CHEVRON VS. PUNGESTI, ROMANIA

Abstract

The issue of operating the shale gases (non-conventional gases) divided Romanians in two categories: some are against the operation (and they are considered in the opposite category as supporters of the interests of Russia, since Romania is importing natural conventional gases mainly from Russia), the others are for (and they are considered in the opposite category as supporters of the interests of USA since the 4 existent oil agreements for shale gases were issued to the American company Chevron). How about the national interest which represents an amount of interests targeting on the one hand national security and on the other hand, its prosperity. It is certain that a judge of Vaslui County Court created the test case, taking in three cases the decision that a commune is legally entitled to decide related to the exploitation of shale gases on its territory, not the Government or another central authority, since this resource is not ruled in Romania and wasn't declared either of national public interest.

Headnote

Abstract: The issue of operating the shale gases (non-conventional gases) divided Romanians in two categories: some are against the operation (and they are considered in the opposite category as supporters of the interests of Russia, since Romania is importing natural conventional gases mainly from Russia), the others are for (and they are considered in the opposite category as supporters of the interests of USA since the 4 existent oil agreements for shale gases were issued to the American company Chevron). How about the national interest which represents an amount of interests targeting on the one hand national security and on the other hand, its prosperity. It is certain that a judge of Vaslui County Court created the test case, taking in three cases the decision that a commune is legally entitled to decide related to the exploitation of shale gases on its territory, not the Government or another central authority, since this resource is not ruled in Romania and wasn't declared either of national public interest.

Keywords: Pungesti, Chevron, shale gases, natural resources.

I. Introduction

The concept of non-conventional gases was mainly developed in the last 10 years, with the perfecting of the technologies of exploitation and extraction of this kind of gases.

The general definition of non-conventional gases, currently accepted, refers to such accumulations of natural gases which cannot be identified, characterized and commercially produced by common technologies of exploitation and production and which are lingered in tanks with low permeability and porosity, which allows the discharge only by widely applying the hydraulic fracturing and digging of horizontal or multilateral bores.

The categories of non-conventional gases identified and valued in the world are: "Shale gas", "Tight gas" carbonate tiles/rocks, CBM "Coal bed methane", "Methane Hydrates".

The common characteristic of the accumulations of non-conventional gases is the very low factor of recovery (3-10%), opposite to the conventional gases, where it is around 80%.

Since the recovery factor per deposits of non-conventional gases is very low, the volume of resources must be significant for the exploitation to be profitable. Consequently, the evaluation of the tanks of non-conventional gases needs a complex exploitation by using the most modern methods of geophysical investigation and calibration thereof by samples extracted from the geologic complexes of interest.

The hydraulic fracturing (fissuring) is the oil operation applied in the tanks with low permeability and porosity in order to artificially perform a system of micro-fissures by which there are employed the gases towards the bore hole. The procedure consists in pumping under pressure in layer of a significant volume of water mixed with relevant chemical substances submitted to such procedure, with materials of support, called propane, which maintain open the system of micro-fissures.

Thus, the exploitation of shale gases by combined technique of hydraulic fracturing and vertical drill proposed by Chevron involves high risks for people health and for the environment.

The impact on environment caused by the procedure of hydraulic fissuring is mainly related to:

- use of the areas of land (areas necessary to dig the bores, park and handle heavy plants), space necessary for surface equipments, facilities of processing the gases and transportation thereof, roads of access;

- polluting emissions in air and phonic pollution: emissions determined by transportation by truck trailer and pressure aggregates (use of thermal engine), handling fluids that contain dangerous substances and which may be released in the air;

- consumption of significant quantities of water;

- the water may be contaminated with chemical products used in hydraulic fracturing, and with waste water generated by the formations fractured or crossed, which includes heavy metals or radioactive particles; there may be accidents during the transportation by truck trailers, the potential discharges on the collection lines, damage of cement or bore columns (deficiency in the endowment of bores) or uncontrolled discharges by natural system of fissures of the tank or on plans of faults;

- it is possible an intensification of seismic movement due to hydraulic fracturing or injection of high volumes of waste water;

- Possible impact on biodiversity.

II. Situation in Pungesti

The Pungesti commune is situated around 35 kilometres far from the town of Vaslui, having an area of 7,112 hectares or around 71 square kilometres. Pungesti commune includes eight villages (Armasoaia, Cursesti-Deal, CursestiVale, Hordila, Rapsa, Silistea, Stejaru, Toporasti) with 3,500 inhabitants.

The commune residence is the village Pungesti including around 357 buildings and 947 inhabitants.

After Chevron company obtained, on 3 October 2013, the building permit to place in the count of Vaslui the first bore for the exploitation of shale gas in Romania, in Pungesti several protests were organised. The authorisation was released by the County Council Vaslui at the beginning of October 2013, the works for the arrangement of oil platform being effectively started on 2 December 2013. Almost 400 individuals protested, on 7 December 2013, on the county road Vaslui-Gârceni, against the intention of Chevron to place in the area the first bore for the exploitation of shale gas in the county of Vaslui. Pursuant to such incidents, the Police of Vaslui delimited a "special safety area" in the localities Silistea and Pungesti, where Chevron held a perimeter of 20.000 square meter, and by an order of the head of Municipal Police of Vaslui in the localities Silistea and Pungesti, as well as on the sector of county road which relates the two villages, it was significantly supplemented the number of patrolling order forces, mainly gendarmes. Incidents between gendarmes and local people from Pungesti were registered as well on 2 December, when Chevron started the works to plant the first bore for the exploitation of shale gas in Silistea-Pungesti. Several protestants accused of being attacked by gendarmes. Pursuant to such protests Chevron suspended the activity. Thus, a small local community managed to impose its will in front of the American giant Chevron, which reiterated the commitment of entertaining constructive and positive relations with the communities where it carries out the activity.

On 6 May 2014, the representatives of the company Chevron Romania announced that they started the drilling on the bore of exploitation of shale gas near the village Silistea, commune Pungesti. The bore will drill permanently for around three months until it reaches a depth of around 4.000 meters. The drilling activities, declares Chevron, started pursuant to completing all safety verifications. "Several metering will be performed and rock samples will be taken in order to determine whether the natural gas is present, as well as the manner of producing it. Our priority is to carry out such activities safely and environment friendly, in conformity to the environment agreements based on which we operate. The Chevron installations are designed in order to protect the underground water during the entire life of bore, with a robust design and being permanently tested for the verification of integrity. The drill wells Chevron have several layers of steel and cement. This creates a barrier which protects underground water by maintaining the fluids and hydrocarbons in the bore hole". The representatives of oil company assert that a condition of the system of Chevron for the management of water is represented by the building of wells for supervision in the drilling platform. Chevron will collect samples from such wells to supervise the water quality in advance, during and pursuant to the completion of drill operations. The results of such tests will be made available to the authorities in the field.

III. Who is the owner of shale gas in Romania

III.1. Permanent suzerainty over the natural resources

The state exercises fully and exclusively over its territory the suzerainty and acts with a view to achieve the duties and functions thereof, the other states having the obligation to refrain from affecting the territorial integrity of other states and the suzerain rights which they have within the territorial limits.

The fullness of territorial suzerainty of a state is expressed by the fact that, on its own territory, every state is entitled to determine the extent and nature of its competence, to rule the social relations in the most different fields, to impose authority over the entire social mechanism and to decide over the natural resources and richness.

The exclusiveness of territorial suzerainty means that any state exercises suzerainty on a certain territory and no state may exercise suzerainty on the territory of another state. If several states exercised suzerainty over the same territory, this would contradict the suzerainty concept. Between the independent states, the respect of territorial suzerainty is an essential base of the international reports.

An element, of extreme importance, of state suzerainty, is the right of every state to dispose freely of its natural richness and resources. Thus, every state is free to exploit and to use its natural richness in its own interest, in a form determined on its own discretion, not being restricted by any international obligation to explain the intervention from outside and which would prevent it to fully and exclusively exercise such right. One considers the use and free disposal of the natural resources. It is thus emphasized the permanent and intangible connection between suzerainty and independence.

According to the resolution no. 1803 (XVII) of the General Meeting of ONU of 1982, permanent suzerainty over natural resources includes:

- free and useful exercising the suzerainty of people and nations over their natural resources;

- the right of people to permanent suzerainty over the richness and natural resources must be exercised, in the interest of national development and well-being of such people;

- nationalisation, expropriation or requisition must rely on solid reasons of public utility, of security and national interest;

- breaching the rights of people and nations over richness and natural resources is contrary to ONU spirit and Charta and affects the international cooperation and peace maintenance (Anghel, p. 127-128).

This principle reveals the illicit nature of colonialism and neo-colonialism having as scope to deprive the people from their inalienable right to suzerainty over the richness and natural resources. The Charta of the economic rights and obligations of state (1974) stipulates the full and permanent suzerain right of every state over the richness, natural resources and economic activity, including ownership, right of use and disposal thereof. It is stipulated as well the right of states "to rule the foreign investments of its national jurisdiction in conformity to the laws and regulations, national objectives and priorities and to exercise authority thereof".

III.2. Shale gas in Romania?

According to the article 135 paragraph 2 letter d) of Romanian Constitution, "The state must provide for the exploitation of natural resources, in conformity to the national interest".

Currently, according to the article 136 paragraph 3 of Romanian Constitution, "The richness of public interest of the ground, air space, water with valuable energetic potential, of national interest, beaches, territorial sea, natural resources of economic area and of continental plateau, as well as other goods determined by organic law, are exclusively subject to public property". And in the next paragraph it is shown that "The goods public property are inalienable. In terms of organic law, they may be assigned to autonomous administrations or public institutions or may be leased or rented; also, they may be assigned on free use to the institutions of public utility".

Practically, in Romania the owner of subsoil with all resources is the state. It may exploit by its own means or may lease to a private company the right of exploitation. It is a matter of course that the owners of lands and those from the neighbouring areas are most of the time in disadvantage, since any kind of exploitation of subsoil (oil, gas etc.) causes a strong degradation of the environment with several consequences different to quantify.

In this system, the peasants are not owners not even of the water in the wells, since these are resources of subsoil.

Including the Law of mines of 1924 instituted the ownership of state over all subsoil resources and defined as well the regime of leases. However, the Romanian legislation does not include any kind of special regulation for the shale gas, moreover, a judge from Vaslui has created a historical test case for Romania namely: the shale gas does NOT belong to the state, but to the village. The decision of such magistrate shows that local authorities may take decisions related to the shale gas as they think properly, since Romanian laws do not classify the shale gases as a conventional subsoil resources, of national use or interest, over which only the central authority of state would have right of management and decision.

The shale gas are not included in the current law of oil no. 238/2004. According to article 1 paragraph 3 of Law 238/2008 "The natural gases include the free gases from the deposits of methane gas, gas diluted in crud oil, those from the head of gas associated to the deposits of crud oil as well as the gas resulted from the extraction of mixture of condensed gas".

The shale gas is not included either in the Law no. 213 of 17 November 1998 on public property and the legal regime of it. According to this law, there is in the public domain of state the richness of any kind of subsoil, encountered in deposit, this is not the case of shale gas since there is no complete professional study which may analyse the non-conventional gases. Therefore, one does not know the perimeters which are certainly including shale gas in Romania.

Since the non-conventional gases are not stipulated by the current Law of oil (Law 238/2004) and that the non-conventional gases are not included either in the Law of electricity and natural gases (Law 123/2012), it results that shale gas does not belong to the state, but to communes, towns, municipalities.

In conclusion, the operation of non-conventional gases on national (state) level is illegal, since the non-conventional gases do not belong to the state, it results that the oil agreements of lease concluded by state (ANRM representative) with different Romanian or foreign companies, for the operation (exploration-development- exploitation) of non-conventional gases - gases that do not belong to it - are illegal.

We consider, thus, that the operation (exploration-developmentexploitation) of non-conventional gases, on national level (by oil agreement), is illegal.

We state that the operation of non-conventional gases locally is illegal, since the non-conventional gases belong to communes, towns or municipalities, it results that the authorities of communes, towns or municipalities, and not ANRM, may decide whether to lease or not the operation of non-conventional gases to Romanian or foreign companies; and the lease would be done based on contracts specific to communes, towns or municipalities, and not based on oil agreement (stipulated in the oil law for lease of the state).

But if the authorities of a commune, town or municipality decided to lease the operation of non-conventional gases from the subsoil of such administrative-territorial unit, then the natural gas (from non-conventional sources) obtained would not be covered by the Law of electricity and natural gases no. 123/2012. Therefore, the only legal option of the authorities of a commune, town or municipality is to decide to forbid the operation of non-conventional gases (in particular shale gas) on the territory thereof.

We thus consider that the operation of non-conventional gases (shale gas included), on local level, is also illegal.

We outline that the operation of shale gas in Romania (both nationally and locally) is illegal. In other words, the shale gas cannot be operated (explorationdevelopmentexploitation) in Romania under the current legislation! However, the American company Chevron holds 4 oil agreements for shale gas, obtained as follows:

- the government has leased (pursuant to the demand submitted in July 2010) to the American company Chevron three perimeters in South Dobrogea, with exit on the Black Sea, with an overall area of 2.700 km2 (=270.000 ha) for shale gas, based on 3 oil agreements of lease for exploration-developmentexploitation, concluded between ANRM and Chevron Romania Holdings B.V.(Dutch subsidiary of the American company Chevron): in the perimeter EX - 18 VAMA VECHE, by HG no. 188 dated 20.03.2012 (published in the Official Gazette dated 28.03.2012), in the perimeter EX - 19 ADAMCLISI, by HG no. 189 dated 20.03.2012 (published in the Official Gazette dated 28.03.2012), in the perimeter EX - 17 COSTINESTI, by HG no. 190 dated 20.03.2012 (published in the Official Gazette dated 28.03.2012).

- On 29 February 2011, Chevron purchased 100% from Regal Petroleum the oil agreement for gas, for the perimeter EV-2 Bârlad of 6.257 km2 (=625.700 ha). The oil agreement was approved to Regal Petroleum by HG no. 2283 dated 9.12.2004 (published in the Official Gazette dated 4.01.2005) and assigned to Chevron by the National Agency for Mineral Resources (ANRM) in 2011; the explorations were planned to start in 2012.

The three oil agreements held by Chevron in Dobrogea were declassified on demand of civil society and published on the ANRM website.

Pursuant to the declassification of the three agreement of Chevron in Dobrogea, it may be noticed that all three agreements include on article 1 the definition: "The natural gases are the free gases in the gas methane deposits, the gases dissolved in crude oil, those from the gas head associated to the deposits of crude oil, the gas resulted from the extraction of the mixtures of condensed gas as well as non-conventional gases. Comparing this definition to the definition of natural gases of oil law no. 238/2004 we notice something in addition: "as well as non-conventional gases". Practically, ANMR has "updated" on its own authority the oil and non-conventional gas agreement, although it is not stipulated in the oil law no. 238/2004: this is the evidence that the oil law does not stipulate the non-conventional gases and that the three agreements are illegal.

It remains to be seen the opinion of the legal advisors about the legality of these three oil agreements from Dobrogea for shale gas, concluded beyond the oil law no. 238/2004. We believe these agreements are illegal in the current legislation and must be annuled.

It remains to be seen as well the opinion of the legal advisors about the legality of exploration-exploitation of -conventional gases in the perimeter of Bârlad by Chevron, with an oil agreement for conventional gases, obtained by purchase (transfer of holder) from Regal Petroleum, which exploited for so many years for conventional gases and not for non-conventional gases. We believe that Chevron cannot operate non-conventional gases based on this oil agreement which stipulates conventional gas operations, in the current legislation. By oil law no. 238/2004, article 3 paragraph 2, "The disposal of the oil agreement remain valid on its entire term", therefore this oil agreement is only for conventional gases, even if tomorrow is changed the oil law.

ANRM has to explain as well the full classification of all oil agreements - as well as of all permits of exploration and exploitation for minerals (gold, silver, copper etc.) - although article 203 letter b) of HG no. 585/2002 on the national Standards of protection of classified information expressly forbids the classification in block of contracts/agreements.

In this respect, the text of the article 203 letter b) of HG no. 585/2002 stipulates: "the classifications are applied only to those parts of contract that must be protected".

Conclusions

The issue of shale gas is integral part of the public debate in the entire Europe. In Romania the manifestations of citizens who opposed to such noxious activity are, sometimes violently repressed. As in the case of Pungesti, where Romanian gendarmerie harmed few protestants. Whose interests were protected by Romanian gendarmerie? This is a mystery! And the argument of energetic independence, supported by some representatives of political class, is not too solid. In reality, the private companies were forced to pay to Romanian state a financial royalty not in kind, and the oil law offered the company the possibility to dispose of the resources exploited including to export them. Rumania may thus obtain gases only by buying them, against the price determined by company.

In the absence of the National Strategy of development, of the Strategies of evolution, including of natural resources, and without defining the national interest (currently replaced by other kinds of interests), without a proper legislation very well implemented, the approval of an investment of the kind of valuation of shale gas is inopportune and illegal.

As seen above, the oil agreements of exploration-development- exploitation of shale gas approved for Chevron are beyond the oil law, therefore they are illegal and must be immediately annulled.

Consequently, it is necessary to vote a law which may forbid the use in Romania of the method of hydraulic fracturing of rocks in the explorationdevelopmentexploitation of shale gas.

The fact that several states from Europe decided against the use of this method is an additional argument. The Romanian government should consider that France forbade in the summer of 2011 this activity, the Bulgarian Government and Parliament adopted similar measures in 2012, Denmark, Netherlands, Czech and Ireland instituted moratoria, and also in Germany the land Westafalia-North Renania. In Great Britain, pursuant to the earthquakes from Blackpool determined by hydraulic fracturing, the exploration activity was suspended for a while. Several states from USA imposed moratoria (Virginia, New Jersey, Ohio, New York, Pennsylvania) and in other such as Vermont it is completely forbidden.

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