About Shale Gas
For more than a year, the Task Force on Shale Gas has explored the potential impacts, positive and negative, of creating a shale gas industry in the United Kingdom.
The Task Force on Shale Gas concludes that:
- Shale gas can be produced in the UK provided that the Government insists on industry-leading standards.
- Exploration drilling to ascertain how much gas may be recoverable in the UK should begin.
- 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. Much of the negativity surrounding shale gas production originates from communities, largely in the US, where operators’ standards were lax. There is now strong evidence compiled by the Department of Energy in the US that shows that standards have improved dramatically in the last few years. There has been understandable concern – and even fear – as a result of the lax standards. However, the Task Force is convinced that this highlights issues with regulation and enforcement from which lessons must be learned, not issues with the process of hydraulic fracturing itself and subsequent gas production.
- Baseline monitoring is essential to reassure local populations. Monitoring of air, land and water should begin as soon as a site has been identified. In our second report we concluded that the existing planning stipulation that the drilling of boreholes for groundwater monitoring can only begin once planning permission is granted does not benefit anyone. The Task Force welcomes the Government's recent announcement of a change to planning procedures to amend this.
- Operators must be held to the very highest standards for well integrity. Failures of well integrity have been responsible for many of the problems associated with shale gas operations in other locations, particularly the US. To ensure this cannot happen in the UK, 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. In the exploratory phases, 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.
- A successful 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 does believe that shale gas operations will have an impact, in terms of noise, disruption and traffic, on those communities directly adjacent to production sites. Operators must do everything possible, and be transparent, in seeking to minimise the effects that their works will have on nearby residents.
- More than this, operators and Government must quickly give specific details on how the creation of successful production sites will benefit residents living nearby. There has been much talk about the potential and proposed economic benefits of a successful shale site – notably in terms of revenue percentage. Operators must give details if they expect public support.
- 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.
- 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.
- The Task Force is convinced that gas is required as part of the UK’s energy mix for the short and medium term. It is simply not feasible to create a renewables industry that can meet all our energy needs in the short term. Gas represents an environmentally cleaner alternative to coal. The adverse climate impact of shale gas is similar to conventional gas and less than LNG.
- Further to the above, the Task Force is convinced that the development of a domestic shale gas industry provides a clear means of strengthening the UK’s energy security and mitigating against potential risks to energy supply.
- The Task Force believes that community payments should involve residents, local authorities and operators working together. Operators should outlines exactly how they intend to provide £100,000 if community benefits for exploratory well pads. For all wider community payments, the industry and Government should define exactly what is meant by “communities”.
- However the Task Force believes that the emergence of a shale gas industry must not be allowed to restrict or prohibit the ongoing development of a renewables and low-carbon energy industry to meet the United Kingdom’s long-term energy needs. Government should commit to applying its energy specific revenue derived from a developed shale gas industry to investment in R&D and innovation in CCS and low carbon energy generation, storage and distribution. A serious development of CCS is in our opinion essential for the medium term viability of any significant shale gas industry. The Task Force is therefore disappointed to note that the government have at this time withdrawn their £1billion support for CCS demonstration projects.
Shale Gas Issues
Communities near potential extraction sites are debating what the new industry could mean for them. Environmental and community groups express concern over the disruption that a new industry could bring to small communities, the capacity of local infrastructure to cope with a surge of traffic, employees and equipment. Earthquakes have been linked to hydraulic fracturing used to release gas from deep deposits several thousand metres underground. Some also worry that chemicals used in the process could pose health risks. Government agencies and oil and gas operators point to the technologies that can safeguard against these risks, and have announced plans to direct a portion of shale gas revenue to areas near extraction sites. They see potential for new jobs, and new business opportunities for companies, ranging from equipment manufacturers to caterers.
The first Task Force interim report examined local impact issues, including noise, health, planning, community engagement, and the adequacy of regulation structures.It made the following recommendations:
- The creation of a new, bespoke regulator for onshore underground energy, to assume the current responsibilities of the Environment Agency, Health and Safety Executive, and the regulatory activities of DECC. This new regulator should be jointly accountable to Defra and DECC and should have the public and environmental interest at the heart of its remit.
- Planning consent for local issues should continue under the democratic supervision of the local planning authority; however planning authorities should have a statutory duty to consult the new regulator when assessing an application.
- The current system in place for an Environmental Risk Assessment – more succinct and approachable than a full-blown Environmental Impact Assessment – should be built upon, in order to achieve a well-considered and readily accessible Risk Assessment made available to local communities, and should be a requirement for all applications. The new regulator should establish a template for these Risk Assessments that includes an analysis of social as well as environmental risk.
- Proactive, independent monitoring by the regulator must take place to ensure that all sites are fully compliant with permits so that the public can be assured that any examples of poor implementation are being identified and remedied.
- In order to encourage a move towards genuine public involvement in the proper regulation of shale gas sites, local community representatives should – if they wish – undertake a role in the monitoring process outlined above, alongside the regulator.
- Community engagement must begin before a proposal is formally submitted to either the new regulator or to the planning authority.
- A community engagement plan – with a degree of emphasis on involving the community rather than merely consulting with them – must be submitted by the operator alongside the initial application for a licence to drill and agreed in advance with the local authority.
- At the outset of any application process, full information must be made available to the local community about all potential lorry and plant movements over the course of the life of the drill pad; in considering the siting of a possible well, the operator should take into account the impact of access to the site on surrounding towns and villages and ensure that disruption is minimised and water should, where possible, be sourced by pipeline rather than by truck.
Environmental & Health
Protection of natural resources is a stated priority for the Government, industry, environment and conservation groups and communities. Some point to accidents and incidents that occurred as shale gas extraction expanded in the USA, leading to groundwater and soil contamination. The extraction process relies on using millions of gallons of water, and waste residues need to be treated and disposed of safely. Others, including engineering and industry representatives, point to technologies that have been developed to prevent the risks of leakages from wells and pipelines, and the Government planning process aims to provide robust monitoring and licencing requirements to safeguard against such incidences. The second Task Force interim report assessed the available evidence on the potential local environmental and health impacts of a shale gas industry in the UK and made the following recommendations:
- Full disclosure by shale gas operators of the chemicals being used in their operations – with Environment Agency monitoring on site to confirm additive levels are within agreed and safe limits.
- Baseline monitoring of groundwater, air and soil to be established at the moment a potential site is identified, with community representatives given an oversight role in monitoring and all results made public. Current planning regulations that require full planning consent before boreholes can be drilled for monitoring should be changed.
- Operators to commit and be held to the very highest standards in well construction, independently monitored. The Task Force found many of the problems associated with shale gas derived from historical poor practice in the United States, rather than the process of fracking itself. This situation can and must be avoided in the United Kingdom.
- The process of ‘green completions’ – whereby fugitive methane emissions are minimised on site – should be mandatory for production wells.
- The disposal of wastewater by deep injection – which has been associated with earthquakes in the United States – should be avoided in the United Kingdom in line with current Environment Agency practice, particularly where the nature of the geology is unsuitable.
- A National Advisory Committee should be established to monitor data from shale gas operations if and when they are established in the United Kingdom to provide an independent analysis of actual and potential impacts on public health to both policymakers and the public.
- Public Health England should commit to reassessing and evaluating its report into the health impacts of shale gas once a statistically significant number of wells have been established and data is available. All results and conclusions must be made public.
The third interim report focused on how the development of a UK shale industry would affect the UK’s overall climate impact. Our overarching finding is that shale gas has a role to play as an interim baseload energy source in the UK energy mix over the medium term. Gas will be needed for several decades, for energy, electricity, heating, and industry; but it must not prohibit or slow the development of an effective renewables and low carbon energy industry. To ensure the longer-term adoption of renewables and low carbon energy, the Government should expediate the development of Carbon Capture and Storage, and measures should be taken to ring-fence Government energy revenue streams for investment in R&D and innovation in renewables and low carbon energy generation, storage and distribution.
- If the UK is to meet its long-term climate change commitments then a transition to renewable and low carbon technology energy sources will be necessary.
- However the evidence is clear that it is not feasible to create a renewable and low carbon industry in the short term in the UK that can meet the UK’s energy needs as a whole.
- Therefore the Task Force concludes – in line with the thinking of relevant forecasting organisations – that there is a requirement for gas to play a significant role in the UK’s energy mix in the short and medium term.
- The evidence suggests that the impact of shale gas on the climate is similar to that of conventional gas and less than that of LNG.
- If this is the case, based on the evidence outlined above, the Task Force is persuaded that, if properly regulated, implemented and monitored, shale gas should be explored as a potential gas source to meet UK energy needs. The Task Force also believes that everything possible should be done to minimise the climate impact of gas extraction in the UK.
- Therefore we would encourage the Government to expedite the development of a CCS industry in the UK that would, ideally, grow concurrently with any shale gas industry.
- In addition, the Task Force is convinced that for a shale gas industry to serve appropriately as a transition fuel it is important that it is clearly demonstrated that this will not prohibit or slow the development of renewables and low carbon energy industry. We believe that government should commit to deploying the government energy specific revenue derived from a developed shale gas industry to investment in R&D and innovation in CCS and low carbon energy generation, storage and distribution.
The Task Force concludes that the emergence of a shale gas industry in the UK would create thousands of jobs for the country. However, there are caveats to this that should be addressed in order to maximise the positive impact of the creation of any industry within the UK and to reassure the public that any industry is being developed in their best interest. The Task Force concludes:
- The presently-available predictions of job creation and likely benefits to UK trade balance, of necessity made with less than ideal amounts of factual data coupled with intelligent guesswork. The Task Force urges that a sufficient number of exploratory wells be drilled, hydraulically fractured and tested under the strict and transparent conditions that we have recommended in previous reports, in order to provide everyone – industry, Government and public – with a more accurate idea of the amount of gas that is economically recoverable. Only by doing so can operators and others evaluate whether and where an industry might develop and at what pace.
- There should be far greater clarity about what tax arrangements are required in order to enable a shale gas industry to get up and running. Government incentives should, righly, be needed only for initial exploratory drilling, until an industry becomes established and self-sufficient. We believe the Government needs to be completely transparent 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, as was the case with North Sea allowances.
- The Task Force is strongly in favour of Government spending to develop skills and training programmes such as proposed by the first national UK shale colleges and to research new technologies. Skills need to be transferable.
The Task Force believes that if Government and industry are serious about establishing a significant community payments system, as we believe they are, then we recommend that as soon as possible (given that planning applications for shale gas are underway) the following is implemented:
- Operators (or UKOOG) outline exactly how they intend to provide £100,000 of community benefits for exploratory well pads. As outlined above the Task Force believes that exploratory wells are necessary to enable more accurate data on the potential for a UK shale gas industry so that operators can make business decisions. Local communities should know how they will benefit from this 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”. It seems clear that those properties directly affected by shale gas operations face the most disruption. As we have seen, in the United States this is countered by the expectation of royalty payments. In the UK, for example, residents living near a developing or subsequently producing well site should benefit from the revenues of that site, according to an agreed formula.
- In order to ensure maximum levels of transparency, community involvement and engagement, operators should not be left to administer community benefits payments as they see fit, neither should it be left entirely to local authorities. Agreeing a fair and robust scheme of community payments will be a complex issue, and should involve residents, local authorities and operators working together. The UKOOG Community Charter, and the pilot work that is being done alongside the UK Communities Foundation, provides a welcome start to this process. We recommend that at local level an independent committee, with members taken from residents, operators and local authority representatives, with the operator acting as a non-voting member, and receiving advice from relevant experts, be established in communities to deal with local policies within an overarching globally-agreed framework of principles when a shale gas production site is established. We welcome that some operators have already agreed to an approach along these lines, working with local community foundations.