Mandatory EIA for Shale Gas Development – EU Recommendations Target Fracking

The recent turbulence in Ukraine and Russia’s politics have multiple dimensions. Energy  security is a major concern, particularly for those European countries which heavily rely on Russian gas supplies. The Ukrainian crisis reminds us how important it is for Europe to secure its energy sources. In fact, the European Commission states that the promotion of energy supply security is one of the goals of its Climate and Energy Policy. Consequently, shale gas will remain an attractive alternative for EU member states to consider in their energy mix. 

After a long and heated debate, the European Union has finally decided to take a stand on the environmental standards for exploration and extraction of shale gas in Europe. In January, the European Commission (EC) adopted a recommendation specifying minimum principles for the exploration and production of hydrocarbons (especially shale gas) by means of high volume hydraulic fracturing, commonly known as “fracking.” The EC recommends, among other things, that member states undertake measures to ensure that an environmental impact assessment (EIA) is carried out prior to the start of high volume hydraulic fracturing. The recommendation defines high volume hydraulic fracturing as injecting 1,000 cubic meters or more of water per fracturing stage or 10,000 cubic meters or more of water during the entire fracturing process into a well.

The requirement of an EIA for fracking operations constitutes one of the most contested aspects of the shale gas debate in Europe. 

Unlike Europe, the United States, which is the world’s most advanced country in shale gas exploration and production, does not require that an EIA (in the U.S. referred to as Environmental Impact Statement (EIS)) be conducted before undertaking oil and gas operations, including fracking, with some minor exemptions. Oil and gas operations in the United States are regulated at the state level and none of the states requires operators to undertake EIA’s before exploration or extraction of shale gas in the form the EU requires.

Additionally, conditions for shale gas development in Europe are much different than in the United States. Notably, Europe is more densely populated, geological formations make the extraction process more complex, and Europe does not have the necessary infrastructure. The EIA may become another hurdle making investors more hesitant to explore shale gas in Europe. 

An EIA is a lengthy and costly procedure. In the European Union, it is regulated by Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment (EIA Directive). This directive requires private operators who undertake construction and other major infrastructure installations which affect the natural environment or landscape to carry out an EIA. The list of projects that require an EIA is included in Annex I to the Directive, which includes, for example, crude oil refineries, thermal power stations with a heat output of 300 MW, integrated chemical installations, waste disposal installations, and construction of motorways. 

With respect to oil and gas operations, an EIA is required for the extraction of petroleum and natural gas for commercial