Ukraine: Shell, shale gas and corruption

26 February 2014

Shell must break off a deal with Ukraine on shale gas, according to Milieudefensie/Friends of the Earth Netherlands, following revelations of environmental damage and potential corruption. A new report from Friends of the Earth Netherlands and Ukraine maps the environmental impacts of Shell's activities in eastern Ukraine, including harmful techniques unacceptable in many European countries and open reservoirs for toxic fracking water, and highlights potential corruption. In 2013, Shell entered into a deal with recently ousted President Viktor Yanukovych [1].

Geert Ritsema, head of the energy and natural resources campaign at Friends of the Earth Netherlands said: "Shell must withdraw its agreement with the Ukrainian state now that Yanukovych has been removed. The Ukrainian people never assented to shale gas. Ukrainians are being doubly penalised by Shell: the environment is being polluted as Shell is dumping toxic waste water into open reservoirs and it also seems that Nadra Yuzivska is being used for funnelling money to Yanukovych and his supporters."

In January 2013, Shell entered into a US$ 10 billion shale gas deal with the Ukrainian government and the Nadra Yuzivska LLC company. This company receives half of the profits and is 90% owned by the state. The remaining 10% is owned by a small company [2] linked to ousted President Viktor Yanukovych and suspected of serving as a cover to channel funds to the Yanukovych family [3].

Toxic fracking water in open reservoirs

Investigations into Shell's drilling locations [4] revealed polluted drilling liquid and fracking water stored in open-air reservoirs, separated from groundwater by only a layer of plastic. The water in these reservoirs contains fracking chemicals and toxins such as heavy metals, volatile organic compounds and radioactive materials [5]. These toxic substances are extremely harmful to human health if found in groundwater or evaporated in the air [6].

Geert Ritsema said: "Shell employs a double standard and would rather drill for shale gas in countries where regulations and enforcement are not as strict."

In the Netherlands, storing fracking water in open reservoirs is not permitted, due to the danger of leakage and the vaporisation of harmful substances such as benzene. Moreover, large quantities of methane, a greenhouse gas that has a great impact on climate change, vaporise from open reservoirs. If drilling fluids and fracking water are stored in sealed tanks, the major part of this gas can be captured, but not from open reservoirs [7].

Shale gas protests worldwide

In the Ukraine opposition to shale gas is increasing, primarily due to the dangers of groundwater pollution, earthquakes and the impact on the landscape.

Pavlo Khazan, campaign leader at Zelenyi Svit/Friends of the Earth Ukraine: "The Ukrainian people have never agreed to shale gas. A number of municipalities have declared themselves 'shale gas free'. Now that Yanukovych has been ousted by the Ukrainian people, a new government must immediately end this contract with Shell."

Friends of the Earth Europe is calling on the European Commission to investigate large European companies involved in corruption issues with the ousted Ukrainian government.

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NOTES

[1] 'Ukraine and Shell sign $10bn shale gas deal' http://www.bbc.co.uk/news/world-europe-21191164

In addition to the deal made in Davos in January 2013, Shell also has a partnership agreement with the Ukrainian gas company Ukrgazvydobuvannya for unconventional gas extraction in the same region. More information on both partnership agreements can be found on Shell's Ukrainian website (in Ukrainian): http://www.shell.ua/aboutshell/our-business-tpkg/onshore/where-we-operate.html

[2] SPK Geoservice: http://spkgeoservice.com.ua/

[3] News items on the links between Yanukovych and Nadra Yuzivska LLC:

Forbes news item (in Russian): http://forbes.ua/business/1338156-rassledovanie-partner-shell-i-chevron-v-gazovyh-proektah-neprostaya-malenkaya-firma

Pravda news item (translated from Ukrainian by the Anticorruption Action Centre): http://antac.org.ua/en/2012/08/partners-of-exxonmobil-and-shell-companies-based-in-bedroom-communities/

News item: 'Ukriane to become shale gas superpower':

http://oilprice.com/Energy/Natural-Gas/Ukraine-to-Become-Shale-Gas-Superpower.html

[4] Shell has a permit to drill for shale gas in an area of nearly 8,000 square kilometres between the cities of Kharkov and Donetsk in eastern Ukraine. The first drilling was done at the end of 2013, and is now taking place at the second location. Images of the two drilling locations (Belyaevsky-400 near the village of Vesele and Novo Mechebylivska-100 near the village of Alisivka ) can be requested from Milieudefensie. Shell plans to carry out drilling in ten locations in 2014 and start commercial shale gas extraction in Ukraine in 2015 (news item 27 January 2014: 'Ukraine's cooperation with Shell expanded' http://en.for-ua.com/news/2014/01/27/104827.html).

[5] Four reservoirs measuring 7,500 m3 are situated at the drilling locations. At the Belyaevsky-400 drilling location, three reservoirs are currently filled with fluid and drilling waste; the fourth reservoir is intended for fracking water storage. At the Novo Mechebylivska-100 drilling location, reservoirs have been dug but are not yet in use.

[6] "An Evaluation of Water Quality in Private Drinking Water Wells Near Natural Gas Extraction Sites in the Barnett Shale Formation", Environmental Science & Technology; DOI:10.1021/es4011724 - http://pubs.acs.org/doi/abs/10.1021/es4011724?journalCode=esthag

"Impacts of Shale Gas Wastewater Disposal on Water Quality in Western Pennsylvania", Environmental Science & Technology; DOI:10.1021/es402165b - http://biology.duke.edu/jackson/est2013.pdf

"Estrogen and Androgen Receptor Activities of Hydraulic Fracturing Chemicals and Surface and Ground Water in a Drilling-Dense Region", Endocrinology; DOI: 10.1210/en.2013-1697 - http://medicine.missouri.edu/news/docs/en.2013-1697.full.pdf

"Birth Outcomes and Maternal Residential Proximity to Natural Gas Development in Rural Colorado", Environ Health Perspect; DOI:10.1289/ehp.1306722 - http://ehp.niehs.nih.gov/1306722/

[7] Methane is a greenhouse gas that is 83 times as powerful as CO2 for the first 20 years. In the Environmental Impact Report for the Belyaesvska-400 drilling location, Shell stated that the methane emissions during the fracking phase would be 15.7 tonnes (Table 4.2.18 line 7, column 7 p. 54 http://s04.static-shell.com/content/dam/shell-new/local/country/ukr/downloads/pdf/update20130830/obhc-b400.pdf).

A study on comparable shale gas wells in the US with both open reservoirs and sealed storage tanks including methane capturing installations (Allen et al. 2013) shows that average emissions in the fracking phase is 1.7 tonnes of methane. The lowest measured emission in that study was 0.04 tonnes of methane, with the use of the best available techniques such as also required by the European shale gas guidelines. Methane emissions at Belyaesvska-400 are thus nearly 400 times higher than permitted European limits.

 

Netherlands, Ukraine