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Regulatory Scrutiny & New Technologies

Since Romania showed interest towards unconventional resources later than other European countries, it is currently in a more advantageous position as it can learn from the mistakes of others and apply from the very beginning the newest technical solutions and safety procedures (that have been developed over the past couple of years by regulators in other countries precisely as a response to situations where things didn’t go right). To create an adequate framework for responsible exploration and production of unconventional hydrocarbons or to improve the existent one, the competent authorities in Romania can and should inspire from the additional measures adopted in such countries as the U.S.A or Great Britain. Only concrete measures and firm actions taken by national authorities and responsible choices taken by the private sector could win the confidence of the Romanian public in support of unconventional projects in the long term.

According to one study conducted by Purvin & Gertz in 2011, Romania could have resources that not only can ensure its self sufficiency in supply with primary energy resources, but can even transform it into a natural gas exporter in the region. The study does not take into account the discussion about unconventional resources, for which there are no certain and up-to-date data. Thus, potential sources of growth for Romanian oil and gas production are the offshore fields in the Black Sea (currently being explored) and the onshore unconventional resources (unexplored yet). Delay of the geological research activities (exploration for unconventional hydrocarbons) is not likely to benefit Romania, especially since other countries in Europe have started exploration activities much earlier: Hungary in 2005 and Poland in 2007. So far, there are many unknowns in Romania related especially to the quantities of such resources and their commercial viability. In addition, exploration work is not an automatic and mandatory guarantee that the project will move into production phase as we have seen in the case of Exxon Mobil in both Poland and Hungary.

The exploration period, however, offers Romania the chance to review, re-think and, if appropriate, change the relevant legislation in the sense of supplementing or restricting it. Indeed, unconventional hydrocarbon production raises a series of new risks, but, at the same time, there are a host of measures developed in the meantime by industry and by regulators in other countries to manage risks and ensure the safety of operations ¹:

• A depth separation of 600 m between drinking water sources and the fracturing area is considered to be a safe distance to prevent groundwater contamination;
• A program for constant monitoring of drinking water quality (conducting baseline water testing) in order to have a set of data that you can compare before, during and after shale gas production;
• Installing seismometers on wells and using early detection systems for seismic activity such as the Traffic light system (adopted by Quadrilla Resources in Great Britain);
• Microseismic mapping (MSM) allows the real time analysis of fracture propagation;
• Management plans for flowback and produced water (which companies should present to authorities);
• Use of different leak-detection systems;
• Underground flow monitoring by various methods: infrared cameras for wells, ultrasonic leak-detection, distributed temperature sensing (DTS), temperature logs, thermal decay logs, noise logs;²
• Technical standards such as ISO 10426-1 for well cementing, ISO 10405 for casing/tubing, ISO 11961 for drill pipes, ISO 13501 on drilling fluids, etc;
• Development of an entire industry that offers a wide range of solutions for water recycling or re-use.

There are risks for which the industry has already developed technical solutions. An example of technical innovation for the problem of produced water is the H₂0 Forward application, developed by Halliburton and commercialized under the Cleansuite brand. The line has four “green technologies” systems of which three are of particular interest: CleanStream, CleanWave, and CleanStim. CleanStream uses ultraviolet light instead of traditional chemical biocides to control bacteria. CleanWave provides an alternative to water recycling by reusing produced water in other frac jobs with the help of a process called electrocoagulation. This technology significantly reduces and even eliminates the need for new fresh water volumes. CleanStim uses chemical ingredients sourced from the food industry to create a green fracturing fluid.

Another example is the green completion or reduced emissions completion (REC) which captures 95% of the volatile organic compounds (VOCs), methane and other air toxics that escape into the air until the well is ready to produce, emissions that have been associated with higher health risks. REC uses special equipment that separates liquid hydrocarbons from the gaseous ones from the flowback water during well completion. In the United States, this measure (the first federal standards for air quality regarding natural gas wells that are hydraulically fractured) will become mandatory for the entire industry in 2015, but there are currently operators that apply it on a voluntary basis (see, for instance the EPA’s Natural Gas STAR Program). One question emerges: is the green completion process currently required in Romania?

On the regulatory side, such a question is precisely why Romania needs a rigorous and impartial analysis of the framework that currently applies, followed by concrete measures which could target:

• either the creation of an additional regulatory package to address the specificities of unconventional production;
• or, shall the analysis indicate knowledge gaps, inadequacies or loopholes in the national legislation, an amendment of the current legal framework to include measures that address the new type of risks. The first steps in this direction could be:
• a document which will detail all the institutions and state agencies with responsibilities in this area (a White Paper);
• strengthening the institutions in charge with monitoring, control and law enforcement; or creating a new institution (a strong and independent regulator) with a clear role and specific responsibilities in the area of unconventional projects;
• drafting a rapid reaction procedure in case of accidents.

Romania’s strategic direction regarding its unconventional resources is clear: full support for identification of new hydrocarbon fields, as stated in the government program for 2013-2016. However, unconventional projects will also require a social license to operate. The concerns of local communities must receive an answer from academia, companies, and competent authorities (Economy Ministry, Energy Ministry, Environment Ministry, specialized agencies such as the National Agency for Mineral Resources (NAMR), Romanian Waters, Environment Guard, etc). The newest available technologies and latest regulations adopted by countries with experience in unconventional projects should be applied in Romania as well, and the data about new policy requirements or voluntary company initiatives disseminated via information campaigns, debates, consultations, nationwide campaigns. To this extent, mixed working groups (made up of citizens, authorities, company representatives) could provide a useful forum for discussing and adequately addressing public concerns.

The above analysis shows that, on one hand, the market already provides viable technical solutions while, on the other hand, the regulations have already evolved significantly compared to just a few years ago in countries with unconventional production. The question that we must ask now is this: on the regulatory side, how many of these new measures adopted elsewhere can be found in Romania’s legislation? And, on the market side, will the companies involved in unconventional projects be willing to utilize the newest technical innovations for their operations in Romania?

 

 

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FOOTNOTES:

1 Support to the identification of potential risks for the environment and human health arising from hydrocarbons op-erations involving hydraulic fracturin g in Europe, report prepared for DG Environment by AEA Technology plc., pp. 129-138.

2 Unconventional Gas: Potential Energy Market Impacts in the European Union, European Commission, JRC, 2012, pp. 70-73.