National Report: Austria. Contract /2014/690962/ETU/ENV.F.1

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1 Study on the application in relevant member states of the Commission recommendation on minimum principles for the exploration and production of hydrocarbons (such as shale gas) using high-volume hydraulic fracturing National Report: Austria Contract /2014/690962/ETU/ENV.F.1 December 2015

2 This report has been prepared by Milieu Ltd and Ricardo under Contract /2014/690962/ETU/ENV.F.1. This report was completed by Helene Hoffmann (Milieu). Information and views set out in this Report are those of the author and do not necessarily reflect the official opinion of the Commission. The Commission does not guarantee the accuracy of the data included in this study. Neither the Commission nor any person acting on the Commission s behalf may be held responsible for the use which may be made of the information contained therein. This report was not aimed at checking the conformity or compliance with existing EU legislation but was aimed only at examining how different pieces of EU legislation were applied in practice at planning, licensing and permitting level. (Belgium), Chaussée de Charleroi 112, B-1060 Brussels, phone: ; web address: Project manager: Florent Pelsy, florent.pelsy@milieu.be 2014/70/EU in Austria / 2

3 Table of content 1. Main finding from the report Background Information Licensing and Permitting procedures in the Austria SEAs Licenses and permits EIAs, screenings, risk assessments Sites selected under this study Application of Commission Recommendation 2014/70/EU Strategic planning and environmental impact assessment (Point 3) Strategic environmental planning (Points 3.1 and 3.4) Administrative capacity (Point 13) Adequate resources (Point 13.1) Conflict of interest (Point 13.2) Applicable EU legal requirements at planning, licensing and permitting levels Regulatory and non-regulatory developments Judicial proceedings/case law Potential legal uncertainties Potential useful practices /70/EU in Austria / 3

4 1. Main finding from the report Although Austria holds potential shale gas resources, up to date these resources have not been exploited using high-volume hydraulic fracturing Licenses have been granted by the government to two companies to explore and exploit hydrocarbons in specific areas. However, so far no permits have been granted on actual exploration and exploitation activities by the relevant authorities at the regional level (Bundesländer). One of the two companies, the OMV Austria Exploration & Production GmbH, had planned exploration activities in However, these plans were abandoned by the company, due to financial infeasibility (official statement) in The licencing process in Austria occurs in two steps. Firstly, the federal government grants licences for the right to explore and exploit hydrocarbons in a specific area. Secondly, the government of the province in which this granted area is located, has to grant a permit for the actual exploration and exploitation activities. This second licensing process is based on an Environmental Impact Assessment, which is compulsory in Austria prior to any shale gas exploration and exploitation activities since SEAs are not foreseen to be carried out before shale gas exploration or exploitation activities by Austrian legislation and none has been carried out prior to any hydrocarbons tenders so far. Little information exists regarding the exploration and production of unconventional reservoirs in Austria. The majority of information presented in this report is based on a questionnaire and a number of follow-up questions, filled in by a representative of the department for Mining and Energy in the Austrian Federal Ministry for Science, Research and Economics (BMWFW; Bundesministerium für Wissenschaft, Forschung und Wirtschaft) 2. Background Information 2.1. Licensing and Permitting procedures in the Austria In Austria, the federal state owns the right to explore and exploit natural gas, as defined by 68 of the Mineral Resources Act, BGBl.I no. 38/1999, as amended by Federal Law No. BGBl.I. 40/2014 MinroG (Mineralrohstoffgesetz). According to 69 paragraph 1, the federal government is empowered to grant the rights for exploring and exploiting hydrocarbons in specified areas based on a reasonable compensation, to natural or legal persons or partnerships of commercial law, who have the necessary technical and financial resources to open and maintain a mining industry. Based on this, a civil contract will be agreed, in which the general rights and obligations of the exploration and exploitation should be fixed ( 70 MinroG). Therefore, a license for the exploration and exploitation of hydrocarbons requires contract negotiations with the federal government. The initiative for establishing such a contract lies within the company, which is interested in exploring or exploiting hydrocarbons in a specific area. 2014/70/EU in Austria/ 4

5 All hydrocarbon operations require administrative procedures and permits for e.g. working programs, original construction and operating licences for uncompleted and completed wells according to the Mineral Resources Act and other provisions (e.g. nature conservation act, water act). In addition, since 2012, an EIA will have to be carried out before any shale gas exploration and exploitation activities, as defined by the amending federal law UVP-Gesetz-Novelle BGBl. Nr. 697/1993 idf BGBl.I Nr. 14/2014. The EIA supervision lies within the responsibility of the provincial government SEAs No SEAs have been carried out so far. This is not foreseen by the Austrian National Mineral Resource Legislation (MineroG). Furthermore, the representative from the Austrian Federal Ministry for Science, Research and Economics (BMWFW) states that no plans or programs for licenses within the meaning of the SEA Directive exist Licenses and permits Until now Austria has granted exclusive rights to explore and exploit hydrocarbons in defined geographical areas to two companies. One of the two companies, Rohöl-Aufsuchungs Aktiengesellschaft, has never made any attempt to use this licence for shale gas exploration or exploitation activities. The other company, OMV Austria Exploration & Production GmbH, planned shale gas exploration and exploitation activities in in the Weinviertel area of Austria. The shale gas exploration and exploitation was supposed to be carried out through a form of clean fracking, where only water, corn starch and quartz sands were planned to be applied. However, the company retreated from these plans before having carried out any activities in The official statement for the abandoning of plans was economical infeasibility of the project. 1 Nevertheless, around the time of the company s resignation, in August 2012, the Austrian Parliament decided on an amending legislation, the UVP-Gesetz-Novelle (BGBl. Nr. 697/1993 idf BGBl.I Nr. 14/2014), which as described above obliges the execution of an Environmental Impact Assessment for hydro-mechanic fracturing ("frac treatment") of rock layers in unconventional oil and gas deposits. In the government bill concerning the EIA Act Amendment 2012 (UVP Gesetz-Novelle) the creation of the amendements was justified by the fact that previously the process of hydrofracturing for the exploration and extraction of shale gas had not been an issue in Austria and the EU, however at the time, Austrian companies were considering the extraction of shale gas (i.e. specifically in the Weinviertel). Furthermore, shale gas exploration and exploitation developments could lead to significant environmental impacts, therefore the Austrian government considered relevant to introduce new legislation to regulate hydraulic fracturing ("frac treatment") of rock layers in unconventional oil and gas deposits during exploration and exploitation. The government defines unconventional oil and gas deposits as deposits from which natural gas or oil does not flow towards the borehole without additional technical measures (i.e. such as fracking). These include tight oil, tight gas, shale gas, shale oil and natural gas from coal seams. Until now, based on the two concessions mentioned above, no specific permit was granted by Austrian authorities for the exploration or exploitation of hydrocarbons using high-volume hydraulic fracturing. Furthermore, the Austrian federal ministry stated that currently no plans seem to exist regarding future application for shale gas exploitation permits. 1 For official company statement see here as 2014/70/EU in Austria/ 5

6 2.4. EIAs, screenings, risk assessments No EIAs related to shale gas exploitation have been carried out so far in Austria, as there was and is no shale gas exploration and production until now. However, as mentioned above, according to the Austrian legislation, an EIA is required for the exploration and exploitation of hydrocarbons using hydro-mechanic fracturing of rock layers in unconventional oil and gas deposits. N/A Sites selected under this study 3. Application of Commission Recommendation 2014/70/EU 3.1. Strategic planning and environmental impact assessment (Point 3) Strategic environmental planning (Points 3.1 and 3.4) A SEA is not foreseen by the Austrian legislation before shale gas exploration and exploitation activities. The Mineral Resources Act does not define or programs for licenses within the meaning of the SEA Directive, which could be subject to a SEA assessment Administrative capacity (Point 13) Adequate resources (Point 13.1) The representative from the BMWFW states that the adequacy of competent authorities (human, technical and financial resources) would depend on the extent of the granted activities. As no activities have been granted so far, this cannot be discussed Conflict of interest (Point 13.2) It appears as if no conflict of interest exists regarding the exploration and exploitation of shale gas in Austria, because the authorities responsible for the development of hydrocarbon exploration and exploitation are separated from the authorities permitting those activities from an environmental impact perspective. The federal state is the owner of the shale gas resources and is represented by the Federal Ministry for Science, Research and Economics and partly by the Federal Ministry of Finance. On the other hand, the authorities permitting the necessary EIA before shale gas exploration and exploitation, but also regarding environmental impacts, such as on water or through mining waste, are the governments of the provinces. The two are clearly separated from another, therefore conflict of interest is avoided. Overall, the representative of the BMWFW states that the Austrian federal government is not leading any projects related to the promotion or support of shale gas exploration and exploitation activities in Austria. 4. Applicable EU legal requirements at planning, licensing and permitting levels The Austrian authorities state that if applications for exploration and production activities of shale gas using high-volume hydraulic fracturing would be received in the near future, the processes discussed under 2.1 and 2.2 above would apply taking into account the relevant EU legal requirements 2014/70/EU in Austria/ 6

7 Competent authorities do not have a clear view on how these requirements would apply in practice due to the lack of unconventional gas developments in Austria. 5. Regulatory and non-regulatory developments Austria did not implement any new law or regulation on shale gas exploration and exploitation since the publication of the Commission recommendation. The responsible authorities report that they are unaware of any non-regulatory developments. 6. Judicial proceedings/case law N/A. 7. Potential legal uncertainties The representative from the BMWFW states that no legal uncertainties are known. 8. Potential useful practices As already described above, an EIA in Austria is not only compulsory before shale has exploitation, but also before exploration activities, since the implementation of the law amendment UVP-Gesetz- Novelle in /70/EU in Austria/ 7