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Shale gas and fracking

Published Tuesday, September 27, 2016

The regulatory regime for fracking in the UK is covered in this note along with comment on environmental concerns. It also covers the new access provisions and debate on fracking in during the Infrastructure Bill’s passage through Parliament.

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Shale gas drilling in the UK is at an exploratory phase. The rapid development of shale gas resources in the US has transformed the world gas-market outlook Despite this the consensus seems to be that shale gas will not be a ‘game changer’ in the UK as it has been in the US. There is, for example, less land available to drill on and landowners do not own the rights to hydrocarbons beneath their land.

Licensing

Existing onshore petroleum exploration and development licences, are not specific to shale gas, but are now more likely to be explored for their shale potential. The Government and British Geological Survey published raised estimates of the shale gas resource in Northern England in 2012. In June 2013 Centrica acquired a 25% stake in Cuadrilla’s exploration licence in Lancashire.  On 17 December 2015, the Oil & Gas Authority (OGA) announced that licences for a total of 159 blocks were formally offered to successful applicants under the 14th Onshore Oil and Gas Licensing Round. All the licence blocks are mapped out on the OGA’s interactive map.

Environemntal Concerns

Shale gas is extracted from solid rock using a process called hydraulic fracturing, or ‘fracking’. A number of environmental concerns have been raised about fracking, including the potential for seismic events, air pollution, surface and groundwater contamination, and greenhouse gas emissions.

The Royal Society and Royal Academy of Engineering have reviewed the risks associated with fracking. They concluded that the health, safety and environmental risks can be managed effectively in the UK, by implementing and enforcing best operational practice. However, they also made several recommendations, including calling for more research on the carbon footprint of shale gas extraction.

A report on this was published by the then Department for Energy and Climate Change in September 2013, in which shale gas emissions were said to be similar to those of conventional gas and lower than those of coal and Liquefied Natural Gas (LNG), leading the Secretary of State to describe shale gas as a ‘bridge’ to a low-carbon future. However, the Committee on Climate Change concluded in July 2016 that the implications of shale gas for greenhouse gas emissions are uncertain, and that shale gas exploitation on a significant scale will not be compatible with UK carbon budgets unless tests in relation to emissions, gas consumption, and carbon reductions elsewhere are satisfied.

Infrastructure Act

The Infrastructure Act 2015 includes provisions to streamline the underground access regime, including horizontal or lateral drilling, and make it easier for companies to drill for shale gas. It also provides a number of new ‘safeguards’. On 16 December 2015 regulations were approved by the House that provide some protection against fracking at depths shallower than 1200m in protected areas. Following a consultation, the Government announced in June 2016 that further protections would be introduced through the licencing process.

The Government has legislated for tax incentives for shale gas exploration, and announced community financial benefits. It is consulting on investment in communities hosting shale gas developments, and on direct payments to households. The Labour Party announced in September 2016 that it would ban fracking.

Devolved Administraions

The Scotland Act 2016 devolved shale gas licensing to the Scottish Parliament, and the Wales Bill 2016-17 includes provisions to devolve shale gas licensing to the National Assembly for Wales. The Scottish Government announced a moratorium on fracking in Scotland in January 2015. In February 2015, the Welsh Government issued a Direction preventing local planning authorities from approving developments which included fracking.

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Commons Briefing papers SN06073

Authors: Mike Fell; Louise Smith; Matthew Keep; Edward White

Topics: Climate change, Energy, Environmental protection, Oil, petrol and natural gas, Planning, Pollution

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