Unconventional gas projects may be added to the list of projects for which an environmental impact assessment (EIA) must be undertaken before planning permission (or equivalent in other Member States) can be granted following a vote of the European Parliament 9th October 2013. The proposal covers not only shale gas and coal bed methane projects but also shale oil, and tight oil or gas from other sedimentary rock types.
The proposed amendments explicitly capture the exploration stage of unconventional gas projects where it includes hydraulic fracturing.
Developers may need to allow up to a year to complete the assessments
If adopted, the Parliament's proposal would remove the current discretion on the part of the relevant Member State authority to determine that no EIA is required where, in its judgement, taking into account the prescribed screening criteria, a project is unlikely to give rise to significant environmental impacts. As a result, EU developers of all unconventional oil and gas exploration projects involving hydraulic fracturing are likely to need to allow for up to a year of project development time in order to allow completion of environmental studies and reports before submitting planning consent applications. Developers may need to drill and flow test several wells before locating one which offers a commercially viable prospect, and this will call for careful sequencing.
The additional categories, if agreed by the Member States, would apply whatever the volumesto be extracted. This is in contrast to the existing category that only covers projects for the commercial extraction of natural gas with daily production volumes in excess of 500,000m3.
Exploration wells with hydrolic fracturing will be caught
The text adopted by the Parliament's plenary meeting which would be added to Annex 1 of the EIA Directive reads as follows:
“14a. Exploration, limited to the phase involving the application of hydraulic fracturing, and extraction of crude oil and/or natural gas trapped in gas-bearing strata of shale or in other sedimentary rock formations of equal or lesser permeability and porosity, regardless of the amount extracted.
14b. Exploration, limited to the phase involving the application of hydraulic fracturing, and extraction of natural gas from coal beds, regardless of the amount extracted."
Exploration wells with no plans to frac
Exploration not including hydraulic fracturing may still fall within the categories of projects listed in Annex 2 of the Directive, in relation to which the Member State authorities have a discretion to decide whether an EIA is required. Given the level of public concern around shale gas exploration, it is perhaps not surprising if local authorities in practice err towards requiring EIA.
Recent English case law clarifying for the purposes of planning policy that "extraction" of hydrocarbons encompasses all stages up to production, including exploration, makes it potentially more likely that this will be the outcome, (Europa Oil & Gas Limited v Secretary of State for Communities and Local Government [2013] EWHC 2643 (Admin), QBD).
An agreed position still needs to be reached
The European Parliament vote does not of itself create binding law. Instead it provides a mandate for negotiations with the Council members to agree the final text of a Directive designed to overhaul the EIA Directive itself. Once a common position is reached between Parliament and Council, the final text needs to be adopted by both institutions and published in the Official Journal before becoming law. Member States will then be given a period to reflect the changes in their domestic laws.
Comment
In the UK, it is the Government's aim to streamline the permitting process for unconventional gas development. Uncertainty regarding a key component of that process at a critical stage for growth of the industry is not helpful for industry.
On the positive side, however, developers planning unconventional oil or gas projects in the EU may find it useful to incorporate an EIA approach in their regular project design phase. .
