EU law enough for now to regulate shale gas - study

BRUSSELS Fri Jan 27, 2012 1:00pm GMT

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BRUSSELS (Reuters) - EU law is enough for now to regulate shale gas exploration, although changes might be needed to protect the environment once Europe enters the development phase, a study commissioned by the EU found.

Shale gas exploitation in the United States has transformed the global supply-demand balance.

In Europe, however, development is less advanced and EU member states Bulgaria and France have banned shale gas activity because of environmental concerns.

"The legal study confirms that there is no immediate need for changing our EU legislation. This refers to the actual phase of exploration," Energy Commissioner Guenther Oettinger said in a statement on Friday to accompany publication of the survey.

"We take environmental concerns seriously and will continue to monitor the development of shale gas extraction in the EU."

The energy mix is the prerogative of member states and only they can decide on implementing a ban.

But the European Union has the power to tighten relevant EU laws or introduce new ones.

Although it found the legal framework was adequate, Belgian-Luxembourgeois law firm Philippe & Partners, which carried out the research, recommended the public should be consulted at an early stage on planned shale gas activity, which would help ensure legal certainty for developers.

Public opposition in France, for instance, led to a ban and the cancellation of licences that had been granted.

Within Europe, Poland sits on the biggest shale gas reserves, estimated at 5.3 trillion cubic metres, which would be enough to meet the country's domestic gas needs for hundreds of years.

It has granted about 100 exploration licences and has said it could begin production in 2014-2015.

The process of extracting gas from shale requires large amounts of water and chemicals and has raised particular concern about the pollution of ground water.

Existing EU laws do not specifically mention shale gas, but include provisions prohibiting water pollution, for instance.

Philippe & Partners examined a sample of four member states, Poland, France, Germany and Sweden, where companies including ExxonMobil (XOM.N) and Total (TOTF.PA) are working on exploitation of shale gas.

"Neither on the European level nor on the national level have we noticed significant gaps in the current legislative framework, when it comes to regulating the current level of shale gas activities," the report found.

"However, this is no reason for complacency, since this assessment explicitly refers to the current level of experience and scale of operations as can be expected during the exploration phase."

The report looked to the example of the United States, where President Barack Obama has backed the shale gas boom, but insisted on the need for safe development.

"As the U.S. example indicates, commercial scale shale gas exploitation would involve operations on much larger scale," it said.

Looking forward "related potential cumulative impacts" needed to be further investigated to assess the fitness of the regulatory framework at national and EU level.

(Reporting by Barbara Lewis; editing by Rex Merrifield)

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