Shale Free for All? Trends in International Shale Regulations

DSC_0969By Brian Greenert, GIELR Staff

Although the US and Canada are the only countries currently producing shale oil and gas in commercial quantities, several other nations are implementing plans to develop nonconventional oil and gas. Global shale resources could increase worldwide crude oil reserves by 11% and natural gas reserves by 47%. Countries with relatively large and potentially attractive shale basins such as the United Kingdom, Poland, and Australia are developing a diverse set of regulatory frameworks. Additionally, the European Union has taken steps to implement a regional regulatory program.

Rising concern over the environmental and health impacts exploration, production, and transfer of shale oil and gas present has spurred international shale regulations. Perhaps the most significant concern is the risk of releasing methane, which traps harmful greenhouse gases in the atmosphere. Additionally, regulators are concerned about groundwater contamination, both through the release of chemicals through leaky wells and from surface activity, and worsening air pollution through increased industrial activity to produce and supply shale oil and gas. Finally, hydraulic fracturing (HF) may also cause hazardous seismic activity.

Most shale regulations reside at the individual state level. Poland, which has the most shale wells of any European Union nation, recently proposed HF regulations that would enable increased shale development. The United Kingdom is also cautiously pursuing shale development and recently lifted a moratorium on HF and implemented new controls to study and mitigate the potential impacts of methane release and seismic incidents.  A more unique example of state level regulation is in Australia, where the federal government has taken a backseat to individual state regulatory programs. Western Australia requires more transparency from industry in disclosing chemicals used in HF, while South Australia is less burdensome. Canada has similar diversity in its state approaches, with Alberta and western provinces having a more robust suite of regulations than the eastern provinces. Quebec currently has a moratorium on HF activities.

While states have tailored their regulations to individual circumstances, the European Union has played an increasingly proactive role regulating regionally. The European Commission (EC), the executive body of the EU, is currently working on a framework to promote safe extraction in the region. Although we do not know what level of regulation the framework will entail, recent reports produced by the EC suggest that more stringent regulation of HF is on the way. The reports identified some potential gaps in current EU environmental legislation. One such gap allows potentially harmful shale exploration projects to proceed without an Environmental Impact Assessment (EIA) because the small project size does not meet the current EC Directive’s threshold. The European Parliament is now considering amendments to the EC Directive that would require an EIA for all nonconventional gas projects.

With the current state of international hydraulic fracturing legislation in flux, regional and state regulatory bodies will be looking to one another to determine the way ahead. However, the pace of development in different states will also depend on each state’s volume of shale resources, the economic feasibility of extraction and production, and the political appetite to deal with potentially harmful environmental and health impacts.

One response to “Shale Free for All? Trends in International Shale Regulations

  1. Pingback: Anton’s Weekly International Law Digest, Vol. 4, No. 12 (29 October 2013) | Anton's Weekly International Law Digest·

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