Increased Climate and Energy Targets bring challenges, despite EU Shale Gas Proposal

Phil Black - PII Editor 23/01/2014

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Today’s European Commission proposals on shale gas are a step in the right direction, but the inclusion of a double, binding target in the 2030 climate and energy policy raises some concerns.

The International Association of Oil & Gas Producers (OGP) is encouraged by the fact that the Communication and the Recommendation on shale gas recognise that an array of binding legislation – in the European Union and in member countries – already applies to shale operations. The documents identify many risks – which the industry has already been managing over its decades-long experience of hydraulic fracturing – but also acknowledges the economic benefits that shale gas development could bring to Europe.

However, the implementation of the Communication and the Recommendation should take into account the operational reality of shale gas operations. Exploratory wells will be necessary to assess many of the very parameters mentioned in the Recommendation. Before exploration, limited data are available on the geology of the rocks, the volume of gas present and the amount of water needed.

“Supporting the exploration of natural gas from shale is ever more topical on the day the EU Commission releases its long-term climate and energy policy,” said Roland Festor, OGP’s EU Affairs Director. “Gas is the best resource Europe has – reliable and immediately available – to help meet EU emission reduction targets quickly and at a competitive cost versus alternatives,” he explained.

“Shale gas can be developed in Europe respecting the environment within the current legislation,” Mr. Festor added. “This is a real opportunity: recent research showed that domestic EU development could create as many as 1.1 million jobs by 2050, while reducing the region’s dependence on energy imports and relatively lowering prices,” he said.

OGP is however concerned by the proposal of adopting two binding targets as part of the EU 2030 climate and energy policy. A single, clear greenhouse gas emissions reduction target is the best way to limit Europe’s impact on climate change in a cost-effective and market-efficient way.

Some useful tools about what the oil and gas industry has been doing on shale gas:

– NGSFACTS.org: this is the website on which OGP member companies voluntarily disclose data about the chemical products they use in their shale gas operations in Europe. This is where anyone can find the details about the chemicals, the water and the sand that’s used in a specific well.

– Poyry Study on The macroeconomic effects of European shale gas production: this is the first comprehensive study that has substantiated with numbers the fact that developing shale gas in the EU would benefit the economy and its citizens. According to the study, shale gas production in the EU28 could add as many as one million jobs to the economy by 2050. It could also reduce dependence on gas imports to as little as 62% from an otherwise predicted 89% of demand in 2035. Indigenous gas production could also relatively reduce energy prices and make industry more competitive.

– Industry good practices: The good practice guidelines for the development of shale oil and gas include a set of global principles for operations. These guidelines provide stakeholders with an overview of how the oil and gas industry manages the risks associated with its operations.

All are available from the shale gas pages of www.ogp.org.uk