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Spain pushes ahead with fracking law

The country has amended its oil-exploration law to include guidelines for hydraulic fracturing (fracking) in a signal it will support shale-gas development

The country’s 1998 hydrocarbon exploration law was amended on 30 October to include guidelines for fracking. The legislation also amended a 2006 law to include fracking in environmental-impact regulations ensuring the technique’s effect on local air and water quality will be heavily scrutinised.

The new law, which comes into force on 31 October, is mainly aimed at improving electricity access for Spain’s Canary and Balearic islands.

Spain wants to diversify its energy mix away from liquids-rich and high-carbon forms of electricity generation, such as oil, by expanding its use of natural gas and renewable energy. 

In July, Repsol said it delayed its shale-gas exploration programme in northern Spain because of a ban on fracking. The company had hoped to begin seismic work on its acreage in Cantabria during the summer.

The local Cantabrian government voted in April to ban fracking in a region thought to be rich in unconventional natural gas. Although the ban was not employed nationwide it was a significant setback for shale-gas development in one of Spain’s most prospective regions.

The US Energy Information Administration (EIA) said Spain could have 227 billion cubic metres (cm) of recoverable shale gas in the country. Spain’s oil and gas trade group, Aciep, believes the country could hold almost 2 trillion cm of shale gas in the Basque and Cantabrian regions alone.

Hamish McCardle, a partner at Baker Botts law firm, told Petroleum Economist that a lack of regulatory certainty was one of the biggest hurdles facing shale-gas development across Europe. “However prospective your resources are if you have no idea how you’re going to get them to market you can’t invest,” McArdle said.

Both Spain’s economy and its energy demand have been hit hard by the global economic downturn. Before the 2008 financial crisis Spain had one of the fastest-growing natural gas markets in Europe and it was the third-largest importer of liquefied natural gas in the world, according to the EIA. Spain’s gas demand fell by 3% last year alone, to 28.2bn cm, according to Cedigaz. This is down from 34.8bn cm in 2008.

Investment in a new shale-gas industry could provide a much-needed economic boost for the country. Although Spain’s unemployment level has nudged down, by 0.03% between July and September, almost 6 million people – around 26% of the population - remain unemployed.

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