10 Ene 2016
INTERFAX ENERGY, 8 January 2016. Shale exploration remains at a standstill in Spain despite support from the national government and the removal of regional fracking bans. Regional laws forbidding fracking were overruled by the Constitutional Court in 2014, with Spain’s national government wresting control away from the provinces, but administrative hurdles still remain. Environmental licences are issued or have to be evaluated by the regional administrations, leading to "very difficult and long periods for exploration projects", according to Roberto Martínez Orio, director of mineral resources research at the Geological and Mining Institute of Spain."Shale gas development in Spain faces quite a difficult position in the near future", Martínez Orio told Interfax. The political situation following the recent Spanish general election adds to the uncertainty. Neither the conservative People’s Party nor the Socialist Workers’ Party won a clear majority on 20 December. The emergence of the left-wing Podemos party and the centre-right Ciudadanos party will lead to a more fragmented parliament. According to Martínez Orio, most of the parties have positioned themselves against fracking. However, Graeme Mackenzie, director of Pyrenees Energy – which holds a minority stake in permits in Bezana and Biguenzo in the Basque-Cantabrian Basin – told Interfax he was confident the political changes would not represent a death knell for shale. "I do not think a coalition government would block drilling for shale gas, and any party that might have pushed for a ban on shale development did not get voted into parliament," he said.
Spanish shale players argue the unconventional resource can make a positive contribution to the country’s struggling economy because Spain imports nearly all of its hydrocarbons. The country boasts an estimated 1.4 trillion cubic metres of shale resources, according to the Spanish Council of Mining Engineers. The development of shale could also create jobs in regions of high unemployment. A report by Deloitte estimates the industry could create 250,000 jobs and account for 4.3% of Spain’s GDP by 2065.
Attractive location
Mackenzie pointed to falling drilling costs, high domestic gas prices relative to North America and the fact that the majority of the technically recoverable shale gas reserves are located in the Basque-Cantabrian Basin – where existing infrastructure is in place for the Ayoluengo oil field – as reasons why Spain is an attractive location for unconventional development. "Spain should use the low price environment to develop domestic opportunities – drilling service rates are significantly down year on year," Mackenzie said. Having partnered with Spanish oil and gas giants Gas Natural Fenosa and Repsol, Pyrenees Energy said it will be drilling for conventional gas this year and will take on shale gas gradually at a later date. Despite lower drilling rates, falling oil prices worldwide have put pressure on energy companies around the globe to slash exploration budgets. "We have decided to develop conventional gas deposits first. If oil prices were higher we could be drilling for shale this year too, but if oil prices remain low relative to 2010-2014 we would hope to drill for shale resources within the next 18 months irrespective of international oil prices," Mackenzie added.
The Spanish government has issued about 70 hydrocarbon exploration permits while a further 75 are awaiting authorisation, according to the Spanish Oil and Gas Association. The country does not use licensing rounds – instead, companies apply for a permit or make a competing bid on rival applications. But according to a study by the European Commission, the majority of the Spanish population is against unconventional fossil fuel development, and protests continue in autonomous regions such as the Basque Country.
Spain’s offshore oil and gas sector appears similarly unpromising. The award of offshore investigation permits has been delayed and made more difficult following earthquakes triggered by the Castor Project, which converted an abandoned oilfield into a gas storage facility in 2013. "The drastic reduction in hydrocarbon prices is a clear weakness right now, given that many of the permissions for exploration have been granted to companies already experiencing a fall in prices in their projects in the United States or Canada," Ricardo González Mantero, regional hydrocarbon director in the region of Castile and León, told Interfax. González Mantero added that two permissions for exploration owned by BNK Petroleum in Castile and León are in an advanced state and have completed the environmental impact assessment phase for their first six exploratory wells.
Written by Annemarie Botzki