UK shale gas revolution set for new delays until 2019

The UK shale industry has had a slow start since the lifting of the fracking moratorium in December 2012 as energy firms get to grips with planning and regulatory requirements.

Just a few weeks ago David Cameron announced that the UK was “going all out for shale” as part of the long term economic plan to secure Britain’s future.  The announcement followed publication of a new regulatory roadmap in December 2013 by the Department for Energy and Climate Change (DECC) which clearly showed the permitting and approvals process required for hydraulic fracturing of shale gas reserves.

The fact that French energy giant Total then in January revealed its plans to enter the investment field alongside other major energy companies Centrica and GDF Suez was hailed as a sign that the new streamlined and simplified regulatory system was already succeeding.

However a new study into the progress being made on shale exploration says that the planning and approvals process is taking much longer than anyone expected.  “They [DECC] have laid out exactly what you have to do but you can’t claim that it is straightforward,” says Lucy Field, principal consultant at energy and industry advisory firm Poyry which wrote the report UK Shale Gas-where are we now?

The report, which was written following talks with developers and regulators, finds that as a result of the slow progress production is not likely to be able to start until 2019 at the earliest. Previous expectations published in 2012 were that production could commence in 2014 or 2015.

According to the regulatory roadmap the planning process begins with issuance of a license by the Department for Energy and Climate Change (DECC) to operators covering set areas. Operators must then negotiate access to the site with landowners and gain permission from the local Coal Authority if the proposed well encroaches on coal seams.

The operator then needs to seek planning permission from the local minerals planning authority (MPA), which in England means the local County Council. In doing this the developer has to consult with the Environment Agency to determine if an environmental impact assessment (EIA) is required. It is expected that each well will require an EIA.

Following the EIA several environmental permits must be sought depending on the site but could include mining waste permits, groundwater permits and radioactive waste permits.  The Health and Safety Executive (HSE) must also be consulted on the well design and this approved by an independent examiner; and the British Geological Survey must be notified of the intent to drill. Finally if planning conditions are met, and all permits approved, DECC will give consent to drill.

The report estimates that from licence award to commercial production might take around 6-8 years not including any judicial review or legal challenges. It therefore calls for a streamlining of the regulatory system before the industry moves into the production phase. At the moment the industry is seeking to drill 20-40 wells as part of a 2-3 year exploratory stage.

“Unless streamlining takes place we are unlikely to achieve any scale of production of shale gas in the UK,” says the report.

For its part the government has pledged to reduce the environmental permitting process from the current 13 weeks down to just two.  Experts have raised doubts over the feasibility of this considering the level of public interest in fracking and the time required to appropriately respond to comments. 

“At the moment there is a definite disconnect between what happens and what the government is asking the Environment Agency to do,” says Richard Sarsfield-Hall, senior principal at Poyry. “There doesn’t appear to be a joined up approach.”

A suggestion made by the report is the formation of a cross industry working group to focus on ensuring that institutional capacity is in place and processes are streamlined for when shale gas enters the production phase. One potential measure for accelerating the process says Poyry, would be to allow developers to submit a single environmental impact assessment for each production pad which would contain a number of wells rather than for each individual well. An EIA takes around 12 months to complete.

Of course it is still early days for the industry which needs test data to determine the UK’s available resource and economic impact. Only then will the actual benefit, and cost, of shale gas be determined.

More info:

The Geological Society is hositng a two day event in London on UK shale gas, 4-5 March. click here 

DECC Regulatory Roadmaps for England, Wales, Scotland and Northern Ireland click here   

Office for Unconventional Oil and Gas, established December 2012 click here