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Task Force on Shale Gas Launches Fourth Report on Economic Impacts

London, UK, 15 December 2015 - Shale gas can be produced safely and usefully in the UK, and can help the UK with the transition to a renewable economy, provided the strictest environmental standards are in place. 

This is the overarching conclusion of the Task Force on Shale Gas in their final report; but they conclude that exploratory drilling should go ahead as soon as possible, in order to establish clearly how much gas is available and what sort of industry might be possible. 

The report found that, provided the highest regulatory and industry standards, there is no more risk to the public from fracking than other comparable industries.

Lord Chris Smith, chair of the Task Force on Shale Gas said: “Our conclusion from all the evidence we have gathered over the past year is clear. The risk from shale gas to the local environment or to public health is no greater than that associated with comparable industries provided, as with all industrial works, that operators follow best practice.”

“The size of the UK industry’s impact will depend on its (as yet unknown) potential output. We recommend that a number of exploratory wells should be allowed to go ahead, under the very strict environmental safeguards that we have outlined in our previous reports, in order to establish a much clearer picture of where and how much recoverable gas there is in the UK. Only when we have a better understanding of how much gas could be recovered in the UK will the public be able to make an informed decision as to whether they support it.”

The Task Force is convinced that gas has a role to play as an interim energy source over the short and medium term. However, the Task Force insists that even exploratory drilling must not be allowed to restrict or prohibit the ongoing development of a renewables and low-carbon energy industry to meet the UK’s mid-to-long-term energy needs. In its third report the Task Force called on Government to commit to applying its energy specific revenue to investment in R&D and innovation in CCS, and is therefore disappointed at the government’s decision to withdraw their £1billion support for CCS demonstration projects. 

A summary of final recommendations and best practice is as follows:

  • Transparency must be placed at the heart of any nascent shale gas industry. Operators must agree to full disclosure of the chemical content of materials used in shale gas exploration and production and agree that the specific composition will not exceed levels mandated by the Environment Agency. The Task Force does believe operators must do everything possible, and be transparent, in seeking to minimise the effects that their works will have on nearby residents.
  • Baseline monitoring of air, land and water should begin as soon as a site has been identified
  • Operators must be held to the very highest standards for well integrity. Operators must commit to using only the very best materials and techniques, and to allow independent monitoring of the site, with the community involved in an oversight role, to ensure that any indication of a failure of well integrity can be identified quickly and remedied.
  • The process of “green completions”, recently made compulsory in the US, should also be mandated in the UK for production wells. The Task Force would wish to see no venting of gases, and for the exploratory phases small time-limited flaring permissions granted only when necessary.
  • Local residents should have a direct role in monitoring any operations in their area. Monitoring of sites is essential. The Task Force believes that, in order to foster trust between operators and the communities in which they wish to work, inspections must be carried out by an appropriate regulatory body with community representatives able to attend to ensure complete transparency.
  • The Government must commit to ensuring that the regulatory system for the shale gas industry is robust and fully resourced. The existing regulatory system is currently fit for purpose, as it will inevitably take time for a new industry to grow. If a shale gas industry does develop, however, the Government should explore the possibility of creating a bespoke regulator specifically to oversee this industry, to assume the current responsibilities of the Environment Agency, Health and Safety Executive and the regulatory responsibilities of the Department of Energy & Climate Change.

On the economic impacts explored in the fourth report, the Task Force is convinced that a shale gas industry in the UK has the potential to create thousands of jobs directly and support a wider supply chain indirectly. If it proceeds, the Government must commit to appropriate skills training in areas in which shale gas production will occur. The Task Force concluded that a domestic shale gas industry provides a clear means of strengthening the UK’s energy security and mitigating against potential risks to energy supply.

Lord Smith said, “Without exploratory drilling the economic impacts of shale gas remain largely unknown. However, we make two strong recommendations to make sure the benefits are felt. First, the Government must commit to appropriate skills training in areas in which shale gas production will occur. And second, we recommend that operators and Government specify details on how the creation of successful production sites will benefit residents living nearby.”

The Task Force further called on operators (or UKOOG) to outline exactly how they intend to provide £100,000 of community benefits for exploratory well pads. Local communities have the right to know how they will benefit and, where possible, should have a say in how they benefit. For all wider community payments, the industry and Government should define exactly what is meant by “communities”. Additionally the administration of community benefits payments should involve residents and local authorities working together, supported by the operators.

Furthermore, the Task Force sees a need for greater clarity about tax incentives such as halving the rate of tax applied to profits of shale gas and these ought to be reviewed in full if and when an industry (of any scale) is up and running.

“We have always said that it is up to individuals to make up their own minds about shale gas on the basis of reliable and factual information. The guiding principle of the Task Force has been to provide that information,” said Lord Chris Smith, “Our recommendations in this fourth and final report are the culmination of more than a year of academic review, input from industry, experts, campaigners and relevant associations. We look forward to both the government and the public’s response.”

The Task Force on Shale Gas was launched in September 2014 to give careful consideration to public concerns, and to provide an impartial and transparent assessment of the potential benefits and risks of shale gas extraction to the UK. For more information visit www.taskforceonshalegas.uk.

ENDS

Notes to editors:

The Task Force has been funded by businesses that operate in the shale gas industry. However it operates completely independently from its funders; and the funders have committed themselves to the Task Force Constitution, which states explicitly that they have no control or influence over how the Task Force operates, what it publishes or the conclusions it reaches.

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