Shale Gas Investments in Romania: Contemplating the Environmental Challenges

Highly debated matter of shale gas asks for an appropriate legislation in order to prevent and address any unwelcomed consequences, states Claudiu Munteanu-Jipescu, Partner, Head of Dentons Bucharest Energy Group


CLAUDIU MUNTEANU-JIPESCU

CLAUDIU MUNTEANU-JIPESCU

PARTNER at SALANS FMC SNR DENTON EUROPE - TODOR SI ASOCIATII SOCIETATE PROFESIONALA DE AVOCATI CU RASPUNDERE LIMITATA

Seen by some as the solution for becoming energy-independent, while by others as too costly from the environmental point of view, the shale gas topic has divided Europe in two camps: on one hand countries like Poland, UK, Spain, Hungary or, lately, Romania  become the main supporters of  shale gas exploration (considering that we are able to overcome the energy crisis by the benefits of the shale gas revolution), and on the other hand countries like France and Bulgaria  are blaming the potential negative environmental impact of the exploration of shale gas, considering that the hydraulic fracturing technology coupled  with horizontal drilling and advanced sensing techniques (or simply “fracking”) could have unpredictable consequences.

 

Truth is that the current US shale gas revolution makes several EU member states have second thoughts and willing to follow the “American Shale Gas Dream” as the US shale gas prices are up to four or even five times lower than the conventional gas prices across Europe or Asia.

 

In Romania’s case, the Petroleum Law regulates activities such as exploration, development and production, without however expressly stating the difference between conventional and unconventional resources. Thus, the specific legislation required for the exploration and production of unconventional natural resources (shale gas in particular), is quite limited for the time being, reflecting the early status of exploration activities, as noticed by the National Agency for Mineral Resources (“ANRM”). Other debates concern the technology required for exploration and utilization of shale gas resources.

 

In this context, we want to point out, in very brief, some of the main environmental challenges expected to require, in the future, appropriate legislation in order to prevent and address any unwelcomed consequences. An elaborated legislation would be of significant importance for the Government in order to make investments in the field attractive for investors.

 

Overlapping between “Natura 2000” Protection Areas and Shale Gas Deposits

 

One of the issues investors will have to confront with is the overlapping of shale gas deposits with areas protected by Natura 2000 European network. In this respect, Romania implemented several EU directives through the Emergency Ordinance No. 57/2007. According to this law, establishing a protected natural area is generally a priority in relation to any other project and the observation of restrictions in such protected areas is mandatory. Once the environmental impact studies reveal that a project or activity could have a significant impact on the protected areas, the relevant authorities will issue a specific environmental permit or endorsement and the Natura 2000 endorsement.

 

The impact of shale gas wells on such areas can be significant and be approved by the competent authorities only based on a major public interest and subject to appropriate compensatory measures. In such cases, authorities will have to carefully assess the impact of wells and impose specific environmental obligations for investors. In this respect, an EU centralized approach would be a benefit to all EU member states’ authorities, setting up clear guidelines as to the way to address requests from the shale gas investors.

 

 

Preventing Water Contamination

 

Several local NGOs (and not only) challenged the utilization of “fracking” technology for shale gas production, as being dangerous for underground sources of both drinking and surface water.

 

Romanian Waters Law No. 107/1996 provides restrictive conditions for the utilization of hazardous constituents around or in relation to water areas if such constituents may pollute underground or surface water areas. This concern is usually addressed through the “location endorsement” (Romanian aviz de amplasament) and the “water management endorsement” (Romanian aviz de gospodarire a apelor) issued by the relevant authorities and required in order that the investor to be granted with the building permit for the project’s infrastructure construction.

 

The above-mentioned rules are generic enough so to be further applied  in case of shale gas wells, but customizing them through the secondary legislation will be  helpful for their implementation by the public authorities that are unfamiliar with the effects of the drilling wells.

 

1.      Water Availability for Shale Gas Production

 

Based on the US previous experience, large volumes of water are needed for drilling the wells (e.g. maintaining the downhole hydrostatic pressure, cooling the drillhead, removing drill cuttings) and for the hydraulic fracturing of each well. In this respect, the water demand can be supplied from the surface or ground water, local municipality water system or recycled shale gas flowback water.

 

The Romanian Waters Law requires a water management endorsement in order to obtain the right to use underground and surface waters, and to evacuate the waste waters from industrial activities evacuating in turn large volumes of water into the available water sources. On the other hand, the injection of hydraulic fracturing fluid into the shale gas formations is not explicitly regulated under the Romanian waters legislation.

 

Considering that hydraulic fracturing is a water intensive technology and may raise potential liability issues, it is recommendable that the current Romanian legislation be adapted in this respect as well.

 

2.      Handling Shale Gas Wastewater

 

The hydraulic fracturing technology gives also rise to concerns pertaining to the disposal of shale gas wastewater, either as rainwater or industrial wastewater (drilling liquids or completion waters). A small part of the injected fracturing fluids remain trapped underground, but the largest part (around 60 to 80 %)  returns to the surface. The concern is related to the content of the industrial wastewater, i.e. the fracturing fluid, dissolved minerals and organic constituents which could be hazardous for the environment.

 

The current Romanian Waters Law applies to activities that involve disposal of wastewater, whereas the law allows injecting wastewater resulted from hydrocarbons exploration and productioninto deep formations which cannot be normally utilized for other purposes. However, after the water is purged, this injection should be made only based on special studies and measures, according to the provisions of the water management endorsement.

 

Generally, in order to discharge the purged water into the municipal sewer system, a permit is required. Also, depending on the nature of the chemical substances utilized for the fracturing process, the wastewater resulted could be classified as a waste under the provisions of the Romanian Waste Law No. 211/2011. This classification still needs further assessments once the type of fluid resulted after the fracking is identified.

 

In our view, additional secondary legislation addressing all these concerns will be required in this field too.

 

Conclusions

 

As in the case of most of EU jurisdictions, Romanian authorities are not familiar yet with the shale gas exploration and production. The lack of specific regulations is not unusual for this stage of development for production from unconventional hydrocarbons sources.

 

Given its historic experience in the Oil & Gas industry, it is likely that Romania will join Poland as among the first EU member states regulating the exploration and production of natural gas from shale gas formations. To some extent, the shale gas “fracking” technology resembles to the carbon capture and storage (CCS) technology. As the latter is already regulated, it may be a good starting point for the future shale gas regulations to use the principles taken into consideration when  the regulations applicable to CCS activities were drafted (the CCS EU Directive was already transposed into the national law by the Emergency Ordinance No. 64/2011).

COMMENT ON THIS ARTICLE:




Load new captcha.