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Protests force OMV to shelve shale drilling plans

Protests over the use of hydraulic fracturing (fracking) have derailed, at least temporarily, OMV’s plans to explore for shale gas in southern Austria

Public unease over fracking has grown over the past six months. In an attempt to allay fears, the Austrian company said it would delay drilling until environmental studies are completed.

OMV takes the population’s concerns regarding an evaluation of Austria’s shale-gas potential very seriously,“ the company said in a statement. It added that it would “await the results of the environmental and social impact assessment studies from Austrian Bundesumweltamt and TÜV. For the time being, we will not submit any project applications to the relevant authorities,“ referring to studies being carried out by the federal environmental agency and an independent safety consultancy group. A company spokesperson declined to say how long the studies will take to complete.

The delay is a setback for OMV, which had planned to spend €130 million ($172m) on its initial exploration programme in the Vienna basin in the province of Lower Austria. It had planned to spud two test wells. OMV said earlier it believed the basin could hold as much as 300 trillion cubic feet (cf) of in-place shale-gas resources, of which 15 trillion cf might be recoverable.

The country consumed 335 billion cf of gas in 2010, according to the US Energy Information Administration (EIA). It produced 61bn cf, and imported the rest of its demand from Russia, Germany and Norway. Russia provides the bulk of Austria’s gas imports, supplying 185bn cf in 2010. If OMV’s estimates are correct, Austria’s shale-gas reserves could be sufficient to meet domestic demand for several decades.

High costs and environmental opposition, however, pose formidable challenges to OMV’s Austrian unconventional exploration plans. The company’s former chief executive, Wolfgang Ruttenstorfer, warned in 2010 that the depths and high pressure of shale formations in the Vienna basin called into question the economic and technical viability of exploring there. “In America, where the shale gas is at [3,000-4,000 metres] depth, you can [drill a well] for $5 million. Here, these holes will cost between $20m and $50m,” he said at the time.

While high costs remain a challenge, environmental opposition has come to the fore. OMV has sought to address criticism of its plans by saying that it planned to use a more environmentally friendly form of fracking than used in the US. To that end, OMV has touted a form of “clean fracking” that it planned to deploy that would replace the chemicals typically used in fracking fluids in the US – which critics claim could poison groundwater supplies – with cornstarch. OMV has also argued that it has already safely fracked a number of conventional wells to improve production levels.

Critics, though, have been unmoved. Last month the governor of Lower Austria, Erwin Pröll, introduced legislation that would require an environmental impact assessment be carried out before OMV was able to start shale-gas drilling. That opposition has been echoed at the federal level. Austria’s environment minister Nikolaus Berlakovich said in November last year that he was “absolutely opposed to shale gas drilling”, adding that “the gas should stay in the rocks.”

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