Bloomberg News

Spain’s First Fracking Ban Coming to Richest Shale Region

April 04, 2013

Spain is set to enact its first regional ban on producing natural gas using hydraulic fracturing, yielding to objections from environmental groups that so-called fracking risks polluting drinking water.

In the northern Cantabria region, where energy companies say much of Spain’s gas exists in shale rock, the Parliament plans to vote April 8 on suspending the contested drilling technique “as long as current doubts on the technology remain,” according to the bill on the government’s website. All political parties in the region supported the law in a March 21 debate.

BNK Petroleum Inc. (BKX) and R2 Energy Inc. of Canada are among companies hoping to use fracking to shatter shale in Spain and tap what their trade group last month said may be enough gas to meet 70 years of national demand. While environmental protests led to a fracking ban across the border in France, in Spain opponents have failed in provinces except for Cantabria, where an estimated $100 million of exploration projects are forecast.

“We are talking about the one area in Spain where the most resources could be found,” Angel Camara, dean of Official Mining Engineers College in Madrid, said in a phone interview. “They are closing the door to what could be a hugely important economic opportunity for the country.”

About 202 exploration test wells have been drilled in the basin shared by Cantabria and the adjoining Basque region that has drawn “the most interest by oil and gas companies,” according to a March report from the Spanish National Association of Oil and Gas Companies, known as ACIEP.

‘Without Remorse’

The relatively abundant rainfall and rivers of the Basque and Cantabria regions will facilitate fracking, which can inject as much as 30,000 cubic meters of water with sand and chemical additives at high pressure to free gas trapped in shale rock, according to Camara, who co-wrote a study by Spain’s Council of Mining Engineers.

Industry Minister Jose Manuel Soria, a member of the ruling Popular Party, in February said Spain will pursue opportunities involving hydraulic fracturing “without remorse” as long as they comply with environmental restrictions.

Inigo Fernadez, the Cantabrian Popular Party’s spokesman, said he would vote in “defense of our patrimony” and against fracking in a March 21 parliament debate.

Underground water sources can be contaminated due to uncontrollable gas flows and fracking fluid spillovers, according to a 2011 European Parliament study.

Streamline Permits

“I believe there is work to be done with the two levels of government to streamline the process” of getting permits, Craig Steinke, CEO of R2 Energy, which has applied for three permits to produce shale gas, said in an e-mailed response to questions. Steinke says the region holds “high potential.”

More than 100 million euros ($128 million) will be invested in Cantabria just for exploration projects in the area, according to data from Shale Gas Espana, an industry backed forum. Once a company obtains a permit to explore, it can take about five to six years for production to start.

Even if the law were to pass, it “offers little or no security,” said Josue Bilbao, a member of Cantabria’s Anti- fracking Assembly, because it will only prevent companies from producing the gas, not from continuing their exploration efforts. “No one lays the foundation for a house they don’t expect to build,” the group said in a note.

To contact the reporter on this story: Patricia Laya in Madrid at playa2@bloomberg.net

To contact the editor responsible for this story: David Risser at drisser@bloomberg.net


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