedstocks with increased use of NGPL feedstocks.1

There is need for authorities and operators to abide by the regulations that are related to permitting and operational activities of shale gas exploration and production aimed at preventing or minimising environmental and human health impacts.

1.2 Shale gas potential in the European Union (EU)

In 2013, an estimation of 885 trillion cubic feet (tcf) of shale gas could be recovered in Europe, representing about 12 % of worldwide shale gas potential from all European countries by the end of 2012.2 Fourteen European countries are believed to have shale gas resources present in their territories of which largest resources are found in France and Poland. Other states such as Norway, Ukraine, Sweden, Denmark and the United Kingdom (UK) have also large deposits. The EU is the largest world regional market for gas demand estimated at 550 billion cubic metres (BCM) in 2010, which is on the increase whilst production is decreasing in the region.3 Unconventional gas production in the EU is expected to grow at a much slower rate from 10 BCM in 2010 and expected to grow much quicker to 80 BCM by 2035.4

At the moment, there is no law specifically for regulating SG activities other than various EU provisions that were enacted for regulating the environmental issues and mining activities in the EU.5

The big question is whether these unspecific but, “catch all”,6 directives effective enough to help gain “social licence to operate”, and win against a growing numbers successful anti-fracking campaigns in the EU? This question will be fully answered by the end of this article.

The USA so far dominates the shale gas production resources and expected to become an overall net exporter of natural gas by 2017 and a net pipeline exporter of natural gas in 2018.7 The gas prices are much lower in the USA as compared to the European prices.

The production of shale gas in the EU is expected to bring some of these benefits which the USA is currently enjoying. It will bring economic and energy security benefits as well as reducing aggregate gas supplies from other countries such as Russia where the supply chain can be volatile. Those who are pro-shale gas activities argue that the use of more gas helps to reduce carbon emission by replacing more carbon intense fuels and be in a position to achieve the greenhouse targets whilst some regard it as unreliable accelerator of zero-carbon society facilitating acceleration of climate change.8

A number of potential technical and environmental concerns on the shale gas production have been so far identified, which includes water contamination, air pollution, ecological damage, noise pollution and harmful environmental pollution caused by the release of chemicals. These issues require a strong and reliable regulatory capacity covering shale gas extraction and protect health and environmental risks.9 The risks related to shale gas exploitation demand a regulatory regime at the European level based on the, “precautionary principle”.

However, in 2011 the Directorate General (DG) for the Energy of the European Commission (EC) reported that the environmental legislation in the EU is also applicable at every stage of shale gas activities. This prompted the initiation of a number of studies covering different aspects of shale gas activities relating to shale gas economics, methane emissions and the adequacy of regulatory framework to ensure the environment and human health are protected from the impacts caused by shale gas production. The European Parliament also debated on the shale gas’s current regulatory framework’s various defects.10

1.3 Research methods

Qualitative approaches to this research shall be utilised throughout the research and collecting empirical data EU law treaties, directives, regulations, general principles and European Court of Justice (ECJ) decisions on environmental issues related to shale gas extraction.

The literature shall be briefly analysed below and reviewed throughout the article, in defining and analysing the EU legislative process, its legislative institutions and control of legislation on shale gas extraction activities in the EU and its Member States (MS). The literature will be used to understand the impacts caused by shale gas exploration and production, the effectiveness of regulations on the environmental these impacts. The response and application of the EU regulations by its MS will also be analysed.

In order to achieve this, various sources will be analysed which includes textbooks, academic research journals and articles, oil and gas industry journals, academic writings and the official EU journal EU commission. Parliament reports on shale gas policy matters and the European Environmental news information will be searched for any latest environmental issues. The United States literature which contains more detailed experiences from the shale gas activities for many years will also be looked into. Reports from the Energy Information Administration (EIA, the International Environmental Agency (IEA) and Friends of the Earth (FOE) will be used in analysing the EU shale gas environmental regulatory regime.

The ECJ plays a very important role in interpreting legislations provisions applicable to shale gas extraction and making decisions on breaches of the environmental regulations in the EU; therefore, a number of decided cases and matters referred by domestic MS for guidance will be analysed.11 These cases are of importance in understanding the role played by the EU judicial system in regulating shale gas activities and to understand how the ECJ interprets EU environmental laws and how they are applied in deciding on shale gas cases and referrals from EU MS.

1.4 Literature review

Fracking is being encouraged by energy demand worldwide becoming a challenge to policy makers and the politicians in making environmental regulation decisions. Despite the fact that shale development in Europe is at its infancy, it is already facing a very strong opposition. The production of shale gas at this level could impact on climate change as warned by many international agencies including the IPCC12 and the International Energy Agency.13

The ever increasing fracking opposition makes it difficult to obtain for a social licence to operate, which was described by Moffat and Zhang as, “A set of meaningful relationships between shareholders based on mutual trust”14 To have trust is to have confidence that the behaviour of an operator will match expectations of the trust holder.15

It has been suggested that a temporal moratorium is necessary in order to get the space to thoroughly scrutinise the uncertainties of the current regulatory framework and gaps, thereby giving more protection to the environment as well as public health.16

It is the task of the policy makers to determine if shale gas activities should be carried out in their respective jurisdictions. Many studies have shown that shale gas extraction causes a number of air and water health associated diseases and there are no conclusive reports as to the impacts caused by chemicals used in fracking due to non-disclosure agreements.17

The need for more studies on to the potential impacts of fracking cannot be over emphasised. Another study revealed that humans, food, domesticated and wildlife die from respiratory and growth problems due to exposure to drilling and fracturing activities.18

The biggest problem is to carry out an accurate assessment of the risks posed to on people who leave near shale gas drilling sites due to the inadequacy of current emission data collection and analysis methods.19

Studies are carried out around the world in different geologies, geography under different regulatory regimes, engineering technologies and methodologies in each study coming up with various results making difficult to reach a consensus. However, all these studies point to the fact that there are known shale gas public health risks which policy makers should take into account when considering shale gas development policies in their respective territories.20

There is lack of specific regulatory policy for shale gas extraction in the European Union and each member state put its own regulatory policies because the European Union cannot set up policies which affect member states’ rights to choose and exploit any choice of energy within their sovereign states.21

It is therefore the decision for each member state which has authority of issuing permits and authorising shale gas activities it its territory. There is no centralised Europe Union institution controlling these procedures across all member states.

Each state has the responsibility to take into account all public health and environmental considerations in making permitting and authorisation decisions. The lack of harmonised regulatory regime results in different EU regulatory interpretations among its member states.22

The European Commission has a duty of strategizing enforcement of environmental regulation, making sure there is effective monitoring compliancy which is its responsibility under Art. 211 of the EC Treaty.23 However, as shall be seen from this paper there are serious shortfalls in monitoring compliancy in the EU shale gas industry.

2 The shale gas exploration and production potential environmental impacts

Shale gas has its distinct features from other fossil fuels. It has been there for many years unexploited, but due to technological advancement, it commercial production has been made possible. The peculiar methods and techniques used to extract shale gas generate its own environmental and health impacts which needs to be addressed as the project progresses.

2.1 What is shale gas?

Shale gas is natural gas with a composition of methane as the main ingredient, which is a found trapped in the source rock which it was formed originally24 with very fine grains, of very low permeability which makes it difficult to be extracted and its extension can be as large as half of France.25 It is said to be unconventional because the resource has to be stimulated to enable hydrocarbons to flow due to low permeability, by injecting water at a high pressure to push gas from the rock shale. It is different from the conventional gas which flows into a conventionally drilled well without stimulation giving in large quantities of economic gas.26

Horizontal drilling and high-volume hydraulic fracturing (HVHF) are the two advanced technological processes that are used in extracting gas from its shale. Drilling using these techniques can drill a 2-km-deep well and 3 km or more horizontally.27 These techniques have been extensively used over the last 60 years and known as fracking or hydraulic fracturing. Other types of unconventional gas are tight gas and coalbed methane, aka coal seam gas.28 These advanced technologies have made it possible to extract shale gas in large quantities.29

Natural gas combustion releases lower levels of carbon dioxide as well as (CO2) and sulphur dioxide than other hydrocarbons such as oil and coal. When used in efficient combined cycle power plants, natural gas combustion can emit less than half as much CO2 as coal combustion, per unit of electricity output.30 However, SG extraction has its own technical and environmental impacts. There are currently controversies surrounding the shale gas extraction development in the EU, some advocating for a moratorium because of its negative impacts on human health and environment whilst others see it as a means to boost their nations’ energy mix, cheaper and a secure energy source supply.

2.1.1 Issues surrounding shale gas extraction

Shale gas exploration and production has got technical and environmental issues that has to be seriously looked into for a shale gas project to take off. It is a unique and requires very technical procedure which need a lot of expertise and done in a way that is environmental friendly. Some of them cannot be avoided with the technology and scientific knowledge currently existing and the risks to the environmental and health can happen if the process of extraction is not properly managed.

2.1.2 What are the technical risks of shale gas production?

The production of SG cycle takes five stages starting from identifying the suitable site and preparation, thereby triggering potential environmental and health issues. The first stage involves levelling and clearing the required area of land for the well site. There will be transportation of heavy equipment to the site and construction of storage facilities.31

The second stage will involve well designing, drilling, cementing and perforation of a hole on the surface and laying pipes, cementing and constructing the wellhead.32

The third stage is the technical hydraulic fracturing, by pumping highly pressurised water mixed with sand or other propane and chemicals. Then the well reaches a completion stage where water produced and flowback has to be managed by the operator. Production will then commence and after the well has reached its end it will then need to be decommissioned.33

However, all these stages have their peculiar environmental impacts that can start at each stage or can be accumulative from start to finish or through multiple well projects. It is the objective of the EU that individual states are obliged to make laws that regulates the potential environmental impacts on shale gas on all projects they authorise to operate in their States.

There are technical rules and regulations that operators are obliged to comply with throughout the shale gas production processes. The MS through their competent authorities are compelled to monitor the activities of the licences in their jurisdictions and to make sure they are complying with the minimum standards expected in these types of projects.

2.2 The application of the best available techniques (BAT)

“BAT” is the most available advanced and effective way of operation which is suitable for limiting pollution in cases where it is generally difficult to reduce emission and the environmental impacts. Achieving the best results in protecting the environment needs the use of advanced technology which is economic and accessible.

The BAT needs to be applied in well construction to make sure that there are no leakages of chemicals from the well into the underground aquifer or land. However, the risks cannot be ruled out completely because there are always chances of human error or technical faults which can also result even where the BAT has been applied. MS have the responsibility of making sure that operators are complying and are up to date with the most relevant information through industrial exchange from across the EU MS and further.

Sources of such information can range from non-governmental organisations that are involved in the promotion of protecting the environmental. Operators need to put in place management systems for water, transport, gas capturing, pressure management, well management and many others which need be attended to at every stage of the operation.34 The only problem is that SG is in its early development stage in the EU and the BAT is also just emerging and not yet fully integrated, thereby lacking a coherent approach of implementing a practice that is recognised across EM MS.35

Fig. 1 Shale gas production techniques and potential environmental impacts. Source Aldhous (2012).

Fig. 1 Shale gas production techniques and potential environmental impacts. Source Aldhous (2012).

Figure 1 illustrates the risks caused to air, water and land by hydraulic fracturing. The diagram shows how a horizontal drilling shale gas well is set up and how it invades the natural environment from the top soil to the passing through the water table, the impermeable rock down to the shale where the fracking takes place in order to release the gas. The diagram also shows the potential locations of the sources of water pollution. The well has to be well cemented to make sure there will be no leaks of methane or hydraulic fluids into the water or soil.

Figure 1 shows how the potential impacts of shale gas production on the environment. The drilling of the well passes through the fresh water aquifers where drinking water is drawn. The well integrity is important to make sure that it does not leak and hydraulic fluids during the time of production and after the decommissioning of the well. Some fugitive gases can also escape from the well to the atmosphere, polluting the air affecting human health and the environment. The water discharged from the shale gas production can also contaminate the fresh water and soil. Human errors and technical faults or earth movement can be a cause for these leaks.

2.3 What are the environmental impacts of shale gas production.

Generally, risks to the water environment, ecology and of climate change have been identified as three main categories of key potential environmental impacts of shale gas EP calling for comprehensive risk factors (RFs) that deal with such impacts.36

Hydraulic fracturing (HVHF) has serious impacts on land take due to its installations which take about 60 % more than a conventional well space of a well pad. Storage tanks for water, chemicals and wastewater that can contain about 30,000 m3 and shale gas formations take up tens of thousands of square kilometres of concessions covering as large as up to 6000 km2. This makes the physical footprint associated with SG EP to be more than conventional resources extraction requirements. Access to land and land usage are likely to be important issues in densely populated EU countries and raises a lot of public support issues in shale gas projects.

HVHF requires a high demand of fresh water competing with other domestic and other industrial needs, depending with location of the project. Wastewater in large amount leads to groundwater contamination if not carefully disposed. The whole operation leaves footprints from increased truck traffic and noise, pollutants and demand in land use for setting up the infrastructure for the projects. Animals, plants and humans in the environment around extraction sites are put at risk of migration or possible extinction from all potential impacts such as land take, noise from traffic and site machinery, the visual impact of the environment and the increasing risk to of seismic events around the extraction area.37

Risks associated with shale gas exploration and production using the HVHF technical methods are found at every stage of the prospection, exploration, production until closing down of the well. Ground preparation which is identified as a suitable to set up the drilling pads causes a lot of environmental disturbances. These are not going to be discussed in detail since this article’s main focus is on whether these impacts are regulated effectively by the EU legislation.

2.3.1 The risk of water contamination

The most feared HVHF impacts are the potential risk of water contamination and depletion. This process uses a lot of water which may affect the water supply from the surrounding natural water resources or from local supply also used by the local community. Hydraulic fracturing fluid may contain potentially hazardous chemicals which may contaminate surrounding areas through spillages and leaks. Large amounts of wastewater produced by fracturing contain dissolved chemicals and need to be treated before reused or disposed.38 Under the UK law, the environmental regulator has the power under the Water Resources Act 1991 to require shale gas developers to disclose the composition of fracturing fluids they use in their projects.39 There are also technical standards set up in the oil and gas industry which has to be followed in shale gas activities, namely ISO 10426-140 which covers well cementing, ISO10405 for casings41 and ISO 1196142 for Drill pipes.

2.3.2 Induced seismicity

Instances of earthquakes have been linked to unconventional shale gas production, for example the Cuadrilla shale gas operations near Blackpool in the UK in 2011 where a small magnitude of around two on the Richter scale was reported but did not create any surface damage.43 Hydraulic fracturing operations at Cuadrilla did not lead to a moratorium to more safety by the use of micro-seismic monitoring.44 Operators are required to implement a “traffic light” to identify unusual seismic activities that may require them to stop activities pending reassessment of operation due to hydraulic fracturing.45

2.3.3 Greenhouse gas emissions

SG uses higher production equipment that emits greenhouse gas emissions more than conventional gas because hydraulic fracturing need more wells to maximise production due to complex nature of its production. An operation of more wells means more diesel pumps are required thereby increasing the CO2 emitted per unit of energy.46 Gas is commonly released into the atmosphere or to flare, thereby converting methane to carbon dioxide, which is also a greenhouse gas. There is now an increasing use of reduced emission completions (REC) technologies to capture the emerging gas emissions.47

2.3.4 Ecological impacts

The physical footprint associated with SG EP considering the number of wells that might be required, space for transport, wastewater storage facilities and containers is quite significant as compared to that of a conventional gas project. Construction of infrastructure and production activities result in the fragmentation of environmental natural habitat lost or totally destroyed especially in some of the UK onshore gas licensing that are in some special areas of conservation (SACs) or other protected category special areas,48 and also in Poland where Chevron was licensed to explore shale gas in a UNESCO reserve, comprising terrestrial, marine and coastal ecosystem.49

2.4 The position of shale production in the EU MS

Despite the potential economic advantages of shale gas production in the EU, its MS are widely and dived on whether they need to carry out the SG production and if there is enough regulation.50 The EU needs shale gas to augment its energy demands, but, however, different opinions on developing it emerge within EU member states which is likely to slow down the speed at which shale gas can be developed in the EU.

A significant figure of about 60 % of the EU public does not want SG activities to take place in their territories as statistics worked on the proportionality of individual member state (MS).51 Other MS such as Poland consider SG production for bringing economic prosperity, creating more jobs and ensure energy security.52 Others are more worried about the harmful effects of HVHF in their respective countries calling for more scientific tests to be carried out on the potential environmental impacts of developing shale gas in their territories.53 Most prospective areas for shale gas development in the EU are found in densely populated areas which have very strong anti-fracking campaign groups in most EU MS,54 which makes access to land and land usage to be important issues especially in densely populated EU countries.

Fig. 2 EU MS shale gas deposits map. Source: International Energy Agency KPMG, press reports (2012)

Fig. 2 EU MS shale gas deposits map. Source: International Energy Agency KPMG, press reports (2012).

Figure 2 shows EU countries with SG deposits and shows which countries have issued a moratorium in HVHF, allowed it and those which have already issued permits.

Footnotes

  1. EIA (2015).
  2. EIA (2013).
  3. IEA (2012).
  4. See supra footnote.
  5. Reins (2011).
  6. Dinan (1999).
  7. See supra footnote 1.
  8. FOEE (2015).
  9. European Parliament 2011/2308(INI) (2012).
  10. See supra footnote 3.
  11. Van Hoecke (2011).
  12. http://www.climatechange2013.org/f.
  13. http://www.worldenergyoutlook.org/media/weowebsite/2012/goldenrules/weo2012_goldenrulesreport.pdf.
  14. Moffat and Zhang (2014).
  15. Thomson and Boutilier (2011).
  16. Hawkins (2015).
  17. Bamberger and Oswald (2012).
  18. Bamberger and Oswald (2015).
  19. Brown et al. (2014).
  20. Brown et al. (2015).
  21. Horia Maican (2013).
  22. Fleming (2015).
  23. Ballesteros (2009).
  24. Meiners et al. (2013).
  25. Charlez (2015).
  26. Luscombe and Corden (2015).
  27. Potocnik (2012).
  28. Exxon Mobil (2014).
  29. Wang et al. (2014).
  30. See supra footnote 27.
  31. Dupont (2013).
  32. ibid.
  33. ibid.
  34. Commission Recommendation, January 2014, on minimum principles for the exploration and production of hydrocarbons (such as shale gas) using high-volume hydraulic fracturing (2014/70/EU).
  35. EC (2015).
  36. Moore et al. (2014).
  37. EIA Natural Gas from Shale (2013).
  38. Energy Information Administration (EIA) (2012).
  39. Royal Society and the Royal Academy of Engineering (2012).
  40. Petroleum and Natural Gas Industries (2009).
  41. Petroleum and Natural Gas Industries (2006).
  42. Petroleum and Natural Gas Industries (2011).
  43. See supra footnote 8.
  44. Green et al. (2012).
  45. See supra footnote 31.
  46.  See supra footnote 44.
  47. EPA (2011).
  48. See footnote 34.
  49. See supra footnote 8.
  50. Fleming (2012).
  51. Sreeramula (2013).
  52. Bugarski and Maulet (2013).
  53. Pearson et al. (2012).
  54. See supra footnote 3.

The legal and regulatory framework for the EU’ shale gas exploration and production

Shale gas has now become a major competing source of energy in the international energy mix scenario. In the European Union, the “fracking” which is the technique of extraction shale gas is facing very strong opposition based on the associated potential health risks and environmental impacts which are not currently adequately regulated. The European Union Commission argues that the current regulatory system is enough for controlling the impacts of fracking on health and the environment.
Emanuel Martin
Emanuel Martin is a Petroleum Engineer graduate from the Faculty of Engineering and a musician educate in the Arts Faculty at National University of Cuyo.
http://www.allaboutshale.com

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