Industry backs single planning and licensing regime for UK shale, according to survey

Out-Law News | 20 Jan 2014 | 3:37 pm | 2 min. read

Most companies involved in the early stages of the UK's shale gas industry support the creation of a single regulatory regime covering planning, environmental and health and safety permits, according to an industry survey by Pinsent Masons, the law firm behind Out-Law.com.

60% of the industry leaders interviewed by the firm (20-page / 5.4MB PDF) said that they would be more likely to get involved in shale gas if the Government backed one over-arching regulatory and licensing regime. In addition, 59% of those interviewed agreed that the Coalition Government should reconsider its policy of not allowing shale applications to be classed as Nationally Significant Infrastructure Projects (NSIPs), allowing them to benefit from a fast-tracked planning regime.

Nearly two thirds of survey respondents said that it would be at least a decade before shale gas made a significant impact on the UK's energy market, while a further 13% thought that it could take up to 20 years. Respondents included members of government bodies such as the All-Party Parliamentary Group for Oil and Gas, and professionals in related fields including planning, environment and the wider oil and gas industry.

"We are at the beginning of a shale gas revolution, but we must recognise that significant investment of time and money is required to ensure success," said energy expert Bob Ruddiman of Pinsent Masons.

"Injecting funds into our supply chain is essential if we want to experience the type of boom seen across the Atlantic. We have the opportunity to provide this funding and focus on what infrastructure and technology we need to ensure shale gas features highly in the UK's future energy supply. Now at the early stages of exploration, it's imperative that we invest in the future and look ahead to a time when shale gas will be a significant element of our energy mix," he said.

Almost every aspect of shale gas exploration, from initial exploratory drilling through to the eventual decommissioning of a future shale well, is already covered by existing legislation. Under environmental laws alone, nine separate applications must be made by developers.

However, despite their concerns in relation to the complexity of the regulatory regime, 52% of survey respondents said that the Conservative Party had come up with the clearest policies to promote exploration and production of shale gas in the UK, while only 2% felt the same about the Labour Party. The Coalition Government's overall record on shale gas policy, including tax breaks and commitments to streamline the licensing regime, was backed by 40% of survey respondents while a slightly higher figure of 42% said that they were dissatisfied.

Other potential challenges to the development of shale gas indentified by respondents included localism or 'nimbyism', with 55% of respondents indicating the need to engage with local residents at the earliest possible stage of any development. Respondents also highlighted a perceived lack of political backing, lack of scale and lack of knowhow and skills. They were also divided on whether protests over exploratory drilling in Balcombe, Sussex during the summer of 2013 would affect investment in UK shale, with 45% believing that the protests did impact the case for investment and 45% believing that they did not.

"Unlike other energy resources in the UK, shale gas is a new and relatively unknown quantity, triggering much concern," said energy expert Paul Rice of Pinsent Masons.

"It is widely accepted that prudent controls will play a major role in providing reassurance. Given the clear concerns expressed by industry around local opposition, it is clear that transparency of process and genuine communication with local residents around those controls will be perhaps the most significant factors in determining the future of shale gas production in the UK, almost irrespective of community incentive packages," he said.

The UK Onshore Oil and Gas Operators Group (UKOOG) will consult shortly on how community benefits will be paid to local residents when shale gas exploitation or exploration works take place. Local communities are due to receive £100,000 when a test well is fracked, plus a further 1% of revenues if shale gas is then discovered. Industry proposals could include direct cash payments to those living near fracking sites and the setting up of local funds, to be directly managed by local communities.