Fracking report misses a golden opportunity

With the publication of its Golden Rules for a Golden Age of Gas, the International Energy Agency has missed an opportunity to develop detailed and credible standards that could speed international acceptance for drilling and fracking.

The rules, published yesterday, are the outcome of a process that has brought together governments, natural gas producers and environmental groups to address social and environmental concerns expressed about fracking and shale gas.

The report’s declared aim is to help the industry win a social licence to operate and “(pave) the way for the widespread development of unconventional gas resources on a large scale, boosting overall gas supply and making the golden age of gas a reality”.

The prize is a vast increase in global gas resources. But overall, the report is a disappointment. Rather than spell out best practices and prescribe detailed international standards that could serve as a benchmark for national regulations, the report is mostly couched in vague principles so broad they are virtually meaningless.

The golden rules amount to a list of 22 separate principles grouped under seven sub-headings like “watch where you drill“, “isolate wells and prevent leaks,” “treat water responsibly” and “ensure a consistently high level of environmental performance.” These are all very sensible and worthy objectives.

As the report notes, no set of regulations can reduce the environmental impact of unconventional gas production to zero. Like any other industrial process, it has costs and benefits.

Policymakers must make “trade-offs between reducing the risks of environmental damage… and achieving the benefits that can accrue to society from the development of economic resources,” it states.

“In designing an appropriate regulatory framework, policymakers need to set the highest reasonable social and environmental standards, assessing the cost of any residual risk against the cost of still higher standards (which could include the abandonment of resource exploitation).”

Making these trade-offs involves a political decision taken at the highest national level. But the agency could and should have performed a valuable role helping policymakers understand them, and suggesting some basic standards to guide regulation in individual countries.

Unfortunately, the report ducks this responsibility. Instead, it adopts the principles-based approach beloved of bureaucrats and industry when they can’t reach real agreement. Rather than prescribe detailed and inflexible rules, the report sticks to a list of “principles intended to guide regulators and operators”.

The most interesting and useful section concerns the implications for industry.

The report estimates the cost of complying with the rules in four key areas — isolating wells and preventing leaks; eliminating venting and minimising flaring and other emissions; treating water responsibly; and disclosing more information and engaging with local communities — would add €460,000 or 7% to the cost of a typical shale gas well.

The real value, however, is in the report’s discussion of best practices currently employed to reduce harmful impacts, as well as speculation on how fracking techniques could be improved.

Finally, the report highlights the possibility of a smarter approach in future. The agency notes the possibility to reduce costs and the environmental impact by reducing “over-fracking”.

If the report does not provide much concrete guidance to policymakers about how best to strike trade-offs between environmental protection and gas development, it does illustrate the possibility for the industry to develop more cost-effective and environmentally friendly approaches in future.

— Reuters