Britain may change shale gas laws after projects blocked

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* British PM Cameron says still wants shale gas to go ahead

* Government, industry have met to discuss shale gas

* Cuadrilla considering appeal against permit rejections (Adds government comment)

By Karolin Schaps and Susanna Twidale

LONDON, July 15 (Reuters) – Pressure is mounting on Britain’s pro-shale government to make changes to the planning system after local politicians rejected two projects that could have become Britain’s first shale gas producing wells.

Prime Minister David Cameron, who has promised to go “all out for shale”, said he respected the planning process but still wanted shale gas to go ahead.

His quest to replicate at least a small slice of the United States’ success in bringing down energy prices with the help of shale gas is now looking bleaker than ever. In order to save his dream, Cameron has to reform the planning system to give the government the final say in approving new projects, legal experts and industry representatives said.

Discussions have already taken place between the government and shale gas developers in which industry representatives have urged politicians to adjust policies, industry sources said.

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“Government just needs to step up. They can’t sit back and say ‘we support this industry’ but have a process in place which is clearly not working,” said David Messina, managing director of Hutton Energy, an oil and gas explorer that has submitted bids for new shale gas licences in Britain.

A spokesman for the Department for Communities and Local Government said the government was looking to make improvements to the planning system, such as simplifying rules for exploratory boreholes to analyse groundwater levels.

A small group of local government politicians in a town near Blackpool on England’s northwest coast stunned the energy industry late last month when they refused planning permission for a Cuadrilla Resources shale gas project, ignoring legal and technical advice.

“This is clearly a very important decision and a major setback for the shale industry,” said Michael Pocock, planning lawyer at law firm Pinsent Masons.

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Only one shale gas well in Britain has been hydraulically fractured, also referred to as fracking, and was later abandoned. Since then, only three shale gas fracking applications have been made, two by Cuadrilla, which have now been refused, and one by energy company Third Energy.

In contrast, 45,000 shale oil and gas wells were drilled in the United States in 2013 alone, according to the American Petroleum Institute.

Fracking has drawn vocal opposition in Britain from anti-fossil fuel campaigners and local residents, some protesting against the environmental threats posed by fracking fluids and others against the prospect of their house prices sliding.

The councillors rejected Cuadrilla’s applications on the grounds of the projects’ visual and traffic impact.

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Cuadrilla can now appeal against the decisions, a process that would take at least eight months, according to a planning lawyer, but which could ultimately mean the permit is approved because the central government could intervene. Cuadrilla said it was still considering how to proceed.

For the long term, Cameron has a number of options that could remove the hurdles which have so far stood in the way, including giving shale gas a special status that would let the government grant planning consents.

His decision to push forward shale gas development stands in contrast to opposition in other European countries, such as Germany, France and the Netherlands whose governments have banned the use of fracking technology, at least temporarily.

'Fracking zone. Be prepared for anything.'

Planning approvals for a number of so-called nationally significant energy infrastructure projects, including nuclear power plants, airports or water supply sites, are given directly by the central government, but shale gas does not currently belong in this category.

Shale gas developers are desperate for a change to those rules, fearing if nothing changes their projects are seriously jeopardised.

“If the government genuinely perceives it (shale gas) as strategically important energy resource, they need to make the planning process more efficient,” said Jim Ratcliffe, Chairman of Swiss chemicals company INEOS that has pledged to invest $1 billion in British shale gas development.

(Additional reporting by Chen Aizhu in Qidong, China, editing by David Evans)

 

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China says more than half of its groundwater is polluted

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Nearly 60% of China’s underground water is polluted, state media has reported, underscoring the severity of the country’s environmental woes.

The country’s land and resources ministry found that among 4,778 testing spots in 203 cities, 44% had “relatively poor” underground water quality; the groundwater in another 15.7% tested as “very poor”.

Water quality improved year-on-year at 647 spots, and worsened in 754 spots, the ministry said.

“According to China’s underground water standards, water of relatively poor quality can only be used for drinking after proper treatment. Water of very poor quality cannot be used as source of drinking water,” said an article in the official newswire Xinhua, which reported the figures on Tuesday.

The Chinese government is only now beginning to address the noxious environmental effects of its long-held growth-at-all-costs development model. While authorities have become more transparent about air quality data within the past year, information about water and soil pollution in many places remains relatively well-guarded.

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Xinhua reported last year that about one-third of China’s water resources are groundwater-based, and that only 3% of the country’s urban groundwater can be classified as “clean”. A land ministry report from last year said that 70% of groundwater in the north China plain – a 400,000 sq km swath of some of the world’s most densely-populated
land – is unfit for human touch.

“The situation is quite serious — groundwater is important source for water use, including drinking water, and if it gets contaminated, it’s very costly and difficult to clean,” said Ma Jun, director of the Beijing-based Institute of Public and Environmental Affairs.

“But still I consider this disclosure a positive move – greater
awareness can help people prevent exposure to health risks, and eventually, motivate society to try and tackle this serious problem.”

Few Chinese urban dwellers consider tap water safe to drink – most either boil their water or buy it bottled. Earlier this month, a chemical spill poisoned the water supply of Lanzhou – a city of 2 million people in China’s north-west – with the carcinogen benzene, causing a panicked run on bottled drinks.

Last week, China’s land ministry released some statistics from a nationwide soil survey, which was previously classified as a state secret. The ministry found that 16% of sites tested over a nine-year period were polluted, some with cadmium, mercury and arsenic. China’s “overall national soil environment” is “not optimistic,” the report
concluded
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While Beijing’s noxious smog has become internationally infamous, drought and water pollution may pose even greater existential threats to the city. Beijing’s annual per capita water availability is about 120 cubic metres, about one-fifth of the UN’s cut-off line for “absolute scarcity”.

Last week, state media reported plans for a seaside desalinisation plant to provide one-third of Beijing’s tap water by 2019. The state-run Beijing Enterprises Water Group will spend 7bn yuan (£667bn) building the plant in neighbouring Hebei province’s Tangshan city, more than 200 km from the capital.

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Kevin Hollinrake MP calls for ‘buffer zones’ for fracking oh dear, wheres Lord Howell?

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A newly-elected Conservative MP in North Yorkshire has called for a six mile “buffer zone” around fracking sites to stop the countryside become industrialised.

Kevin Hollinrake’s constituency of Thirsk and Malton contains potential fracking sites which are being considered for approval.

Speaking in a Westminster Hall debate, Hollinrake said: Traditionally, the fracking process involves a high number of lorry movements and unsightly infrastructure that could be a real blot on the landscape.

I propose clear planning guidance that there must be buffer zones, with a minimum distance between sites of, say, six miles. We do not want the images of a fracked industrial landscape from North Dakota to become a reality here.”

Hollinrake asserted that he is “keeping an open mind” about fracking in his constituency and supports the industry “in principle” and described shale gas as “a great opportunity”.

I think we have one chance of doing this and I would like to see it done right, with the proper protections in place,” he said.

A spokesperson for the Department of Energy and Climate Change said: “The Government does not believe there is a need to set a fixed ‘buffer zone’ between oil and gas developments.

Each development will be determined by local planning authorities on a case-by-case basis, and any separation distance can be set through planning conditions.”

The UKOOG, said: “The industry looks at each site on its merits including geography, topography and geology, a rigorous evidence based approach is employed. There is no scientific evidence to support buffer zones.”

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US overtakes Russia as largest combined hydrocarbon producer (2015)

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The US has overtaken Russia as the world’s largest oil and natural gas producer, as US oil production rose to record levels, according to BP’s Statistical Review of World Energy report.

Commenting on a rise in daily US oil production of 1.6 million barrels per day in the last year, BP chief economist Spencer Dale said: “We are truly witnessing a changing of the guard of global energy suppliers the implications of the shale revolution for the US are profound.”

The effects of the shale boom on the economy have been significant as the country produced 90% of the energy that it consumed in the last year.

In addition according to BP’s data, imports of energy equated to 1% of GDP compared to half of the 5% account deficit of GDP prior to the financial crisis in 2007 and onset of the shale boom.

The shale industry invested and spent around $120 billion, which is more than double from the turn of the decade and despite slashing the number of operations in the wake of an oil price crash, production has continued to climb into 2015.

BP chief executive officer Bob Dudley forecast that the lowered oil and gas prices will mean that some producers look to shut in “frothy activity” at their operations but added that most projects are operational at current prices.

Dudley suggested that the number of US shale rigs will stabilise by the end of the summer.

The shale revolution hasn’t run out of steam in the US,” he asserted.

To demonstrate the magnitude of the growth in the shale industry, BP said that the increase in US oil output is the first time that a country has raised production by over 1 million barrels per day for three consecutive years.

UK Shale: Fracker Barons need to cut councils & citizens into the profits…..Tim Yeo & Ben Wallace have said…allegedly…

Tim YeoAt the two-day ‘2nd Annual UK Shale Summit: Making it Happen’ event kicked off in July 2013 at the Lancaster London Hotel. Douglas Bain, director at Dart Energy was the first to speak. He gave a rundown of the company’s licences in the Bowland Shale, which he said was the UK’s most prospective shale play: thick shales, good gas and flow rates demonstrated. He said the Western region is the most active and Dart has one of the largest acreage positions there. The Eastern region does not show as much potential but there are indications of hydrocarbon potential and both dry and liquid rick shale gas may possibly be extracted.

The theme of the morning seemed to be how to get local authorities and communities on board with shale development in the country and Bain too touched upon this. He said that the most common questions that the industry must always be prepared to answer are: Is it safe? Do we need gas? Do we need to get it from ‘here’?

He believes it is very important to win over public acceptance and as stakeholders can turn very quickly if there is even a shred of doubt in their mind, there must be easily accessible, transparent and honest data regarding factors like air quality, noise and traffic management plans – issues that citizens will care about.

He concluded by saying that the UK government has been very supportive, and hoped that this would only get better. He admitted that there are always cynical people in society that will assume the worst, and so the industry will have to work hard to get them on board.

Next up was Tim Yeo, chair of the energy and climate change committee in the UK Parliament. He described the event as ‘timely’ and ‘topical’ (just last month the British Geological Survey (BGS) said that the country’s shale gas resources are estimated to be 1329 trillion cubic feet). His reasons to develop shale gas are to reduce dependency on imports and to keep gas prices down.

However, he said that unlocking shale potential would be a slow and difficult process because of the UK’s strong tradition of protecting its environment. There is a near certainty, he believed, of strong opposition based on environmental concerns even though this may “sometimes border on being completely irrational”.

The way to win over local communities would be to make them direct beneficiaries. While he personally felt that 25% of revenues going to land owners would be a great method and a model used in the US, he said its implementation would not be likely, there are other ways of going about it, such as offering to freeze energy bills. Something dramatic is needed, said Yeo, not just for local councils but individuals too.

He also spoke about the importance of having a low carbon element as part of the UK’s energy mix.

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Following him was Ben Wallace MP, who started off by giving a disclaimer that he is open minded about shale and not an enemy, but wanted to warn the industry that the role that will be played by local communities in any shale development plan is very important.

He said that the promise of more jobs, an oft-used rhetoric, will not work in his constituency, where unemployment rates are ‘enviably’ low.

He emphasised that when it comes to planning decisions, it is the local councils and not the central government that is in charge and it is the local councils that need to be won over. In his opinion, councils do not yet know where they stand on the issue, nor do local communities.

Trust, he thinks, is the most importance factor in this. The industry must make sure that government enthusiasm for shale is not seen as simply a way of enriching the Treasury. Moreover, he reiterated what Yeo said about local individuals directly experiencing benefits and feeling some kind of ownership towards the process.

He warned against ‘gimmicks’ that may come off as ‘shoddy bribes’ but something sustainable. He also recommended that companies invest in universities to teach students shale-related skill sets, that could in the future be a useful export when shale gas is developed around Europe.

He said that by demonstrating the real benefits of shale, and by telling people the success stories of places like Texas and North Dakota , where local economies are booming thanks to shale, companies could get communities on board. Moreover, they must strive to understand the complexities of these communities, what their concerns are and what they are thinking. He gave the example of a CEO who managed to turn an entire town hall against him because he had the wrong attitude.

He pointed out that local politics often trumps national issues and said that if the industry keeps these points in mind, and myths are countered and taken on, then “shale gas has a future”.

Fracking site in UK suffered “loss of wellbore integrity” ‘allegedly’……

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According to reports and information gained under the UK Freedom of Information Act it appears that one of Cuadrilla’s initial drilling sites in the UK suffered a previously unreported structural failure.

The damage has been described by engineers as a possible “loss of wellbore integrity”, this can result in a leaking of fluid or gases from shale extraction and cause possible environmental or public health hazards.

The allegations originate from emails between Cuadrilla and the Health and Safety Executive (HSE) which suggest that the site at Preese Hall, Lancashire, suffered structural damage.

The news has caused environmental and safety concerns regarding fracking, although there is no indication that any gases escaped from the well into the air or surrounding rocks.

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Cuadrilla has made no admission of such damage but Anthony Ingraffea, Professor of Engineering at Cornell University, said “it is quite apparent… that there was indeed a loss of wellbore integrity followed by attempts to remediate.”

But clarified that the blanket term covers a multitude of incidents of varying severity and as such “there are so many factors to consider” when reviewing the impact of a loss of well integrity.

The well itself was abandoned by Cuadrilla in December 2013, a HSE spokesperson asserted that “the issue has been resolved during the abandonment process” and that there had been “no leak of fluids” but that the site would be continued to be monitored for any potential concerns.

Caroline Lucas an MP for the Green Party said, “these new revelations cast serious doubt upon their [the government’s] assurances.

Ministers claim that the serious leaks of gas and fracking fluid that have blighted the industry in the USA couldn’t happen here because of strong regulation. But now it seems that, before fracking has even started in a meaningful way… independent experts are saying that well integrity has been breached… the only safe and responsible thing to do with shale gas is to leave it in the ground.”

However, a spokesperson for Cuadrilla stated that “the well integrity at Preese Hall is secure and always has been…

Shale Energy Insider 2014

 

Fracking & Litigation – money talks, bullshit walks?

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June 6 (Bloomberg) — Chris and Stephanie Hallowich were sure drilling for natural gas near their Pennsylvania home was to blame for the headaches, burning eyes and sore throats they suffered after the work began.

The companies insisted hydraulic fracturing — the technique they used to free underground gas — wasn’t the cause. Nevertheless, in 2011, a year after the family sued, Range Resources Corp. and two other companies agreed to a $750,000 settlement. In order to collect, the Hallowiches promised not to tell anyone, according to court filings.

The Hallowiches aren’t alone. In cases from Wyoming to Arkansas, Pennsylvania to Texas, drillers have agreed to cash settlements or property buyouts with people who say hydraulic fracturing, also known as fracking, ruined their water, according to a review by Bloomberg News of hundreds of regulatory and legal filings. In most cases homeowners must agree to keep quiet.

 The strategy keeps data from regulators, policymakers, the news media and health researchers, and makes it difficult to challenge the industry’s claim that fracking has never tainted anyone’s water.

“At this point they feel they can get out of this litigation relatively cheaply,” Marc Bern, an attorney with Napoli Bern Ripka Sholnik LLP in New York who has negotiated about 30 settlements on behalf of homeowners, said in an interview. “Virtually on all of our settlements where they paid money they have requested and demanded that there be confidentiality.”

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Energy Transformation

Because the agreements are almost always shrouded by non-disclosure pacts — a judge ordered the Hallowich case unsealed after media requests — no one can say for sure how many there are. Some stem from lawsuits, while others result from complaints against the drillers or with regulators that never end up in court.

“We are transforming our energy infrastructure in this country from burning coal for electricity to potentially burning a lot of natural gas,” Aaron Bernstein, associate director of the Center for Health and the Global Environment at the Harvard School of Public Health, said in an interview. Non-disclosure agreements “have interfered with the ability of scientists and public health experts to understand what is at stake here.”

Gas Alliance

“The practice is common in every type of litigation in every industry,” Dan Whitten, spokesman for America’s Natural Gas Alliance, a Washington-based industry group, said in an e-mail. “It is often the case that it is less burdensome to settle — even on claims that have no merit — than to go into a protracted court battle.”

One driller, Southwestern Energy Co. of Houston, said it agreed to settle a class-action complaint of water contamination in Arkansas last year only if the agreement remained open so there would be no suspicion.

“If we had a confidentiality agreement, everybody would have thought ‘oh gosh, what did Southwestern do here. They got away with something and just paid these guys a pittance,’” said Mark Boling, Southwestern’s general counsel. The $600,000 the company paid three families was a fraction of what the legal fees would have been to see the case through, he said.

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Legal Threat

Another driller, Encana Corp. of Calgary, took a different approach, threatening legal action to keep details of a case out of view of the Colorado Oil and Gas Conservation Commission.

Laura Amos believed gas drilling near her home in Silt, Colorado, about 160 miles (257 kilometers) west of Denver, was to blame for a tumor she developed. Encana, which owns the well, disagreed that fracking made her sick. Yet the company bought her 30-acre property in 2006 for $310,000, according to public records.

Amos’ complaint and the existence, though not details, of a settlement and non-disclosure pact were disclosed in filings with the oil and gas commission. In December, the agency subpoenaed Amos to testify about a rule it was considering to require water tests. Matt Sura, an environmental attorney in Boulder, Colorado, who represented conservation groups that were seeking Amos’ testimony, said an Encana attorney told him the company would sue Amos if she talked. She didn’t want to face a lawsuit from Encana and Sura said he asked the commission to withdraw the subpoena.

‘Relevant Testimony’

“She had really relevant testimony,” Sura said in an interview. “Because they’ve bought everyone’s silence, they often state that they haven’t damaged anyone.”

In filings with the commission, Amos said gas drilling on a neighbor’s property in 2001 caused her water well to blow out “like a geyser at Yellowstone.” Two years later she said she developed health problems that her doctors could not explain and she believes were related to the drilling.

The commission had concluded that Encana was responsible for methane in Amos’s well, though it said it found no evidence of fracking fluids in her water. Encana disputed the finding yet agreed to a $99,400 fine and to monitor the well until methane levels dropped.

“Encana settled the Amos case as it had been an issue a predecessor company had been working with since 2001 and rather than continue with a lengthy and costly process, Encana decided to settle,” said Jay Averill, a spokesman for Encana, in an e-mail. He didn’t respond to a question about why the company sought to keep Amos from testifying to the commission.

Amos declined to comment on any aspect of the case when contacted by telephone.

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Horizontal Drilling

“Why are they settling all these cases?” Deborah Goldberg, managing attorney with the environment group Earthjustice, said in an interview. “There’s obviously information that they don’t want to get out there.”

Michael Gerrard, director of the Center for Climate Change Law at Columbia University, said corporations often insist on confidentiality.

“Companies don’t want other potential plaintiffs to know how much money the companies were willing to pay for a settlement,” he said in an e-mail.

Advances in fracking and horizontal drilling have lowered energy prices, created thousands of jobs and helped reduce emissions blamed for global warming. President Barack Obama has highlighted the benefits of natural gas, including jobs created in the industry, in major speeches.

The technology, in which millions of gallons of water and chemicals are forced underground to free trapped gas, has brought drilling operations to within hundreds of feet of schools, homes and farms. With that has come complaints of drinking water contamination — which the industry has forcefully denied.

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No Contamination

“There has never been a case of groundwater contamination as a result of hydraulic fracturing,” Jack Gerard, president of the American Petroleum Institute, a trade group representing the oil and gas industry, said in an April 23 interview with Bloomberg Radio.

Such claims rest in part on viewing fracking in isolation from the drilling that precedes it and the disposal of wastewater that follows. Defined narrowly, fracking is the step in the middle in which water and chemicals are forced underground to break up rock and free gas and oil.

Regulators in Pennsylvania, however, have linked gas and oil drilling with about 120 cases of water contamination from 2009 to 2012, according to documents obtained through a state right-to-know request. The documents don’t say if it was the fracking stage that was to blame, as opposed to faulty drilling or waste disposal.

Public Concern

“At the end of the day the public is less concerned with the niceties of whether it’s coming from the fracturing of the shale or whether it is coming from the failure of the well casing because as far as they’re concerned, it’s all hydraulic fracturing,” Mark Brownstein, chief counsel for the Environmental Defense Fund in New York, said in an interview.

The U.S. Environmental Protection Agency is conducting a long-term study of the potential impact of fracking on water.

Settlement terms in the Hallowich case were unsealed over the objections of the driller, Range Resources, by Washington County Common Pleas Court Judge Debbie O’Dell-Seneca who said companies failed to show they’d suffer harm to trade secrets or reputations if the records were open.

Hallowich Case

MarkWest Energy Partners LP and Williams Cos.’s Williams Gas unit joined in the June 2011 agreement, which included the transfer of the Hallowich home in Hickory, about 25 miles (40 kilometers) southwest of Pittsburgh. The family received $594,820, including $10,000 for each of their two children. The rest of the $750,000 went to attorneys’ fees, according to court documents.

Unlike most settlements, the deal required court approval because minor children were parties to the case. That put the settlement in court, where newspapers and public interest groups challenged an order sealing the case.

“We support the judge’s decision to release the file, which now clearly shows that the state’s extensive investigations clearly proved that there were no environmental or health impacts,” Matt Pitzarella, a spokesman for Range, which is based in Fort Worth, Texas, said in an e-mail. The problems the Hallowiches experienced were from the nuisance of drilling and related activities nearby, he said.

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‘Can’t Talk’

As part of the settlement, the Hallowiches signed an affidavit stating there is no medical evidence that their symptoms are related to gas drilling. The Pennsylvania Department of Environmental Protection had said it “cannot conclude” that drilling contaminated the water, a finding the family disputed in its lawsuit. They alleged the agency refused to adequately investigate and outsourced some of the testing to Range Resources itself.

The Hallowiches declined, through their attorney, to discuss the case.

“My clients signed a confidentiality agreement,” Peter Villari, their lawyer, said in an interview. “They can’t talk to you.”

In the end, settlements undermine the industry’s credibility, Robert Kennedy Jr., president of the environment group Waterkeeper Alliance, said.

“The industry is asking us to trust it on the one hand, at the same time it’s gagging people who get sick so that they’re not allowed to talk,” Kennedy said in an interview. “Local doctors, the medical community and citizens who are in these areas need to know.”

Excerpt from Bloomberg.net

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