Azernews.Az

By Zuzanna Marchant

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Quite recently, in the middle of the presidential campaign, Romanian Prime Minister Ponta said that there was no shale gas in the country, despite the research not yet having been analysed or finished. Mr Ponta himself had said earlier that preliminary exploration of the reservesshould take around five years. Chevron still hasn’t made any announcements regarding their exploration data so it would seem that the Prime Minister’s statement was not based on any specific source of information.

According to Mr Radu Dudau, Co-Founder and Director of Energy Policy Group (EPG) -Bucharest-based independent think-tank specializing in energy policy -Romania’s shale gas expectations were pinned to the US EIA (2013) of 51 trillion cubic feet of technically recoverable shale gas resources and 0.3 billion barrels of shale oil and condensate. Yet that was a theoretical model, based on structural comparison between North American and European shale geology. More recently, various operators have contracted seismic acquisition services all over the country, yet there is no public report on that.

Even though not as many companies are searching for shale in Romania as in, say Poland, the Prime Minister’s remark seems to not have been thought through. Out of the very few drills done to date, the data could not have possibly been clear enough – or yet available – for him to say that there is no shale gas in Romania. Is it possible that Mr Ponta had a moment of weakness and simply lost hope?

The government and its people

It’s understandable if he did, since Romania’s road to shale has been tough to say the least. There’s been protests, vast demonstrations, clashes with the police and calls for the Prime Minister to resign (due to his changing his mind on shale gas policies). Many Romanians oppose the extraction of shale gas and some even travelled to the European Parliament to lead the protest at the beginning of December. At the moment, as there are not ongoing operations in the country, there are no anti-shale protest. But, according to Mr Dudau it is likely that they would start again, if the operations were to resume.

When it comes to protest in Romania, Chevron has been their main aim and the company’s drills were delayed due to clashes with the locals. There were some claims that Russian money was behind the protest, with the New York Times, among others, writing about it, but such claims areeasy to make but not easy to prove. According to Mr Dudau: Other than Chevron, a couple of geological survey companies have seen their activity blocked by hostile landowners (mostly farmers) who feared they were looking for shale gas. In general, (being) denied land access has become a serious hurdle for geological surveys, and both the Govenment and the lawmakers will have to soon exercise authority in order to create the needed legal clarification.

Whatever the Romanians’ feelings about Chevron and shale gas may be, just as it is with other European countries, the Romanian shale adventure has not even properly started yet and Chevron drills were done forexploratory purposes. Despite the Prime Minister’s claims, we still have to wait for the results of those. But until then, despite the many protest, it would appear that some local communities are becoming more accepting of the industryas they get used to its presence, (they) see no harm done, and also get jobs and other indirect economic gains.

The hidden resources

Romania’s shale has been largely untapped with Chevron being the only concession holder interested in such explorations and no other licenses having been granted. Other companies have only been active in the unconventional gas area (CBM and tight gas) despite the rumours that Russian subsidiaries were interested in shale gas in Romania – those have been denied.

Many protesters are against large international oil corporations, but it wouldn’t really matter to them if the gas operator was Romanian or foreign as the core allegations and fears about shale are transferable to any operator. This has been made clear by activists threatening to tackle Gazprom’s rumoured interests in Romanian shale gas.More broadly, there is a marked tendency of the anti-shale protests to take on an anti-oil and gas dimension.

And it’s not only social acceptance that’s required, but more research. The geological surveys and exploratory drills still need to establish specifics of the Romanian geology. Even assuming the right geology, shale gas operations would take a lot of patience and cooperation from Government and operators alike, in order to get a sufficient level of social acceptance. Some legislative changes will be needed, concerning for example the implementation of fiscal mechanisms whereby local stakeholders can get an extra share of the financial benefits.

Legalese

The Romanian laws and policies regarding shale gas are, unfortunately, creating mistrust among the Romanians. The concession agreements (classified as secret and not to be made public, which is already perceived in a negative way) are neutral in the respect of conventional and unconventional gas as the O&G legislation does not distinguish between the two. Problems arise when the National Agency for Mineral Resources (ANRM) has to approve every operations schedule and the kind of technology and method that are going to be used. The fact that those documents are secret and cannot be made public fuels public mistrust and sundry conspiracy theories.Yet when a particular operator is granted a license for, say, shale gas exploration, that becomes publicly known. Every further operational step requires specific approval by ANMR.

As the shale gas industry develops in Europe, the amount of quality information available to the public grows and will allow for a more in-depth debate. However, as Mr Dudau states at present, all Romanian green movements are utterly intransigent in their opposition to hydraulic fracturing. There are no compromise-ready organizations, able and willing to work with government and industry to define standards and promote best practices.

As we are all aware, the consent of the public is not required for exploratory or any other operations but it’s something that should be desired and earned through information campaigns, local liaison executives and specific programmes designed by the government and operators alike. In fact, public perception nowadays is so important, that it will be discussed at the CENTRAL AND EASTERN EUROPE SHALE GAS AND OIL SUMMIT in Warsaw (9-10 March), where a panel discussion of experts will consider its impact on the industry.

Change of Heart

Interestingly, Romania is one of the European countries with the largest natural gas production, one of the most energy-independent, which imports only the fifth of its gas from Russia. But the interest in shale is still there, as was demonstrated byMr Ponta, who in 2011 had run for parliament on the platform of banning shale exploration and one month after getting into office, had his government block its own proposal, sparking protests. The Prime Minister seemed to think that the country’s energy independence was more important than his promises.

Mr Dudau commented: although Romania is relatively energy independent when compared to its neighbours in S-E Europe and even at EU level, the prospect of a major new gas source, able to turn the country into a net gas exporter, is very important – next to the resource potential of the Black Sea offshore. Indeed, this has been the line taken by the Government over the last couple of years. The country needs new natural gas sources to compensate for the decline on conventional production.

Energy independence is a dream for any country, especially those relying on Russian gas, so exploring resources is a logical step in that direction. According to Mr Dudau, once the Romanian public sees that hydraulic fracturing is not anything like what they fear, they will be more willing to accept it. Protracted and amplified use in North America along with technological progress with respect to water use and treatment, probable use in Poland over the coming years, establishment of a better adapted regulatory framework – including at EU level – and better fiscal compensation mechanisms for local communities affected by the extractive industries will undoubtedly enhance public acceptance. Moreover, with the gradual creation of a proper market environment for natural gas, the right incentives for investors will be in place in about 10 years.

Prime Minister Ponta’s remark, despite his position, should be ignored as it was not based on any available geological data. Is it possible that the large protests made him change his mind again and think that the country’s complete energy independence is not worth it after all, if the public is so opposed to the method of achieving it? Who knows the politician’s reasons for changing their minds? But Romania’s shale potential is still there to be assessed, and possibly, used. For now, geology is still an unknown factor and more drills and research are needed.