Tag Archives: Europe

Fracking Europe – Spanish Edition

Joining similar efforts to the south, Spain’s Basque Country region have announced an investment partnership with European and U.S. companies to help explore the area’s shale potential over the coming year.

Following the positive results of fourteen test wells drilled in the region, the Basque president announced a plan to initiate a series of exploratory wells in the region meant to help the region access an estimated 200 trillion cubic feet of free and absorbed gas; enough to supply the country with reserves for five years or the Basque region for 60 years. Funded by an initial $100 million investment, the project will be split between three significant actors, including Basque Energy with 42.8 percent, Texas’ Heyco with 21.8 percent and Cambria Europe with the remaining 35.4 percent.

Planned for 2012, the two appraisal wells will reach upwards of 15,000 ft into the dense Cretaceous Valmaseda formation, which presents a favorable consistency of shale and dense sand for the necessary hydraulic fracturing process.

Touted as a tool for greater energy independence and sustainability both locally and nationally, the Basque shale project is the second of its kind in Spain, joining California’s BNK who launched their respective effort in the Castille and Leon region earlier this year. BNK took on 234,000 acres in the central region, with the agreement that they will conduct a geological analysis during the first year and drill two wells in year two, three and four, with three wells promised for year five. The acquisition builds on earlier investments in the region including 61,470 acres in the Northern Spanish region of Cantabria.

Although shale projects and the necessary hydraulic fracturing have elicited government and public protests as the practice spreads across Europe, these worries have not manifested themselves in any significant way in Spain. Facing a precarious economic landscape and heavy dependence on foreign energy resources, novel and unconventional approaches to energy generation have been welcome in the Southern European country, especially as alternative resources have suffered as a result of cuts in research spending and subsidies.

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Eurobonds – An Inevitable Conclusion?

Aside from the dismal showing of German bonds this morning, the story of the day appears to be the unveiling of EU President José Manuel Barroso’s proposed economic policy suggestions for how to pull the community out of the current downturn. As outlined in the Guardian this afternoon, the proposals amount to:

1. All 17 euro area countries would send their draft budget plans to the Commission by 15 October each year.
2. The Commission be able to request a new draft budget if the original showed serious divergences with commitments made by member states.
3. The Commission carry out closer monitoring of Member States under its ‘Excessive Deficit Procedure.’
4. The Commission would have the right to decide on enhanced surveillance of member states when financial stability is threatened.
5. The European Council could recommend to a Member State that it requests financial assistance.
6. All euro area Member States would be required to set up independent fiscal councils, and prepare budgets based on independent forecasts.

While Barroso’s pitch was weighed down by early resistance out of Berlin, it really seems like all of the points he made were inevitable conclusions of Euro proponents’ plans for community economic integration. Sure, they are coming earlier than expected and forcing more than one head of state’s hand in the matter, but greater transparency and reporting seems like a natural progression of integration plans for the community and really, in line with what I understood leaders like Merkel to be demanding more of out of Athens and Rome. Critics have pointed to a loss of economic sovereignty in the face of greater oversight from fellow member countries, but unless I missed something along the way, doesn’t an EU community of shared policies requires at least a level of lost independence in favor of the health of the larger community?   I understood that to always be part of the plan.

Which leads me to the other big confrontation of recent days – the viability of a Eurobond for member states. Sure, it would mean more short-term benefits for those countries in the most need of assistance and require the most from the countries that have kept things in order. But like the Barroso’s proposals listed above, the bonds seem like a natural evolution or endpoint for the community’s economic integration.

Again – yes, they are coming earlier than expected but if a tool that will eventually be a part of the economic community could help strengthen fellow member states in a time of crisis, why not adopt them earlier than later. Resistance from Merkel and Sarkozy is certainly understandable as it allows a level of acceptance of economic misdeeds, but if eventually, why not now? And if they insist on holding out until a more ideal time, how good do things have to be before they can be considered? Or how bad?

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