UK: Moratorium on Shale Gas lifted, and EU announces Consultation

The government has announced that it is prepared to consent to new fracking proposals for shale gas. Meanwhile, the European Commission has launched a consultation on shale gas and other unconventional fuels; views are sought on the risks and benefits associated with the exploitation of such fuels and whether additional regulations are needed.

Shale gas is a natural gas (predominantly methane) found in shale rock. Natural gas produced from shale is often referred to as ‘unconventional’ and this refers to the type of rock type in which it is found. Advances in technology have made it economically viable for shale gas to be exploited through hydraulic fracturing (fracking). This is a technique that uses water, pumped at high pressure, into rock to create narrow fractures to allow gas to flow into a well bore to then be captured.

As a result of seismic activity, fracking operations were suspended in the UK between May 2011 and December 2012. However, on 13 December 2012, the government released a ministerial statement which said that shale gas drilling in the UK should be permitted (based on a review of evidence and a public consultation) provided new, non-exhaustive, controls are adopted. These include;

Water pollution, use and disposal

• In assessing the risks to determine whether a permit is required for groundwater activity, the operator needs to provide the Environment Agency (the EA) with a geological assessment, and details of the casing design and fracking fluid composition. Conditions may be attached to any permit given.
• Operators must disclose, publicly, the chemicals used in fracking. The Environment Agency has powers to require full disclosure of any chemicals used.
• Operators must carry out laboratory and batch scale trails to identify the best options for the disposal of water that returns from the well. The disposal method of the fluid must be agreed between the operator, their contractors and the Agency.

Seismic activity

• Operators will need to review the available information on the faults in the area of the proposed well and carry out site-specific surveys to characterise and identify local stresses and faults.
• Seismicity should be monitored before, during and after fracking (for a period of several weeks). Once fracking commences, real-time seismic monitoring must be used.
• The operator will be required to submit seismic data promptly to DECC and to publish up-to-date information on their website.
• For the first few fracking operations, DECC will place an independent expert on site to observe that protocols are being followed and that monitoring is proceeding as planned.

Other control measures

• Flaring or venting of gas will be minimised through conditions attached to the licence,
• During the construction and drilling of a well the operator must monitor methane emissions.

Meanwhile, the European Commission has launched a consultation on the exploitation of unconventional fossil fuels. Previously, in 2011, the Commission found that existing EU environmental legislation applies to practices required for shale gas exploration and production from planning to cessation. However, it concluded that further information was deemed necessary to assess whether the current EU legislative framework is appropriate for the increased extraction of unconventional fossil fuels and whether it is fit to manage the potential new environmental risks of such projects. Subsequently, the Commission released studies examining the potential impacts of unconventional gas and is now seeking views through a consultation.

The consultation runs until 23 March 2013 following which the Commission will publish a draft legislative framework. It is expected that the framework will be released toward the end of 2013. Ultimately, each member state will have the right to decide on whether to exploit its shale gas reserves.

Republished with the kind permission of John Blain and Sharon Long of Freshfields Bruckhaus Deringer LLP