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Key Hydraulic Fracturing Activities in Foreign Jurisdictions

Australia: In May 2016, an Australian Senate select committee released an interim report on its inquiry into unconventional gas mining. The report makes 18 recommendations, including that the Australian government work with all states and territories to ban the process of hydraulic fracturing across the country. The inquiry lapsed following the dissolution of the Australian Parliament in May, and no final report is expected to be released.

On March 17, 2016, the Western Australian government released its response to the November 2015 hydraulic fracturing report prepared by the state parliament’s Standing Committee on Environment and Public Affairs. The government proposed to adopt 10 of the report’s 12 recommendations, including amending existing legislation to formalize the Department of Mines and Petroleum’s policy of public disclosure of chemicals used in hydraulic fracturing, reviewing existing legislation that allows companies to classify certain information as “permanently confidential” to avoid disclosure, and banning the deliberate addition of BTEX compounds to hydraulic fracturing fluids. Meanwhile, in July 2016 two Labor Party members of the state parliament called for a state-wide hydraulic fracturing ban. The call followed an anti-hydraulic fracturing campaign launched in April 2016 by the Western Australian Conservation Council and other protests in the state. Western Australian government ministers have called the push to ban hydraulic fracturing “pre-emptive, hypocritical and surprising.”

In August 2016, the Victorian government announced that it would introduce legislation to permanently ban exploration and development of onshore unconventional gas in the state, including a ban on hydraulic fracturing. The legislation would also extend the current moratorium on onshore conventional gas development until 2020 (an hydraulic fracturing moratorium in Victoria has been in effect since 2012). The decision was made to “protect the clean, green reputation of Victoria’s agriculture sector,” despite a 2015 state parliamentary inquiry that failed to reach a consensus on whether to impose such a ban. The legislation will be introduced later this year.

On September 13, 2016, an hydraulic fracturing moratorium commenced in the Northern Territory. In addition, a panel was established to investigate the potential risks and impacts of hydraulic fracturing in the territory, including potential effects on groundwater, surface water, geology, ecosystems, ecotoxicology, human health, land use, and emissions. The panel is tasked with preparing a report and recommendations, which must include community input and opportunity for public comment. The Northern Territory government will provide a response to the report and implementation framework for the panel’s recommendations. The hydraulic fracturing moratorium will remain in place until the report is released, which could take up to four years.

Legislation permanently banning onshore unconventional gas exploration and development in Victoria, including hydraulic fracturing, is expected later this year. The Northern Territory government has established a panel to investigate the potential risks and impacts of hydraulic fracturing in the state. Consultation on the terms of reference for the investigation ended on October 13, 2016. Once the terms of reference have been finalized, panel members will be appointed and public meetings will be held in communities across the state.

Canada: A study published in March 2016 in Seismological Research Letters found a strong correlation between earthquakes in western Canada and hydraulic fracturing. The study, conducted by scientists at Canadian universities and government agencies, linked earthquakes to 39 hydraulically fractured wells in the foothills region of the Western Canada Sedimentary Basin. It concluded that while the proportion of fractured wells linked to earthquakes is small (less than one percent), a hazard exists because thousands of wells are fractured each year.

The Yukon government is accepting proposals for an analysis of the potential economic impacts of shale gas development in the Liard Basin. The analysis would address the January 2015 Yukon Legislative Assembly Final Report of the Select Committee Regarding the Risks and Benefits of Hydraulic Fracturing’s recommendation that an analysis of the potential economic impacts of shale gas development be completed before allowing hydraulic fracturing in the Yukon. A March 2016 assessment of the Liard Basin, which straddles British Columbia, Yukon, and the Northwest Territories, by the National Energy Board and provincial agencies estimated that the Basin contains 219 trillion cubic feet of recoverable unconventional natural gas, making it among the largest unconventional resources in the world. However, this analysis may never be completed. As a result of this week’s election, the liberal party has taken control of Yukon’s legislature after running on a platform to ban hydraulic fracturing in the territory.

In May 2016, a review panel in Newfoundland and Labrador issued its report recommending that hydraulic fracturing not be allowed to proceed in the province until further studies are undertaken. The panel – which generally found that subsurface migration and well integrity issues are manageable – recommended that full disclosure of “additives and concentrations of [HF] fluids” be made to regulators as part of project approval and a disclosure report for each well be made available to the public, and “the compositions of all fluids used or produced during [HF] operations are available to the regulator and to monitoring and health authorities” and “timely access to compositional information” be provided to health professionals.

In June 2016, the provincial government in New Brunswick extended its moratorium on hydraulic fracturing indefinitely in light of the determination by an independent review panel in its February 2016 report that the five conditions established by the province for allowing hydraulic fracturing to proceed have not been met (the panel found that well integrity issues and groundwater contamination concerns are generally manageable). Those conditions were that operators must ensure that plans are in place for a social license, report impacts of hydraulic fracturing, mitigate impacts on public infrastructure, respect the duty of the provincial government, and maximize benefits for New Brunswickers.

The provincial government of Quebec in June 2016 authorized the use of hydraulic fracturing for oil and gas drilling on Anticosti Island in the Saint Lawrence Gulf region. Certificates were issued to drill and fracture three horizontal wells to evaluate the island’s oil and gas potential. Meanwhile, the British Columbia Oil and Gas Commission now requires ground motion monitoring during hydraulic fracturing activities and submittal of a report within 30 days of completing hydraulic fracturing activities as part of all new well permits issued as of June 1, 2016, in areas designated as ground motion monitoring areas.

The timing of future actions by the Yukon government is uncertain.

EU Generally: In April 2016, the REACH Exposure Scenario Task Force finalized the Generic Exposure Scenario and background document for the use of chemicals in the exploration and production of hydrocarbons using HF. These are now publicly available for use by industry in complying with REACH going forward.

Over the past six months, initiatives regarding the development of best available techniques reference documents (BREFs) have progressed. A meeting in Brussels on October 26-28, 2016, included discussion of the scope of the proposed hydrocarbon BREF and the activities that should be included within it. Additionally, a draft BREF on mining waste was published in June 2016. Its aim is provide up-to-date information on the management of waste from extractive industries and to develop best available management techniques.

The European Commission (EC) is finalizing its review of the effectiveness of its January 2014 recommendation on the minimum principles for the exploration and production of hydrocarbons, such as shale gas, using high-volume hydraulic fracturing. Member states have had the opportunity to comment on the principles and give feedback to the EC on the extent to which national legislation already implements the principles.

In May 2016, the text for an EU directive for the protection of trade secrets was adopted. The directive harmonizes the definition of trade secrets across member states and provides various protection measures for those whose trade secrets are misused or misappropriated. Member states must implement the directive through their national laws by June 2018.

The EC’s review of its recommendation on the minimum principles for the exploration and production of hydrocarbons using high-volume hydraulic fracturing is due to be completed in November 2016, but the date of publication is unclear.

United Kingdom: The Environment Agency (EA) issued its guidance for onshore oil and gas operators earlier this year, following a public consultation. The guidance describes how existing environmental legislation applies to oil and gas activities and how operators can comply with it. The guidance also explains what environmental permits are needed and where relevant, the Best Available Techniques that operators must use to meet regulatory requirements.

On June 29, 2016, the Government confirmed that it will introduce surface development restrictions prohibiting hydraulic fracturing operations at wells where the well pad is located in specified protected areas. These include areas of outstanding beauty and world heritage sites. The Government will implement these restrictions through conditions of exploration licenses (PEDL licenses).

In May 2016, Third Energy was granted planning permission by North Yorkshire County Council to carry out hydraulic fracturing at a site in Kirby Misperton. Friends of the Earth have challenged the decision in court. A hearing will take place this month and will be key to future operations at the site and the UK shale gas industry. Friends of the Earth did not proceed with its threat to challenge Third Energy’s separately issued environmental permits, following a robust response from Third Energy and the EA.

The Government has granted Cuadrilla permission to carry out hydraulic fracturing at a site in Lancashire, using its powers to assume responsibility for hydraulic fracturing-related planning decisions. This follows a public inquiry hearing in February 2016. The approval has been challenged by a local action group, and a court hearing has been set for later this month. The Government’s decision in relation to a second Cuadrilla site in Lancashire has been postponed following concerns about the impact of the operations on local road safety. However, the Government has indicated that it also may approve the application for this site, provided that Cuadrilla produces evidence that the approval will not impact road safety.

Igas is also applying for planning permission to undertake exploratory hydraulic fracturing drilling in the East Midlands region. The Planning Officer of Nottinghamshire County Council had recommended that the Council grant planning permission. However, a decision has been delayed until later this month following submissions from Friends of the Earth on the risk to habitats of protected species and covenants affecting the land.

The UK Climate Change Committee’s July 2016 report states that the development of a UK shale gas industry is compatible with the UK’s climate change targets, provided that three conditions are met. The conditions are that emissions are tightly regulated, gas consumption remains in line with carbon budgets, and shale gas production emissions are offset through reductions elsewhere in the UK.

A decision on the legal challenge brought by Friends of the Earth against Third Energy’s planning permission is expected this month.

Other Foreign Jurisdictions:

Germany: In August 2016, the German Federal Parliament passed legislation imposing a ban on hydraulic fracturing for shale gas. The legislation does however allow for up to four hydraulic fracturing test projects for scientific purposes if the relevant German state consents to the projects. It remains to be seen whether any hydraulic fracturing shale gas test projects permitted by the hydraulic fracturing Legislation will be undertaken. The legislation requires the German parliament to reassess the ban in 2021. Other hydraulic fracturing activities, including for the purposes of commercial tight gas production, are allowed under certain conditions. These conditions include far-reaching disclosure requirements with respect to the composition of the hydraulic fracturing fluid (full disclosure) and an obligation for the competent authority to publish information about the composition of the hydraulic fracturing fluid being used. German hydraulic fracturing tight gas projects, which were suspended while the political discussions about the legislation were ongoing, can now be resumed.

Mexico: In July 2016, a commissioner for the Mexican National Commission of Hydrocarbons announced that Mexico plans to begin developing its natural gas resources through hydraulic fracturing once regulations are in place. The new regulations will be based largely on those already developed by the United States. The Energy Secretary has indicated that regulations are expected to be proposed in early 2017, with public consultations completed by the end of the first quarter. The Energy Secretary is also planning to build more than $10 billion of new natural gas pipelines within Mexico in the next five years to provide natural gas to the south of the country and provide access for undeveloped fields. Meanwhile, a newly formed private sector energy advisory council called the U.S.-Mexico Energy Business Council was announced on June 30, 2016. The new council will focus on cross-border energy issues, including the harmonization of hydraulic fracturing regulations.

South Africa: In March 2016, the South African government announced that exploration for shale gas in the Karoo region is scheduled to begin in “the next financial year.” The government said in a statement that shale gas development is an “area of real opportunity for South Africa.” The Strategic Environmental Assessment for Shale Gas Development, which launched in May 2015, is expected to be completed in March 2017. A draft scientific assessment was released for stakeholder review in June 2016, and public meetings were held in July 2016.



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