Out-Law News | 18 Dec 2013 | 4:55 pm | 3 min. read
Energy and planning law expert Jennifer Ballantyne of Pinsent Masons, the law firm behind Out-Law.com, was commenting alongside the publication of an independent assessment of the potential economic and environmental effects of expanding onshore oil and gas exploration and production. The Government has also published a regulatory 'roadmap' for onshore oil and gas exploration, setting out the series of permits and permissions developers must obtain before they can begin exploration.
"These publications are a huge step in the right direction for the UK's shale gas industry," Ballantyne said. "By identifying large areas of the UK as being potentially the subject of shale development, shale gas developers now have more certainty to aid much-needed investment and drive forward the shale gas industry in earnest, while also local residents within those areas will be empowered to become involved in the consultation process."
"If we want to properly explore the opportunities which shale gas could present in the UK, industry will need to engage with residents, bringing them together with the developer community from the very initial stages of the planning process. This will foster transparency and trust, and demonstrate to communities exactly how they will directly benefit from this new energy resource," she said.
Produced by engineering consultancy AMEC on the request of the Government, the Strategic Environmental Assessment (SEA) sets out the potential impact of further onshore oil and gas exploration and development in the UK under both 'low' and 'high' activity scenarios. AMEC concludes that up to 32,000 full-time jobs could be created if a "substantial" amount of shale gas is produced during the 2020s, while local communities could receive almost £1 billion in community benefits.
However, this level of activity could also impact on emissions levels and water resources, and increase traffic congestion in affected communities, according to AMEC. In particular, it noted that up to 108 million cubic metres of water could need to be transported for treatment off site, which could "place a substantial burden on existing wastewater treatment capacity". The effects of this could be reduced through onsite treatment and reuse, scrutiny through the planning system and cooperation between operators and the water industry, as set out in their recent memorandum of understanding, it said.
The Government is consulting on the SEA's findings until 28 March 2014, and will consider any responses before taking forward plans for further onshore oil and gas exploration and production licensing, it said. It plans to conduct its 14th onshore licensing round next year.
Shale gas is natural gas trapped within shale formations at significant depths below ground. It has become an increasingly important source of natural gas in the US; particularly over the past decade, where a combination of drilling and 'fracking' has facilitated access to large volumes of shale gas that were previously uneconomical to exploit. Fracking involves pumping water at high pressure into shale rock to create narrow fractures, through which trapped gas can flow out and be captured.
The SEA covers five broad geographic areas which, due to their geology, are "most likely" to contain hydrocarbons for exploitation. These cover approximately 100 square kilometres and are broken down into Scottish Midlands; West Midlands, North West England and Southern Scotland; East Midlands and Eastern England; North and South Wales; and Southern and South West England. Whether or not these areas actually contain exploitable reserves will not be known until further exploratory work and analysis is carried out.
"There could be large amounts of shale gas available in the UK, but we won't know for sure the scale of this prize until further exploration takes place," Energy Minister Michael Fallon said.
"It is an exciting prospect, which could bring growth, jobs and energy security. But we must develop shale responsibly, both for local communities and for the environment, with robust regulation in place," he said.
In a statement to Parliament, Fallon explained that the new 'regulatory roadmap' also published by the Government did not contain any new policy, but set out the current exploration and appraisal processes in one place with consideration for the regulatory differences between England, Scotland, Wales and Northern Ireland. Almost every aspect of shale and coal bed methane exploration and production is already covered by existing regimes.
"Shale gas developers are currently required to obtain a variety of consents from a number of different authorities," said energy and planning expert Jennifer Ballantyne. "While this position has not changed, by producing a roadmap of the relevant consenting requirements across the UK, DECC has provided a transparency of process which is critical to a successful shale gas industry in the UK."
"Strong but fair shale gas regulations, and a proper balance of economic environmental and community interests, will allow developers to proceed under the scrutiny that a nervous public demands," she said.