Legislation Required in Fracking Debate

15 June 2011 FDI Team

Background

Hydraulic fracturing has gained prominence in Europe and America in recent weeks, with reports linking the process to earthquakes, environmental damage and illnesses. Co-ordinated State and Federal legislation is required to reconcile community concerns and development of the emerging shale hydrocarbon industry.

Comment

Australian mining companies and projects are involved in a growing international environmental furore over the hydrocarbon extraction technique known as hydraulic fracturing, or “fracking”. The process involves injecting a high pressure mix of water, sand and chemicals into resource beds to liberate deeply buried hydrocarbons. The mix, according to Royal Dutch Shell, is 99.5 per cent water and sand with the remainder ‘small amounts of chemical components, most of which are also used in household products.’

Fracking, however, has been linked to seismic activity, environmental degradation and health-related issues.

In early June, Cuadrilla Resources, a joint venture that includes a 41 per cent stake owned by Sydney-based AJ Lucas, suspended its operations off the coast of Blackpool in the United Kingdom, after the British Geological Survey recorded a series of earthquakes two kilometres from the drill site. Farmers in Arkansas, United States are filing a class action law suit against BHP Billiton, claiming that the company’s US$4.75 billion ($4.5 billion) Fayetteville shale gas venture is causing earthquakes, poisoning water and polluting the soil and air. 

Emerging shale gas and coal projects in the Surat Basin, Queensland, and the Canning Basin, Western Australia, will rely heavily upon fracking. It is imperative that the Federal and State Governments promote transparency within the sector, to ensure that safety and environmental concerns do not delay or disrupt projects. Legislation should be developed to ensure the integrity of wells prior to fracking. Legislation must also promote accountability and require companies to declare the type, concentration and volume of all chemicals in the fracking mix.

Producers also have a responsibility to manage their technical and public affairs operations, to allay public concerns. Otherwise, they risk the sector failing to meet its projected economic potential and growth.

Liam McHugh

Strategic Analyst

FDI Northern Australia and Energy Security Research Programmes

[email protected]

 

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