Unconventional Gas - Thinking on Policy Approaches to Managing Environmental Risks

1
Unconventional Gas - Thinking on Policy
Approaches to Managing Environmental Risks

• Daren Luscombe

• Technical Director, AMEC Environment
  Infrastructure UK Ltd

2
Thinking informed by

• European Commission Technical support for the
  development of a risk management framework for
  unconventional gas
• Environment Agency - Review of assessment
  procedures for shale gas well casing installation
• UK Water Industry Association - Understanding the
  potential impacts of shale gas fracking on the UK
  Water industry (ongoing)
• UK Department of Energy Climate Change (DECC)
  Strategic Environmental Assessment of the 14th
  Gas Licensing Round (ongoing)
• Extensive work in North America and China on
  shale gas projects

3
The European shale gas storyso far in five
slides
4
Let battle begin !

• Shale gas claims place at Europe's energy table
• As the EUs main source of gas starts running
  out, the prospect of an interim energy solution
  that bridges the gap between the high-carbon oil
  and gas of yesterday and the renewable
  carbon-free energy of tomorrow could be here now
  shale gas.

• 12 May 2010, ENDS Europe

5
May 2011 April 2012
12-May-11 French MPs vote to ban shale gas fracking
18-May-11 Poland targets shale gas despite pollution concern
24-May-11 UK parliament committee backs shale gas extraction
31-May-11 Shale gas drilling in northwest England suspended after (earth)quake
12-Sep-11 European Commission to propose EU rules on shale gas
23-Sep-11 European Commission fracking chemicals not REACH registered
14-Nov-11 Bulgarian minister calls for EU shale gas rules
16-Jan-12 Bulgarian parliament ponders anti-shale gas law
17-Jan-12 Bulgaria cancels Chevron's shale gas permit
29-Feb-12 Lithuanian minister keen to exploit shale gas
02-Mar-12 Polish report gives shale gas a clean bill of health
03-Apr-12 Chevron stops shale gas activities in Romania
13-Apr-12 No evidence fracking is bad for water, says MEP
17-Apr-12 British geologists give green light to fracking
18-Apr-12 French presidential hopefuls divided over energy (including on shale gas)
25-Apr-12 Soniks draft shale gas resolution divides MEPs
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May 2012 Dec 2012
07-May-12 Czech government considers shale gas moratorium
08-May-12 Romania's new government promises shale gas moratorium
21-May-12 UK government wavering on shale gas
29-May-12 IEA calls for 'practicable' regulation of shale gas (Golden Rules)
14-Jun-12 Bulgaria partially lifts shale gas ban
04-Sep-12 Czechs to temporarily ban shale gas exploration
06-Sep-12 Study suggests mandatory EIAs for fracking
07-Sep-12 Three more EU studies on impact of shale gas
21-Sep-12 French industry leaders demand shale gas re-think
08-Oct-12 UK minister backs investment in shale gas
16-Oct-12 Poland outlines draft shale gas law
16-Oct-12 UK government set to resume shale gas drilling
23-Oct-12 EU executive unveils work programme for 2013 (that includes work on shale gas)
21-Nov-12 MEPs urge caution on shale gas pending review
13-Dec-12 Fracking given the green light in the UK
17-Dec-12 German states want tough rules for shale gas
20-Dec-12 EC consults on shale gas ahead of review
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2013
25-Jan-13 Poland finalises draft of first shale gas law in EU
18-Feb-13 Poland seeks EIA exemptions for shale gas
19-Feb-13 Shale gas developers need long-term (regulatory) certainty
21-Mar-13 Romania ends moratorium on shale gas exploration
01-May-13 European Parliament rapporteur seeks mandatory EIA for shale gas
29-May-13 BusinessEurope urged EU strategy on shale gas
07-Jun-13 Consultation finds strong backing for shale gas rules
13-Jun-13 Fracking law benefits companies
28-Jun-13 Big boost for shale gas exploration in the UK
02-Jul-13 Changes to Polish EIA legislation approved
04-Jul-13 Shale gas project in Spain delayed following fracking ban
12-Jul-13 European Parliament committee backs EIAs for shale gas projects
15-Jul-13 Hollande French fracking ban will remain in place
22-Jul-13 UK plans tax breaks for shale gas
28-Aug-13 Large quantities flowing at Polish shale gas operation
3-Sep-13 Spanish government seeks to streamline EIA rules (and extend EIA to shale gas)
11-Sep-13 MEPs postpone vote on including fracking in EIA update
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What does this tell us?

• Enthusiasm varies considerably across Europe for
  shale gas
• Approaches to regulating and developing the
  industry vary
• The adequacy and scope of policy and regulation
  vary
• There is political need and pressure to address
  the policy position
• The industry has argued for a consistent approach
  across Member States
• There is a need to address the issue at a
  European level to ensure consistency of access to
  markets and to address potential socio-economic
  and environmental impacts

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What is the policy problem?
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What are the potential policy gaps?

• Water Framework Directive
• Aimed at Member States and not operators
• Targets water bodies not projects
• Safeguards protected water areas
• SEA and EIA
• Strategic Environmental Assessment should apply
  to national plans
• Environmental Impact Assessment should apply as
  potential significant impacts

• Mining Waste Directive
• Could require BAT
• Can not address all aspects
• Does not address all stages of development
• Industrial Emissions Directive
• Could require BAT
• Unlikely to apply as thresholds not met
• Site baseline only covers soil and groundwater
  not necessarily deep underground issues

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What are the potential policy gaps?

• Cumulative impacts
• EIAD, SEAD, MWD, IED address cumulative impacts?
• Thresholds may apply
• Variable application across Europe
• Deep underground impacts
• The acquis communautaire does not address deep
  underground aspects
• Deep geological, hydrogeological and induced
  seismicity aspects present a gap

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And Member States?

• Divergence
• In regulation, e.g. EIA some plan to explicitly
  include and some do not
• In interpretation/application of EU law
• Flowback mostly MWD, but IED also used to
  regulate
• Fragmentation
• Member States ploughing their own furrow,
  reacting and developing regulation
• Uneven environmental protection
• Uneven playing field for business resulting in
  additional cost

• Adequacy
• Geological characterisation - approach to
  conventional gas may be applied but may not be
  adequate
• No specific uniform requirements for well design,
  construction and testing
• No specific legislation to ban venting or flaring
• Adequacy of approaches to manage induced
  seismicity only in the UK?
• Regulation of injected water covered by various
  legal frameworks with different interpretations
• Closure and post-closure no specific
  requirements for unconventional sites

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What is industry doing?

• Best/recommended practice
• Emerging
• Not well established/integrated yet into the
  industry
• Little/no coherence in the industrys collective
  approach across Europe to managing environmental
  issues

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Is a policy response needed ?

• Gaps in the acquis some key risks not covered
• Member States reacting and developing various
  regulatory responses
• Fragmentation of environmental protection across
  Member States
• The playing field is becoming uneven
• Industry best practice is developing but is not
  uniform, coherent or complete

Many environmental risks may beaddressed but not
through acoherent approach presenting an
argument forintervention at the European level
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What might be the focus for policy?
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What might be the focus for policy?

• Chemicals
• Chemicals REACH registration
• Testing and registration specific to fracturing
• Disclosure to regulators/public
• Water use
• Planning and management of resources
• Recycling and reuse of process waters
• Surface water
• Design and management practices to prevent
  surface water pollution
• Recycling and reuse of process waters

• Zoning
• Buffer zones from activities/environments
• Underground risks
• Conceptual models
• Groundwater modelling
• Seismic surveys and monitoring
• Well design and safety
• Establishment of baseline conditions
• Operational monitoring
• Releases to air
• Reduced emissions completions

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What might be the focus for policy?

• Wider aspects
• Traffic and transport impacts
• Mandatory EIAs
• Requirement for SEA by Member States
• Noise abatement
• Skills of Members States and regulators
• Resources of Members States and regulators
• Information sharing on emerging and best practice

• Waste
• Wastewater management and treatment
• Post closure
• Financial guarantees/contributions
• Well plugging, risk assessments and monitoring
• Period of operator responsibility prior to
  licence surrender
• Public disclosure aspects
• Environmental monitoring information
• Chemicals usage
• Staged consultation and engagement

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What are the policy options?
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What options might be considered?

• 1 Do Nothing

• Doesnt address the issues just set out !
• Gaps in the acquis and regulatory uncertainty
• Environmental/health concerns left unaddressed
• Fragmentation/inconsistency between Member States
  of environmental protection
• Reacting and developing various regulatory
  responses
• Uneven playing field for business

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What options might be considered?

• 2 Voluntary Best Practice

• Exchange of ideas and technologies within the
  sector
• Direct between the companies and sector
  associations
• Extending to Voluntary Agreements with the
  sector
• Limits on practicality, e.g. commercial
  confidentiality
• Needs strong industry organisation framework
  around which to coalesce and with which to
  negotiate
• Does not guarantee outcomes is the whole
  industry represented and signed up?

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What options might be considered?

• 3 Clarifications and Guidance

• No legal amendments required
• Guidance and/or tools developed linked to
  existing legislation
• Familiar process to Members States
• Enables alternative approaches for different
  situations
• Various stakeholders can be involved in
  development
• Can be developed quickly and adapted
• But
• - is not binding
• - limited to existing legislation and may not
  address gaps

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What options might be considered?

• 4 Updating Existing Legislation

• Fills gaps in the existing acquis
• Improves regulatory coverage
• Increases coherence of the acquis
• But
• - would need to be addressed as Directive review
  opportunities arise (e.g. EIA in 2013, WFD in
  2018)
• - only partial results in the short-term and
  piecemeal resulting in poor coherence
• - questionable whether all gaps could be
  addressed unless scope of legislation is changed

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What options might be considered?

• 5 New Legislation

• Fills gaps in the existing acquis
• All gaps and issues with the acquis can be
  resolved
• Scope can be made appropriate (e.g. wider than
  MWD/IED)
• Can deliver a coherent solution
• Not reliant on review cycles of existing
  legislation
• But
• What sort of new legislation?

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What options might be considered?

• 6 Combinations of the above

• E.g. new legislation requiring updating of
  existing regulations
• Can increase coherence and effectiveness

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What next?
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What next?

• In response to a request of the European Council
  the European Commission
• Is studying the impact of shale gas and any
  requirement for new legislation
• Has published reports on the EUs legal
  framework, energy market impacts, climate impacts
  and environmental impacts with further studies to
  follow

The Commission will develop potentiallegislation
requirements on shale gas in 2013 The European
Parliament and Council of theEU will then make a
joint decision on the proposal
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Daren LuscombeTechnical DirectorAMEC
Environment Infrastructure UK Ltd
daren.luscombe_at_amec.com

• 44 (0)1454 822 015