Bulgaria cancels Chevron shale gas permit

SOFIA Tue Jan 17, 2012 10:19am EST

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SOFIA (Reuters) - The Bulgarian government, preparing a full ban on shale gas drilling due to environmental concerns, on Tuesday cancelled a exploration permit for the unconventional energy source that it granted to U.S. energy major Chevron in June.

The centre-right government decided Chevron can still prospect for oil and gas in northeastern Bulgaria but only by using conventional drilling techniques and not hydraulic fracturing, which involves injecting water mixed with sand and chemicals at high pressure into shale formations.

"The idea is that they can still have the right to test for oil and gas, but without using the controversial technology hydraulic fracturing," Economy and Energy Minister Traicho Traikov told reporters after a cabinet meeting.

Traikov said Chevron had not been informed and talks with the company were pending.

The decision comes a day before the parliament debates a total ban on hydraulic fracturing, or fracking, in the Balkan country and its Black Sea territorial waters - a proposal drafted by the ruling GERB party which is expected to be passed.

The government in June granted a 5-year permit to Chevron to prospect for shale gas at the 4,400-square-km Novi Pazar field for which initial estimates, based on similar rock formations, showed potential reserves of between 300 billion and 1 trillion cubic meters of shale gas.

It hoped to reduce the country's almost complete dependence on gas imports from Russia's Gazprom.

Other former Soviet-bloc states such as Poland are aggressively pursuing unconventional gas to help ensure future energy security. The Czech Republic and Hungary are two other countries exploration companies see as potentially promising.

In Bulgaria there have been widespread calls for a moratorium on shale gas exploration over concerns it may poison underground waters and trigger earthquakes.

Critics worry that fracking fluids might get into groundwater-holding aquifers and contaminate them.

The impact of shale gas exploration, which has revolutionized the U.S. natural gas industry, has been under scrutiny globally.

France banned fracking in July, while Britain suspended the deep-excavation practice near Blackpool after minor tremors in the spring.

(Reporting by Tsvetelia Tsolova; Editing by Anthony Barker)

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