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10 February 2014
On November 28 and 29 2013 the National Agency of Petroleum, Natural Gas and Biofuels (ANP) executed the 12th Bidding Round, which offered 240 onshore blocks of potential natural gas areas and marked a new milestone for the exploration and production industry in Brazil. For the first time, the bid included the potential non-conventional reservoirs of shale gas to be exploited by concessionaires situated in the Acre, Parecis, Sao Francisco, Parana and Parnaiba basins.
As is the case in other countries embracing similar developments, this has placed Brazil in the midst of a controversial debate on the technical criteria and environmental rules that should govern the exploitation of shale gas. Particular emphasis has been placed on the environmental impact and potential risks associated with the hydraulic fracturing ('fracking') technique used to extract natural gas.
The technique was originally developed in the United States by oil and gas companies aiming to maximise the production of oil and natural gas from non-conventional reservoirs. The technique involves cracking shale rocks through high-pressure injections of a mixture of sand, water and chemical substances, in order to force the oil and natural gas in the formation to flow into the well bore, from where it can be extracted. Although fracking may have introduced a new era in energy production and even allow countries such as the United States to achieve or increase their energy security, the input of chemical products into these non-conventional reservoirs may result in soil and groundwater contamination, as well as other environmental impacts such as increased greenhouse gas emissions.
With the aim of establishing reasonable risks for the development of shale gas exploitation in Brazil and preventing accidents, the ANP recently opened for public consultation a draft resolution that will regulate the criteria that must be met before oil wells can be drilled.
According to the draft resolution, block operators must establish an environmental management system that complies with the best practices of the petroleum and natural gas industry and guarantee that it is implemented faithfully. This must contain a detailed plan on the control, treatment and disposal of solid and liquid waste. The operator must also prepare and ensure the enforcement of an emergency plan that specifies the resources available and the ratio of emergency contacts and scenarios identified in the risk analysis. Such plan must cover issues specific to hydraulic fracturing.
Despite the search by the ANP for a regulatory solution to assure the feasibility of shale gas exploitation in Brazil, as well as the operation of oil and gas blocks that were granted in the 12th Bidding Round, the environmental agencies remain silent on the suitability of fracking in terms of Brazilian legislation. It is clear only that any work and activities will depend on prior analysis and approval by the environmental agencies. Any damages eventually raised from the exploitation of oil and gas reservoirs will trigger the accountability of concessionaires, operators and/or subcontractors.
For further information on this topic please contact Maria Alice Doria at Doria, Jacobina e Gondinho Advogados by telephone (+55 21 3523 9090), fax (+55 21 3523 9080) or email (firstname.lastname@example.org). The Doria, Jacobina e Gondinho Advogados website can be accessed at www.djga.com.br.
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Maria Alice Doria