EU Drafts Fracking Guidelines to Clarify Conflicting Laws

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Workers prepare pipes used in the drilling of shale gas at a rig operated by Exalo Drilling SA in Lubocino, Poland. Close

Workers prepare pipes used in the drilling of shale gas at a rig operated by Exalo... Read More

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Photographer: Bartek Sadowski/Bloomberg

Workers prepare pipes used in the drilling of shale gas at a rig operated by Exalo Drilling SA in Lubocino, Poland.

The European Union plans guidelines for shale drilling under proposals that may facilitate oil and gas extraction using the contested technique that’s brought the U.S. toward energy independence.

The 28 member governments will be urged to follow the non-binding principles so that hydraulic fracturing, or fracking, is done safely and without confusion over conflicting environmental regulations among states and the bloc, according to draft recommendations seen by Bloomberg News. The guidelines wouldn’t interfere with a nation’s right to ban the practice.

Investors and exploration companies have expressed concern that shale prospects may become too difficult to tap compared with other nations such as the U.S. and Russia because European countries are creating a jumble of new laws. France’s Total SA, banned in its home country from fracking, yesterday became the largest oil producer to enter the U.K.’s shale industry.

“As shale-gas exploration activities are progressing, member states have started interpreting the EU environmental legislation in different ways” including bans and moratoriums, the European Commission said in a draft statement to governments to accompany the guidelines. The EU needs a level playing field to respond to a “fast-evolving energy landscape,” it said.

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Cuadrilla Resources Ltd.'s shale gas exploration site is seen in Singleton, U.K. Close

Cuadrilla Resources Ltd.'s shale gas exploration site is seen in Singleton, U.K.

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Photographer: Paul Thomas/Bloomberg

Cuadrilla Resources Ltd.'s shale gas exploration site is seen in Singleton, U.K.

A commission spokesman wasn’t available for comment on the documents, which are due to be adopted by the EU’s regulatory arm on Jan. 22. In the past, the commission has declined to comment on draft recommendations.

Protect Climate

The proposal will be part of a package of documents on future energy and climate policies to be considered by EU governments. The EU is debating a framework that could reconcile the need to protect the climate with demands to make the bloc more competitive at a time when energy prices in the U.S., its biggest trading partner, have sunk amid rising shale-gas output.

The decision to offer new voluntary guidelines while maintaining current EU oil and gas laws is a victory for industry groups and governments such as Poland and the U.K. that are pioneering shale drilling in Europe. It’s a defeat for environmental lobbies including Friends of the Earth and Greenpeace that wanted restrictive EU-wide rules.

“Existing EU legislation and national laws already cover shale-gas operations in a comprehensive way,” said Alessandro Torello, a spokesman for the International Association of Oil & Gas Producers in Europe.

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An anti-fracking protest sign sits on a telephone cable pylon near to Cuadrilla Resources Ltd.'s exploratory shale gas drill site in Balcombe, West Sussex. Close

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Photographer: Matthew Lloyd/Bloomberg

An anti-fracking protest sign sits on a telephone cable pylon near to Cuadrilla Resources Ltd.'s exploratory shale gas drill site in Balcombe, West Sussex.

Environmental Opposition

While the EU said almost a year ago it had adequate legislation to protect the environment as companies including Chevron Corp. (CVX) expanded shale exploration, environmental lobbies and citizen groups stepped up pressure for more rules. Opponents have said fracking, which involves blasting underground rocks with water, sand and chemicals, contaminates ground water, pollutes the air and mars the landscape.

“This is obviously a very disappointing and alarming proposal,” said Antoine Simon, shale-gas campaigner for Friends of the Earth Europe. “European politicians are turning a blind eye to the dangerous realities of shale-gas expansion.”

Fracked wells need at least 10,000 cubic meters (2.6 million gallons) of water injected, according to the document on the new principles, which are meant to guide governments in setting national laws.

An average of 3 million to 5 million gallons were needed for wells in the Marcellus Shale in the U.S. northeast, according to research published on a Pennsylvania State University website.

No Protection

In the U.S., where thousands of new shale wells are begun each year, regulations among states can differ widely, according to Barbara Pomfret, an analyst with Bloomberg Industries.

The EU proposals have “nothing in the way of real protection for the thousands of ordinary people who will see their lives and local areas turned upside down if the fracking industry gets its way,” Lawrence Carter, a climate campaigner at Greenpeace in London, said in an e-mail.

A majority of individuals, companies and institutions that took part in the EU public consultations on shale gas that ended in March saw the need for further European action to address challenges and risks linked to exploration, according to the commission.

Among four regulatory options, guidelines gathered the most support among companies and organizations in the survey, at 56 percent. A comprehensive and specific piece of EU legislation was the second most popular option, backed by 55 percent.

Political Differences

“This is likely to be only the beginning,” said Caroline May, head of safety and environment at law firm Norton Rose Fulbright LLP in London. “The difficulties for the regulators are the political differences across member states and the differing reserves, which mean that some countries can ‘afford’ to have no policy or to protest, whereas for others like the U.K. there is a real resource as well as financial imperative.”

Britain is offering tax breaks and other incentives to open up its shale industry as North Sea oil and gas reserves decline. Prime Minister David Cameron this month pledged millions of pounds to local authorities that approve shale developments, part of a drive to create jobs and attract investment.

The draft EU shale-gas framework yields to the interests of “fossil-fuel-fixated governments,” said Friends of the Earth’s Simon. It “ignores the studies the commission published and fails to protect Europe’s citizens from the health and environmental risks of unconventional and dirty fossil fuels.”

To contact the reporters on this story: Todd White in Madrid at twhite2@bloomberg.net; Ewa Krukowska in Brussels at ekrukowska@bloomberg.net

To contact the editor responsible for this story: Timothy Coulter at tcoulter@bloomberg.net

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