Shale Gas Developments in Germany

Shale Gas Developments in Germany Brian Horsfield GFZ German Research Centre for Geosciences 14473 Potsdam, Germany Shale Gas Reservoirs in Germany ...
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Shale Gas Developments in Germany Brian Horsfield GFZ German Research Centre for Geosciences 14473 Potsdam, Germany

Shale Gas Reservoirs in Germany Lower Potential Cretaceous Jurassic Carboniferous Shale Gas Provinces (red)

Most Promising Regions Lower Saxony N‐E Germany Upper Rhine Valley Major Targets /  GIP (1012 m3) Lower Cretaceous 1,22 Lower Jurassic 3,46 Lower Carboniferous 2,63

*BGR, 2016 *Federal Institute for Geosciences and Natural Resources (BGR) 2016: Schieferöl und Schiefergas in Deutschland.

Companies holding licences, end 2014

Erdöl-Erdgas-Jahresbericht 2014, Landesamt für Bergbau, Energie und Geologie Hannover

Companies holding licences, end 2014 Continuation of the list………

Erdöl-Erdgas-Jahresbericht 2014, Landesamt für Bergbau, Energie und Geologie Hannover

Legislation, Licensing and Fiscal regime for oil and gas exploration and production The responsibility lies with the local State Authorities for Mining http://www.lbeg.niedersachsen.de for Lower Saxony, Hamburg, Bremen and  Schleswig‐Holstein http://www.bezreg‐arnsberg.nrw.de/bergbau‐und‐energie for Nordrhein‐Westfalen http://www.bergamt‐mv.de for Mecklenburg‐Vorpommern http://www.sachsen‐anhalt.de/LPSA/index.php?id=15849 for Sachsen‐Anhalt http://www.lbgr.brandenburg.de for Brandenburg and Berlin http://www.rp‐darmstadt.hessen.de for Hessen http://www.saarland.de/7809.htm for Saarland http://www.lgb‐rlp.de for Rheinland‐Pfalz http://www.lgrb.uni‐freiburg.de/lgrb for Baden‐Württemberg http://www.stmwivt.bayern.de for Bayern http://www.tlba.de for Thüringen http://www.bergbehoerde.sachsen.de for Sachsen

Old Regulations Hydrocarbons in subsurface are covered by the Federal Mining Act National Mining Authority approve or decline Tiered approval procedure for mining projects

Exploration

Extraction

Licence for exploration

Licence for exploration and extraction

Approval of framework operational plan, including EIA*

Approval of framework operational plan, including EIA

Approval of principal operational plan for exploration

Approval of principal and special operational plan(s)

*in cases where exploration is likely to have significant environmental effects.

Approval of operational plan for mine closure

Regulations and Political Situation in Germany New Draft Bill, April 2015 1. No hydraulic fracturing in water protection areas, nature reserves and national parks. 

2. Unconventional hydraulic fracturing in target rock formations  3.000 m: Only non or low hazardous fracturing fluids may be used A comprehensive report on initial environmental conditions is compulsory Identity and volume of all substances used in hydraulic fracturing must be published  Monitoring of ground and surface waters is compulsory Monitoring of produced waters, flowback, and wellbore integrity is compulsory

Status: PENDING Apparently not a hot topic for the government

‘Fracking’ in Germany >300 Fracs over the last 50 years in conventional and tight gas  reservoirs Amount of ‚fracs‘ in Germany over time Around 180 frac treatments conducted by EMPG To date, one test fracturing of shale in 2008 (Damme 3, Lower  by EMPG Saxony).  ExxonMobil also published the chemical composition of the  frac fluids used in the 3 frac treatments. 

www.erdgas-suche-in–deutschland.de

A question of trust • • • •

Where is the gas? How much is there? What are the real benefits? But are there risks ‐ for me, the community, and the environment? > Lack of trust is an issue > Facts alone may not be sufficient to  remedy the situation

Studies into Shale Gas Exploitation Environmental Studies

A slow and cautious  A slow and cautious  development of  development of  hydraulic fracturing  hydraulic fracturing  in unconventional  in unconventional  reservoirs should be  reservoirs should be  possible – possible – there is  there is  no factual reason  no factual reason  for a ban of the  for a ban of the  technology.  technology. 

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Hydraulic fracturing  Hydraulic fracturing  should not be banned,  should not be banned,  but its application  but its application  should only be  should only be  allowed with strict  allowed with strict  regulation in place and  regulation in place and  should be  should be  accompanied by  accompanied by  intensive  intensive  administrative and  administrative and  scientific supervision.  scientific supervision. 

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The risks related to  The risks related to  shale gas  shale gas  development cannot  development cannot  conclusively be  conclusively be  evaluated at present.  evaluated at present.  Hydraulic fracturing  Hydraulic fracturing  should be prohibited  should be prohibited  in drinking water  in drinking water  protection areas.  protection areas.  This study  This study  recommends  recommends  suspending shale gas  suspending shale gas  exploration with  exploration with  hydraulic fracturing  hydraulic fracturing  in North Rhine‐ in North Rhine‐ Westphalia, until less  Westphalia, until less  harmful additives for  harmful additives for  the fracturing fluids  the fracturing fluids  2 1 0 are available and the  are available and the  t2 r o waste disposal is  waste disposal is  rep regulated to an  regulated to an  W R acceptable extent. acceptable extent. N

Environmental Studies in Germany

Comment on Environmental Studies "The highlighted  "The highlighted  geoscientific deficits of  geoscientific deficits of  the studies may result in  the studies may result in  a one‐dimensional  a one‐dimensional  perception and  perception and  accordingly in a general  accordingly in a general  overestimation of the  overestimation of the  uncertainties when  uncertainties when  assessing geoscientific‐ assessing geoscientific‐ based dangers and risks  based dangers and risks  of hydraulic fracturing  of hydraulic fracturing  technology. (…) It should  technology. (…) It should  be emphasized that many  be emphasized that many  of the recommendations  of the recommendations  with geoscientific  with geoscientific  relevance are already  relevance are already  common practice." common practice."

SGD 2013

State Geological Surveys Germany

German Studies and Discussion Study about SG potential

Statement SG in ‘Energiewende‘

Scientific Debate

SRU (Sachverständigenrat für Umweltfragen German Advisory Council on the Environment)

"From a geoscientific point of view,  environmentally‐friendly application  of the technology is possible, as long  as the law is observed, the necessary  technical measures are taken and  local baseline studies and pilot  surveys are carried out. Hydraulic  fracturing is compatible with the  protection of freshwater reservoirs." 

BGR 2012*

Shale gas is not essential for  transforming the energy system. For the moment fracking  technology should not be used for  commercial production of shale  gas, in view of serious gaps in our  knowledge of environmental  impacts. Fracking will not be justifiable  until pilot projects have yielded  favourable results.

SRU 2013

In a nutshell… Best practices are fully  sufficient for exploiting  shale gas from  Germany’s subsurface  reservoirs

BGR, GFZ, UFZ 2013 ‘Hanover Declaration‘

* Project ‘Niko‘ until 2015

Study, Statement, Discussion

Studies into Shale Gas Exploitation more Environmental Studies

"Fracking is a risk  "Fracking is a risk  technology ‐ technology ‐ and therefore  and therefore  needs tight guardrails to  needs tight guardrails to  protect public health and  protect public health and  environment. As long as  environment. As long as  the major risks of this  the major risks of this  technology are not  technology are not  properly predictable and  properly predictable and  controllable, hydraulic  controllable, hydraulic  Uwe Dannwolf fracturing should not be  fracturing should not be  RiskCom used for the production of  used for the production of  Coordinator of the Commission shale gas and coal bed  shale gas and coal bed  The stated conclusions are not  methane in Germany."  methane in Germany."  those of the committee… UBA President Maria  UBA President Maria  Krautzberger Krautzberger 4

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Scientific evidence  Scientific evidence  does not justify a  does not justify a  general ban of  general ban of  hydraulic fracturing. hydraulic fracturing.

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From a geoscientific  From a geoscientific  viewpoint, hydraulic  viewpoint, hydraulic  fracturing can be  fracturing can be  performed  performed  environmentally  environmentally  friendly, as long as  friendly, as long as  detailled site‐specific  detailled site‐specific  geological knowledge  geological knowledge  is available, legal  is available, legal  requirements are  requirements are  complied with and  complied with and  current technical  current technical  standards are  standards are  observed.  observed. 

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Statement by the Directors of  North Atlantic Group of the  European Geological Surveys

• frequent misleading media messages regarding exploitation of  raw materials and geo‐energy  • the role of the national Geological Survey has been bypassed,  resulting in the submission of poorly formulated geoscientific  advice to governments • Geological Surveys can supply them with geoscience data and  knowledge so decisions will be based on the best available  scientific evidence.

Sustainable developments are defined as those that meet present needs without compromising  the ability of future generations to meet their needs. 

Environmental compatibility

Economic  efficiency

Sustainable Exploitation Societal  acceptance

Security  of supply

Monitoring at  industry  fracking sites

Discussions at UBA in  2013, 2014 Included BMBF, BMU,  ExxonMobil, BGR, UFZ and GFZ

Shallow horizons being studied

Status – honest brokers and  industry await the next step • Potential leakage – deep to shallow • Potential contamination by  leachates (metals and organics) • Induced seismicity (Statoil)

www.shale-gas-information-platform.org

Wrap Up ‐ Germany • Shale resource plays are still at a very early stage of  development in Germany; • GIP is significant and represents a national resource that can help ensure security of supply; • BUT each shale resource system is unique, and must be tested to determine the efficiency of extraction; • We are well equipped to meet these challenges – industry, academia, geological surveys, regulations; • BUT political, environmental and acceptance issues can make or break – Germany is slow in finding a  solution that is in the best national interest, balancing all elements of sustainability.

ROUND TABLE

«EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI ? »

Paris, 15th June 2016 Eloy Alvarez Pelegry Director of the Energy Chair Orkestra-Basque Institute of Competitiveness University of Deusto Member of the Royal Academy of Engineering

EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

INDEX

 Political and legal framework for exploration of unconventional hydrocarbons  Industry activities on exploration permits  Evaluation process of potential resources, current status and results  Civil society acceptance and obstacles  Personal views on the main challenges 2

EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Political and legal framework for exploration of unconventional hydrocarbons

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Political and legal framework for exploration of unconventional hydrocarbons Different processes for exploration permits and administrative authorization • If the area of the permit includes more than one Spanish Autonomous Community, is offshore or includes a portion of sea State level: Administración General del Estado (AGE) • If the whole area of the permit is within an Autonomous Community (AC)  Autonomic level • In principle, it is not necessary to specify if the objective of the exploration permit is conventional or unconventional

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Political and legal framework for exploration of unconventional hydrocarbons Different processes for exploration permits and administrative authorization (1) • There is specific regulation for Hydraulic Fracturing (HF) operations • When applying for the administrative authorization for an exploratory well, a full Environmental Impact Assessment (EIA, Evaluación de Impacto Ambiental Ordinaria) is required since 2013, as well as a positive Environmental Impact Statement (EIS)

(1) A written and detailed description of the Spanish legislation can be seen in the report “Shale Gas: strategic, technical, environmental and regulatory aspects”. Eloy Álvarez Pelegry and Claudia Suárez Díez (http://www.orkestra.deusto.es/es/investigacion/publicaciones). There is also a book in Spanish. Marcial Pons (2016). http://www.orkestra.deusto.es/es/investigacion/publicaciones/libros-informes/otras-colecciones/814-gas5 noconvencional-shale-gas-aspectos-estrategicos-tecnicos-medioambientales-regulatorios

EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Political and legal framework for exploration of unconventional hydrocarbons Hydrocarbons legislation 1958

1958: legal regime for Oil and Gas exploration

1974

Act 21/1974 (RD 2362/1976)

1998

Hydrocarbons Act 34/1998 • Title II: includes the liberalization of the oil and gas sector Note: the Acts in bold are in force today

2007

Act 12/2007 • Adaptation of the 34/1998 Act to the directive 2003/55/CE on common regulation of internal gas markets

2015

Act 8/2015. • New taxes and incentives for local communities for conventional and unconventional projects • Regulation of the organized gas market

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Political and legal framework for exploration of unconventional hydrocarbons Historical evolution of the hydrocarbons legislation 1958

1974

1998

For 24 years, there were no modifications in basic hydrocarbons legislation

In 40 years, there were just two Acts regarding hydrocarbons exploration and production

Liberalization Definition of the administrative process, liberalization of the oil and gas sector

2007

Directive 2003/55/CE on common regulation of internal gas markets

2015

Introduction of the new fiscal regime of E&P and definition of the organized gas market 7

EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Political and legal framework for exploration of unconventional hydrocarbons Basic Environmental Regulation Environmental report (memoria ambiental)

2008

RD-Act 1/2008: the Environmental Impact Assessment of projects Act • Hydrocarbons projects were not subject to a full Environmental Impact Assessment (EIA). [Appendix II, simplified EIA]

2010

Act 6/2010 • Definition of the process to get the Environmental Impact Statement (EIS)

EIA + positive EIS

2013

Act 17/2013 (Amended 1/2008) • Hydraulic Fracturing (HF) projects subject to full EIA process (ordinaria). • A positive EIS is required to get the administrative authorization

Act 21/2013 • A simplified EIA can be applied for seismic works and onshore drilling (without HF). • In this case, the environmental body opens a consultation period of the project to a group of 20-25 agents which evaluate the documents and may decide: to grant, not to grant or restart the project by the full EIA process

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Political and legal framework for exploration of unconventional hydrocarbons Exploration authorization, exploration permit and exploitation concession Preliminary exploration

Exploration phase

Production

Administrative Process

Exploration authorization (Autorización de exploración)

Exploration permit (Permiso de investigación)

Exploitation concession (Concesión de explotación)

Duration

1 year, renewable for another one (with the 50% of Surface reduction)

6 years, renewable for an additional 3- 30 years, renewable for two year period (50% of Surface reduction) additional 10-year periods

Works and activities

Geologic prospection, Surface geochemistry, Geophysical methods and shallow drilling (300m)… production wells…

Required documentation

-

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Legal, financial and technical capacity Extension of the exploration permit (geographic coordinates). Exploration plan (Works program, investment plan, environmental protections methods and restoration plan). Environmental Impact Assessment in case of drilling Guarantee accreditation

-

Work program Investment budget Economic-financial study Guarantee long-term viability Annual work program Abandonment and restoration plan

Álvarez Pelegry, Eloy & Suárez Diez, Claudia (2016). Gas no convencional: shale gas. Aspectos estratégicos, técnicos, medioambientales y regulatorios.

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Political and legal framework for exploration of unconventional hydrocarbons From the exploration permit to the administrative authorization1

Time (months)

1. Application for a drilling permit to the Ministry of Industry, Energy and Tourism (MINETUR), submitting an EIA for a well. Two processes (full –for HF or onshore wells- or simplified –for conventional2) 2. MINETUR sends the file to the Ministry of Agriculture, Food and Environment (MAGRAMA) for the definition of the scope of the EIA (ordinary process)(3 months) 3. Elaboration of the environmental impacts study by the Operator of the permit (18 + 9 months of possible extension) 4. Submission of the Environmental Impact Assessment (EIA) to MINETUR 5. The EIA is published in the Official Gazette of the State and the Autonomous Community, as well as in the local Gazette. 6. Time for receiving allegations from stakeholders (30-45 days) 1The process described here is mainly referred to AGE projects 2.In some cases, conventional projects also need a full EIA

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Political and legal framework for exploration of unconventional hydrocarbons From the exploration permit to the administrative authorization

7. The operator prepares a report replying to allegations (possible modification of EIA) and sends it to MINETUR. MINETUR sends it to MAGRAMA. 8. MAGRAMA has 4 months (+2 months of possible extension) to evaluate all the allegations and prepare the Environmental Impact Statement (EIS). 9. The EIS has to be signed by the Secretary of the State in the Ministry of Environment. 10.MAGRAMA sends the EIS to MINETUR. 11.No higher appeal is possible against the result of the Environmental Impact Statement. The positive EIS loses its validity after 4 years if no activity is carried out 12.If EIS is positive, MINETUR should grant the Administrative Authorization (to perform an exploratory well) Time (months) Time (months)

26 (3 + 18 + 1 + 4) 37,5 (3 + 27 + 1,5 + 6 )

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Political and legal framework for exploration of unconventional hydrocarbons Key messages (I) • Hydrocarbons projects using HF are subject to a full EIA process since 2013  The time required has increased dramatically • The schedule of the EIA process is usually much longer than regulated • High number of allegations (thousands) of different type and nature • A protracted process discourage companies for exploration • The administrative authorization granted is signed at political level 12

EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Political and legal framework for exploration of unconventional hydrocarbons Key messages (II) • After 6 years 50% reduction of the acreage to extend the period of the permit for 3 years. This issue is negative in the unconventional case due to the regional extension of this type of reservoir. Previous execution of the commitment is required. • Normally the timetable is not long enough to develop all the necessary activities to demonstrate reserves (for the delay in the administrative process and for the proper definition of the unconventional reservoir) before the permit expires • For this reason, some companies choose a surface which is often broader than the real target (bearing in mind the 50% of surface reduction)

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Political and legal framework for exploration of unconventional hydrocarbons New Hydrocarbons Act

• Act 8/2015, regulating specific fiscal and non-fiscal measures related to hydrocarbon exploration and production. • New rates on the use of exploratory wells drilled in exploitation concessions and investigation permits and the acquisition of seismic surveys. • Holders of exploitation concessions and exploration permits (permisos de investigación) are required to pay different fees for land use. • Tariff I: annual canon for Ha in the investigation permit (0.076 €/Ha.yr, updated annually) • Tariff II: annual canon for Ha in the exploitation concession (scale for each 5 years) • Tariff III: deep drilling in exploration permits and exploitation concessions (125,000 €/onshore well; 600,000 €/offshore well) • Tariff IV: seismic acquisition in any of the permits (0.3 €/m 2D; 0.0003€/m2 3D) • Fee for the amount of gas extracted (in cubic meters), for which operators will have to install measurement equipment on site. • Annual payment to land owners. Concession holders are required to pay an amount (1%) which will be shared between land owners. 14 • Subsidies for local communities (up to 4%)

EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Industry activities on exploration permits

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Industry activities on exploration permits, Exploration permits in 2012

Permit applied to the State Permit in force at State level Permit applied to the Autonomous Community (AC level) Permit in force in the AC (MINETUR, 2012)

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Industry activities on exploration permits Exploration permits in 2016

• The number of exploration permits has decreased Permit applied to the State Permit in force at State level Permit applied to the Autonomous Community (AC level) Permit in force in the AC (GESSAL, 2016)

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Industry activities on exploration permits Exploration permits in 2016 and Administrative Authorization (AA) Type of Exploration Permit

Conventional + Unconventional

AA for Unconventional wells

Permit for the exploration of hydrocarbons in force at State Level

39

0

Permit for the exploration of hydrocarbons applied to the State

24

0

Permit for the exploration of hydrocarbons in force in the AC

19

0

Permit for the exploration of hydrocarbons applied to the AC

27

0

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Industry activities on exploration permits Exploration permits at State level (1) Exploration Permits in force at State level (Administración General del Estado) Company

Permits for Hydrocarbons Exploration

Frontera Energy Corporation SL

Aquiles, Cronos, Géminis, Libra

SHESA/PETRICHOR/CAMBRIA

Angosto-1, Enara, Mirúa, Usapal, Usoa (Gran Enara)

Petroleum Oil&Gas España SA/RIPSA/PYREENES Energy Spain

Bezana, Bigüenzo

RIPSA

Luena

BNK Sedano Hidrocarburos SLU

Urraca

Exploration permits applied to the State (Administración General del Estado) Company Montero Energy Corporation SL

Permits for Hydrocarbons Exploration Edison, Galileo

(1) Given the legislation, there is no a clear, or unequivocal, identification of conventional/unconventional

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Industry activities on exploration permits Exploration permits in Autonomous Communities (AC) (1) Exploration Permits in force at AC level (Comunidad Autónoma) Company

Permits for Hydrocarbons Exploration

BNK Sedano Hidrocarburos SLU

Sedano

CBM Recursos Energéticos

Boñar-Cistierna*

Pyrinees Energy Spain

Carlota

Hulleras del Norte SA

Morcín 1*

Greenpark Energy España SA

Pisuerga

* CBM

Exploration Permits applied for the AC (Comunidad Autónoma) Company

Permits for Hydrocarbons Exploration

Montero Energy Corporation SL

Aristóteles, Arquímedes, Copérnico, Kepler, Pitágoras, Platón

Exploraciones de Recursos Naturales Geológicos SA

Burgos 5

Heritage Petroleum

Guardo

Compañía Petrolífera de Sedano

Osorno

Trofagas Hidrocarburos SL

Rojas

(1) Given the legislation, there is no a clear, or unequivocal, identification of conventional/unconventional

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Industry activities on exploration permits A more detailed view of some exploration permits

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Industry activities on exploration permits Historical drilling activity in Spain

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Industry activities on exploration permits Wells drilled in Spain since 1959

• Since 1999 there has been practically no activity and, in some years, no wells at all were drilled

Martín , A (2013) en Gas No Convencional: Shale Gas. Alvarez Pelegry, E & Suarez, C. (2016).

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

 Evaluation process of potential resources, current status and results

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Evaluation process of potential resources, current status and results Evaluation of unconventional resources

• At present the evaluation of prospective resources has been carried out by ACIEP, based on the following sedimentary basins (geological domains) - Vasco-Cantábrica (Domain12) - Surpirenaica (Domain 13) - Cuenca de Rioja-Ebro (Domain 14) - Cuenca Ibérica (Domain 16) - Cuenca Bética (Domain 20, 21, 22, 23) - Cuenca del Guadalquivir (Domain 19) - Cadenas Catalanas (Domain 15). - Duero Oriental (Domain 17) - Macizo Hespérico (Domain 24)

Informe ACIEP y Gessal (2013)

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Evaluation process of potential resources, current status and results Shale gas prospective resources Prospective resources GEOLOGICAL DOMAINS

tcf

bcm

Basque-Cantabrian Basin (12)

381

1,084

1

32

Pyrenees (13) Duero Basin (17) Ebro Basin (14) Iberian Chain (16) Catalan Coastal Ranges (15) Guadalquivir Basin (19) Betic Basin (20.21.22.23) Hesperian Massif (24) TOTAL Informe ACIEP y Gessal (2013)

9

3

3

1

3 -

12

70



260 72

95 15

79 -

340



The EIA based its estimate of 8 tcf (68.8 bcm) on only one geologic formation, the Jurassic one, so does not reflect the real Spanish Potential. EIA estimates only assess the shale gas potential whereas ACIEP evaluates all kinds of unconventional gas (shale gas, tight gas and CBM)

1.977

Prospective Resources are accumulations of undiscovered hydrocarbons (oil and gas), but of occurrence estimated from indirect evidence.

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Evaluation process of potential resources, current status and results Prospective resources of shale gas, tight gas and CBM

Informe ACIEP y Gessal (2013)

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Civil society acceptance and obstacles

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Civil society acceptance and obstacles Social movements induced the elaboration of different Acts intending to ban hydraulic fracturing projects in some Autonomous Communities

• In the Spanish Constitution, the State has exclusive competence as based on basis and coordination of the general planning of the economic activity (Art. 149.1.13) and the basis of the energy and mining regime (Art 149.1.25) • Every regional regulation regarding a possibly ban on fracking has been revoked or is under appeal by the Central Government of Spain. No Autonomous Community can regulate hydrocarbons, as this competency belongs to the Central State. For the moment, there is no fracking ban in any part of Spain. • The competence of the state in energy and mining has been a key element for the Constitutional Court to dismiss the different fracking bans in Spain. These bans have been rejected because they infringed both formal and material aspects of the Spanish Constitution.

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Civil society acceptance and obstacles Social movements induced the elaboration of different Acts intending to ban hydraulic fracturing projects in some Autonomous Communities

• Cantabria (Act 1/2013) - “urban infraction” revoked • La Rioja (Act 7/2013) – “administrative environmental infraction”  revoked • Navarra (Act 20/2013) – “urban infraction”  revoked • Catalonia (Act 2/2014) – “urban infraction”  revoked • Basque Country (Act 6/2015) – Caution and prevention principles (it banned hydraulic fracturing in non-building lands where it might have negative effects on geological, environmental, visual or socioeconomic characteristics)  under appeal by the government (and not in force)

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Civil society acceptance and obstacles Key points. A personal opinion (I)

• Ideologically, fossil fuels are not well viewed by the public. Renewables seem to be the only argument for energy in the future. • Technically, the personal view of citizens, as a whole, on hydraulic fracturing is not known. • The environmental groups and other organizations (some based at local level) are against this technique and they have been very active, particularly since 2010-2013. Movements against HF have become more intense since the accident in Fukushima (2011). • The part of civil society in favor of unconventional gas projects does not publically express its opinion. This makes movements against fracking even more visible. 31

EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Civil society acceptance and obstacles Key points. A personal opinion (II)

• Media and politicians in general have endorsed the arguments against shale gas • Some political parties have publically express their opposition to hydraulic fracturing, such as Podemos and PSOE. Ciudadanos has not a clear position and PP, which has been in favor of unconventional projects, has not approved any administrative authorization during the last 4 years of government. In addition, PP is against at local level (in the majority of municipalities and regional governments)

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

 Personal view on the main challenges

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Personal view on the main challenges Main challenges • Not a favorable perception for fossil fuels • Politics focused on renewables and energy efficiency • Relatively low oil & gas prices

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EVALUATION DES RESSOURCES POTENTIELLES D’HYDROCARBURES DE SCHISTE EN EUROPE : OÙ EN EST-ON EN ALLEMAGNE, EN ESPAGNE ET AU ROYAUME-UNI

Personal view on the main challenges Some suggestions

• Define ex-ante the schedule for making decisions • Provide to the responsible people in the Administration with more technical support and with procedures that allow them to decide on technical basis avoiding pressure on social or political grounds • To drill the first unconventional well and show that it is technically and environmentally satisfactory • In the medium run, improve general perception towards hydrocarbons and fossil fuels 35

Merci beaucoup Thank you Muchas gracias

Status of shale gas development in the United Kingdom Dr Nick Riley MBE, C. Geol., FGS Director Carboniferous Ltd. Nottingham. UK [email protected]

Political and legal framework for exploration of unconventional hydrocarbons

Political Framework: Central Government has overall responsibility for policy, but has devolved powers to Scotland, Wales and Northern Ireland. Scotland and Wales have a moratorium on fracking. England does not. Northern Ireland is paralysed by Republican (anti) and Unionist (pro) political polarisation. UK Conservative Government is strongly pro., labour was luke warm before the 2015 election, although Labour’s energy policy is unclear since then – but most probably anti (Jeremy Corbyn wanted to ban fracking, yet re-open coal mines during his Labour leadership election campaign!!). Liberal Democrats are luke warm and their leader (Tim Farron) is against fracking in his own constituency (Westmorland and Lonsdale). UKIP (united Kingdom Independence Party) is pro, The Green Party is anti. UK government devolves planning issues to local government Councils (County, Borough, Parish). Although national party lines are reflected in local government policy – rural constituencies are generally against (even though the electorates in these constituencies generally have high fossil fuel dependency!!). It is important to note that local government has to conform with national planning legislation. Some are not and despite threats by the Conservative government to revoke powers of the Councils who do not comply, the government has not carried this out. Legal Framework: All underground resources belong to The Crown, not the land owner. The Oil & Gas Authority (an Agency of the Department of Energy & Climate Change) has responsibility for oil and gas exploration & production licensing on behalf of The Crown. The OGA issues invitations periodically (rounds) inviting companies to bid for oil & gas licences. There are separate onshore and offshore licence rounds. The 14th Round was the most recent onshore round, with the full set of successful applicants announced on 15th Dec 2015. The Environment Agency has responsibility for Environmental protection (including water supplies) and the Health and Safety Executive for safe operation of exploration and production activities. Local government has responsibililty within local planning regulations regarding impact on local infrastructure and residents. The regulations ensure that the process of hydraulic fracturing can only take place below 1200 metres in specified groundwater areas (source protection zones National Parks, Areas of Outstanding Natural Beauty and World Heritage Sites. https:/www.gov.uk/government/organisations/oil-and-gas-authority

Evaluation Process of potential resources, current status & results. The British Geological Survey was commissioned by UK government (Department of Energy & Climate Change -DECC) to assess shale gas/oil resources In 4 UK regions. Northern & Central England: Bowland-Hodder interval was published in July 2013. Central estimate of gas in place of 1329 tcf (shale oil present but not assessed in study terms of reference) https://www.gov.uk/government/publications/bowland-shale-gas-study

South East England: A report on the Jurassic shale gas/shale oil of Weald Basin was released in May 2014– “A reasonable central estimate is 4.4 billion barrels of oil in place (591 million tonnes)”. No significant unconventional gas https://www.gov.uk/government/publications/bgs-weald-basin-jurassic-shale-reports

Scotland: Carboniferous shale gas/oil of the Midland Valley of Scotland was published in June 2014. It gave central estimates of 80.3 tcf of gas in place and 6.0 billion barrels of oil in place (793 million tonnes) https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/324541/BGS_DECC_MVS_2014_MAIN_REPORT.pdf

Wales: BGS Resource report published June 2014 http://gov.wales/docs/desh/publications/140626energy-study-of-potential-unconventional-gas-resource-in-wales.pdf . (not able to give assessment due to lack of data) Shale gas and coal bed methane research report published by the Welsh Assembly, March 2015 http://www.assembly.wales/research%20documents/15-013%20-%20gas/15-013.pdf

UK gas consumption per annum is @ 3tcf of which @1.5tcf is imported

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BGS MAP OF UNDERGROUND GAS STORAGE SITES 5

Industry activities on exploration permits, including seismic, drilling, and fracking operations (records and planned activities) Companies with 13th Round onshore blocks have acquired seismic (2D & 3D) and drilled stratigraphic boreholes to appraise shale in Northern England. Only one company, Cuadrilla, attempted a vertical frack test, which led to induced seismic events one of which was felt at surface (2.3ML but no damage) in early 2011. A voluntary suspension of fracking operations was put in place until a “traffic light system” for mitigating induced seismic risk was adopted. See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/15745/5075-preese-hall-shale-gas-fracturingreview.pdf In 2014 Cuadrilla was awarded permits to frack test at 2 exploration sites in NW England. However planning permission for exploration drilling was refused by local government (not on any geotechnical issues) and a 6 week appeal hearing was conducted in 2016 chair by the Planning Inspector. The Government has said it will take note of the Inspector’s recommendations, but reserves the right to make its own decision on whether the exploration wells should proceed. No decision is expected before the UK EU Referendum. In May 2016 Third Energy was given planning permission to conduct frack tests on an existing well at Kirkby Misperton. These tests are expected to be carried out next winter. Other operators have submitted planning applications for seismic and drilling are also being considered/submitted in the East Midlands. On 17 December 2015, the Oil & Gas Authority (OGA) announced that licences for a total of 159 blocks were formally offered to successful applicants under the 14th Onshore Oil and Gas Licensing Round. Aurora has recently applied for planning permission to shoot 3D seismic in NW England over parts of its newly acquired acreage. Many companies have seismic acquisition and drilling commitments as part of their 14th Round obligations, but because of the cuts in exploration budgets, due to the recent fall in oil prices, some of these companies may have difficulty meeting these commitments, quite apart from the delays & associated costs in getting planning approval from local government faced with public opposition.

Civil society acceptance and obstacles

• Very effective and deliberate misinformation campaign by national & international activists has induced fear & anxiety in local communities & set up “frack free” local activist groups. • There are legitimate concerns in local communities – these are mainly around traffic, noise, light pollution, dust, smells and impact on wildlife– all of which are controlled by strict local planning regulations. • Deep mistrust of Government, especially Central Government and its agencies (on many more issues, not just oil & gas exploration) • Deep mistrust of oil & gas companies; in fact, big business generally. • Over-optimism that renewables are the only answer (e.g. all UK electricity generation by the 2030’s to be renewable) and that all renewables are harmless, zero emission, democratic and will not industrialise the country side. Very poor knowledge of how complex national energy infrastructure is and the continuing need for gas, not just for heat and electricity, but also as a feed stock for fertilisers, and petrochemical/household products.

Images from the Fylde courtesy of Rev. Michael Roberts 8 https://michaelroberts4004.wordpress.com/2014/11/24/has-the-fylde-gone-fcking-bonkers/

Site of Whitmoor 1 exploration well, at Caton Moor which penetrated the Hodder/Bowland shale interval. Note which technology is industrialising the landscape.

9

Timetable and possible outcome It is vital that companies are allowed to explore and test. The questions are how many frack tests will be statistically significant? How long will it take to get the planning permissions?? The biggest risk is political. The outcome of the UK’s referendum in June 2016 may force a general election, which if the Conservatives lost, would almost certainly mean withdrawal of central government support. Offshore exploration/production of shale gas is unlikely to proceed until the onshore reservoirs have been successfully tested.

Personal views on the main challenges • In my view if you are prepared to use hydrocarbons, then ethically, you should be prepared to have them produced in your own country, even locally where you live! • Even if central government support continues, local planning authorities could still be the gate keeper as to whether exploration is allowed. Unless Central Government gets a grip and makes local planning authorities concentrate only on the issues to which they have powers under national planning regulations and come decisions in a timely manner, then long planning delays will continue! • The misinformation campaign from activists needs to be addressed. Where campaigns are in breach of the law and/or publish deliberately deceptive articles/leaflets & media statements they should be challenged in a way that is accessible, evidence-based & clear to the general public. • Operators need to be especially careful not to breach permits and planning consents, as even minor infringements will be used by activists to inflict maximum reputational damage. • As drilling and testing permissions are so hard to acquire it is vital that the very best sites are chosen for exploration & testing. Share risk through collaboration and knowledge sharing and conduct the very best standards of geotechnical testing. • If the industry moves to production then seek opportunites to design & future proof projects that enhance and hybridise with renewables, not just during gas production, but also post production/abandonment. • There is a real danger that campaigners will create so much unwarranted mistrust in our ability to engineer the underground, that underground energy storage infrastructure, which will be vital for a renewables dominated electricity system, will be delayed or even impossible to deploy.

Personal views & main challenges (continued) http://www.cbc.ca/news/canada/edmonton/sask-co2-leaks-raise-questions-inalberta-1.1040629

BASELINE MONITORING IS ESSENTIAL! Reporting on (false) allegations of animal deaths being caused by deep geological gas leakage to farmland from a CO2 injection project at Weyburn Canada, the National Resources Defense Council (NRDC) commented that “Two separate investigations have found no evidence to suggest that CO2 is leaking from the Weyburn-Midale CO2-EOR field in Saskatchewan, Canada. In January of last year the Kerr family, who owns property near the Weyburn field, feared that their groundwater and soil had been contaminated by CO2 leaking from the EOR project.” “This incident is a lesson for future project developers. It reinforces the importance of site characterization, collection of baseline data, robust monitoring, and having in place a plan to address possible leakage. As was done at Weyburn, the right way to address concerns about the performance of geologic sequestration projects is to face them head on with thorough scientific investigation and analysis and we commend these organizations for undertaking this effort.” January 12, 2012 https://www.nrdc.org/experts/briana-mordick/investigations-find-no-evidence-leaksweyburn

The UK Carboniferous Hydrocarbon System

Surface oil seep sourced from BowlandHodder shales in the Peak District National Park & probably known since at least Bronze Age times.

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The Environment and Health Atlas for England and Wales informs researchers, policy-makers and the public on the geographic patterns of disease and potential exposure to various environmental agents. It has been developed to assist in developing hypotheses and research into the reasons for variability in disease risk that may relate to environmental agents. It is essential reading for public health professionals and academics from within the fields of public health, epidemiology, health geography and statistics. http://www.envhealthatlas.co.uk/homepage/book.html

BASELINE. Atlas prepared from National Health Service data at Parish (ward) level, accumulated over a 20 year period!! Always test negative health impact claims regarding shale gas by asking: • Was there a baseline? • On what data/evidence are such claims made & by whom? • How was the data analysed? • What other factors may have caused the alleged negative health impacts? 14

What is certain is that it is often difficult to communicate acceptable levels of risk & uncertainty in a digital age that has spawned “environmental democracy”

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