Showing posts with label _Europe. Show all posts
Showing posts with label _Europe. Show all posts

Germany approves bill restricting hydraulic fracturing

Hydraulic fracturing operations in the United States have increased dramatically over the past decade. Indeed, hydraulic fracturing is also growing in other countries. Germany, however, appears to be taking a different approach. Recently, Germany’s cabinet approved a draft of a bill that would restrict hydraulic fracturing operations in the country.

Fracking in Germany will be subject to a number of restrictions. For example, hydraulic fracturing is barred in nature parks and water bore areas. Moreover, companies cannot engage in fracking operations above 3,000 meters unless the drilling is for research purposes and an expert panel concludes that the drilling will not cause any harm. Companies engaging in fracking for scientific purposes must also obtain a number of licenses. Hydraulic fracturing for commercial purposes is permitted under the draft law if the expert panel approves it.

The new bill has been the subject of criticism from several politicians, environmental groups, and unions. Some observers have argued that hydraulic fracturing should be further limited depending on the area in which fracking is operated. Like many environmental groups in the United States, some groups in Germany have argued that hydraulic fracturing will result in damage to the environment and pollution. That said, Germany’s federal environment minister has stated that a ban on fracking would contravene the principle tenets of the German constitution.

Some members of the German government have stated that they may reconsider their current position on fracking if future evidence suggests that environmental concerns are reduced. It is estimated that hydraulic fracturing operating in Germany could produce enough gas to satisfy the county’s gas demands for fourteen years. The current draft bill will now proceed to the upper house of parliament for review.

Read the law.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713 651 3662) and Johnjerica Hodge (johnjerica.hodge@nortonrosefulbright.com or 713 651 5698) from Norton Rose Fulbright's Energy Practice Group
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Web seminar: Legal lessons learned in shale plays in North America

With North America leading the way in shale oil and gas production, interest is mounting globally in the unconventional hydrocarbon sector. On Wednesday, September 17th , we will host a web seminar on Legal lessons learned in shale plays in North America, which will look at the key legal issues that have arisen in North America related to shale development, the lessons learned, and the implications for countries where shale development is still in the early stages.

This web seminar will be broadcast in two separate sessions for Asia/Australia audiences (session 1) and Europe/South Africa audiences (session 2) respectively. If you are unable to register for a session, a recording of the web seminar which will be made available after the event.

Session 1: Wednesday, September 17
  • 9:00 am – 10:15 am Hong Kong, Singapore 
  • 11:00 am – 12:15 pm Sydney, Melbourne 
To learn more about the seminar and register please access the following link: Legal lessons learned in shale plays in North America – Session 1

Session 2: Wednesday, September 17, 2014
  • 6:00 am – 7:15 am Los Angeles 
  • 7:00 am – 8:15 am Calgary 
  • 8:00 am – 9:15 am Houston 
  • 9:00 am – 10:15 am New York 
  • 2:00 pm – 3:15 pm London 
  • 3:00 pm – 4:15 pm Cape Town 
To learn more about the seminar and register please access the following link: Legal lessons learned in shale plays in North America - Session 2
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Poland considers changes to its hydrocarbon licensing scheme (Part 2 of 2)

Under both the current law and the proposed Act, the Ministry of the Environment has authority to grant and limit licenses. Under the Act, however, the Minister of the Environment has a stronger and more authoritative regulatory role. For instance, the Minister is obliged to commence proceedings to withdraw licenses under certain conditions. Conditions include but are not limited to (1) failing to start conducting activities as provided for in the license, (2) permanent halting of license activities, (3) conducting activities outside of the licensed time schedule, and (4) failing to maintain adequate documentation.

The Hydrocarbon Act contains several inter-temporary provisions that deal with existing hydrocarbon license holders and other related parties.

All exploration and extraction licenses issued before the Hydrocarbon Act becomes governing law will remain in full force. Extraction licenses will become licenses under the meaning of the Act. Generally, holders of exploration licenses will be authorized to apply to the Ministry of Environment to convert their licenses into licenses under the Act.

According to data provided by the Ministry of Environment, as of May 2014, Poland has granted 101 licenses targeting shale gas. The first drilling to explore for shale in Poland began in June 2010. As of 2014, 63 exploratory drillings have been completed. Poland has not granted a single shale extraction license— to date, all existing shale licenses are exploration licenses.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
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Poland considers changes to its hydrocarbon licensing scheme (Part 1 of 2)

Poland’s parliament is considering amendments to its Geological and Mining Law that will change its hydrocarbon licensing regime. Submitted for consideration by the Polish Government in April 2014, the Hydrocarbons Act (the “Act”) and Hydrocarbons Tax Act will change the regulatory landscape governing both conventional and nonconventional hydrocarbon production.

The Act introduces changes in the licensing system for prospecting, exploration, and extraction. Under the current system, companies must acquire separate exploration and extraction licenses, each of which could be granted for a period of 3 to 50 years. Under the Act, however, there will be a unified licensing system. Single licenses will be granted for prospecting, exploration, and extraction, and they will be issued for a defined period of time (10 to 30 years).

Prospecting and exploration activities will have a maximum time limit of 5 years. This period may be extended a single time for a period not longer than 1 year. Production may commence with approval of the Ministry of the Environment. Before granting approval, the Ministry must assess a play’s geological, environmental, and investment data. Among other things, the Ministry will determine the approved production methods, the borders of the mining area and the time schedule for commencing the production. Production activities may be extended as necessary to complete production, but for no longer than 5 years.

The Polish Government wants the Hydrocarbons Act to be approved and functional by the beginning of 2015, and expects hydrocarbon taxes to be due and payable starting in 2020. Whether these estimates are accurate remains to be unclear.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
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Shale Gas Projects are absent in EU’s updated EIA

On March 12, 2014, the European Parliament (EU) supported a proposed update to make environmental impact assessments (EIAs) clearer, to ensure that EIAs take into account biodiversity and climate change, and to involve the public via a central web portal.

Approximately 200 types of projects are covered in the directive, including bridges, ports, roadways, and landfill sites.

Shale gas projects, including hydraulic fracturing, were not included in the legislation.

However, according to the EU’s press release, “new aspects of gas projects will have to be taken into account, notably the risks to human health due to water contamination, use of soil and water as well as the quality and regenerative capacity of water underground. If member states conclude that no assessment is needed, then they will have to state the reasons why.”

The fact that shale gas development is not referenced in the updated directive is seen as indicating that the EU is concerned with energy security.

The EU wants its member countries to become self-sufficient for their energy needs and not rely on other countries, especially Russia, to supply their oil and gas.

This is particularly true in light of the geopolitical unrest in the Ukraine. Approximately 16 percent of Europe’s natural gas flows through the Ukraine.

The updated EIA directive provides flexibility for the divergent views among the member countries about shale gas exploration, which views include France banning hydraulic fracturing and the UK and Poland actively seeking development of their shale gas resources.
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European Commission issues recommendation for hydraulic fracturing

On January 22, 2014, the European Commission adopted a Recommendation on the “minimum principles for the exploration and production of hydrocarbons (such as shale gas) using high-volume hydraulic fracturing.” The Commission “invites” the 28-member states of the European Union “to apply the principles” so that hydraulic fracturing is done safely and without confusion over different environmental regulations among various nations. The Recommendation includes the following guidelines:
  • Before issuing licenses for exploration and/or production of hydrocarbons which may include high-volume hydraulic fracturing operations, the member state “should prepare a strategic environmental assessment to prevent, manage and reduce the impacts on and risks for human health and the environment.”
  • The member state should require the operators to prepare a characterization and risk assessment of the potential site and surrounding surface and underground area. The risk assessment should “respect a minimum vertical separation between the zone to be fractured and groundwater.”
  • Before high-volume hydraulic fracturing takes place, a baseline study should be made of the water, air, and land in the surrounding area in order to monitor any changes and deal with emerging risks.
  • The member state should ensure that operators
    • Use the best available practices to prevent surface leaks and spills to the soil, water, or air.
    • Use fracturing techniques that minimize water consumption and waste streams.
    • Not use hazardous chemical substances, “wherever technically feasible and sound from a human health, environment and climate perspective.”
    • Capture gases for subsequent use, minimize flaring and avoid venting.
    • Carry out high-volume fracturing in a “controlled manner and with appropriate pressure management with the objective to contain fractures within the reservoir and to avoid induced seismicity.”
    • Maintain well integrity through well design, construction and integrity tests.
  • The operator should publicly disseminate information on the chemical substances and volumes of water that is intended to be used at the site and then are finally used. The Chemical Abstract Services numbers of all substances, a safety data sheet, and the substance’s maximum concentration in the fracturing fluid should be provided by the operator.
The Commission suggests that the member states apply these guidelines within the next six months and, from December 2014 onwards, inform the Commission annually about the measures they put in place. It plans to monitor the application of the Recommendation on a publicly available scorecard, comparing what each member state is doing. In 18 months, the Commission plans to review the effectiveness of this program and will decide whether it is necessary to put forward legislative proposals with legally-binding provisions on the exploration and production of hydrocarbons using high-volume hydraulic fracturing.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
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The European Parliament seeks to restrict hydraulic fracturing while France's Constitutional Council upholds hydraulic fracturing ban

On October 9, 2013, the European Parliament meeting in Strasbourg, France, voted (with 328 for and 311 against) to tighten rules on hydraulic fracturing by requiring a full environmental impact assessment from oil and gas companies seeking permits to use the process. An assessment would even be required for exploratory drilling. Another round of voting in the Parliament is required to finalize the rules. In the environmental assessment, the oil and gas companies must identify and describe the direct and indirect effects of the project on the population, human health, biodiversity, land, soil, water, air, and the landscape. The member state’s oil and gas authority must make a decision about issuing a permit within 90 days of receipt, and only after considering comments from the public and other interested parties, including independent, qualified and technically competent experts.

The European Parliament’s proposed rules are being met with opposition from oil and gas companies who see the rules as an expensive hurdle to doing business with the member nations. These companies may turn to other areas of the world to develop shale gas in order to avoid the extensive assessment reporting requirements, which may take as much as one year to prepare. It is thought by some that the rules are a reaction to a recent report (released September 30, 2013) from the United Nation’s Intergovernmental Panel on Climate Change (IPCC) which stated that methane gas is 86 times more damaging to the climate than carbon dioxide over a 20-year period.

Two days after the European Parliament vote, on October 11, 2013, the French Constitutional Council, which is made up of judges and former French presidents and has the power to deem a law unconstitutional, reviewed the French legislature’s 2011 ban on hydraulic fracturing. The Council upheld the ban. France’s environmental minister applauded the decision as an environmental and political victory while oil and gas industry groups complained that the ruling deprives the country of needed oil and gas exploration and development. The U.S. Energy Information Administration (EIA) has estimated that France has 137 trillion cubic meters of technical recoverable shale gas and 4.7 billion barrels of technical recoverable shale oil in the Paris basin and the Rhone Valley.

This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.
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European Parliament Calls for Shale Regulation, Rejects Ban

On November 21, 2012, the European Parliament comprised of 754 representatives from the 27 Member States of the European Union (EU) approved two resolutions relating to shale oil and gas development based on reports from its Environmental, Public Health and Food Safety Committee and its Industry, Research and Energy Committee, both of which studied shale gas and oil extraction activities.

These resolutions call for each member state to establish “robust regulations” for all shale activities and to use caution in developing shale gas and oil resources with hydraulic fracturing. 

The European Parliament decided that each member state should determine whether it wants to exploit shale gas development (vote: 492 for to 129 against) and rejected a proposed ban on hydraulic fracturing (vote: 391 against ban to 262 for ban).

Other provisions of these resolutions include:
  • Because of insufficient data on fracturing chemicals and the environmental and health risks associated with hydraulic fracturing, there is an on-going need for further and continuous research. 
  • The development of a comprehensive European Best Available Techniques Reference (BREF) for fracking based on robust scientific engineering practice is needed. 
  • Operators must meet certain seismic and microseismic standards to prevent seismic tremors. 
  • Operators must consider the need for advance water provision plans based on local hydrology, local water resources, the needs of other local water users, and capacities for wastewater treatment. 
  • The oil and gas industry must take measures to protect groundwater. Concerns over the potential of shale gas development damaging water supplies through leakage from wells can be addressed through the adoption of best practices in well development and construction, especially casing, cementing, and pressure management. Operators should test domestic water wells close to their oil and gas wells both before and during production, and to disclose the results to the public in an accessible, understandable and transparent manner. 
  • Chemicals used for hydraulic fracturing must be registered with the European Chemicals Agency and cannot receive approval unless it is ensured that they do not cause damage to the environment or that such damage is mitigated. 
  • EU shale gas operators should engage and build strong relationships with local communities, given that landowners in Europe do not own underground resources and thus do not benefit directly from shale gas extraction.
Read the text of  the two resolutions:
This article was prepared by Barclay R. Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice.
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