£1 billion bonus for local communities and up to 30,000 new jobs predicted in new government fracking forecast

 

Hon Michael Fallon MP, Minister of State for Energy
Hon Michael Fallon MP, Minister of State for Energy

Large scale shale gas production by the 2020s could boost the UK’s energy security, contribute to economic growth, create thousands of jobs and plough almost £1 billion back to local communities through benefit schemes.

These are the key finding of an independent Strategic Environmental Assessment (SEA) report – produced by AMEC and commissioned by the government – which sets out the potential economic and environmental effects of further oil and gas activity in Great Britain,

In response, the government has published a ‘regulatory roadmap’ for shale oil and gas developers which sets out the series of permits and permissions developers need to obtain prior to drilling for onshore oil and gas. This is to provide certainty to investors and local communities about what the permitting process entails.

A consultation will now run until March 2014 to consider the findings of the SEA and how this affects shale gas production in the UK. Energy Minister Michael Fallon said:

“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. Today marks the next step in unlocking the potential of shale gas in our energy mix.

 

“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.”

The ‘high activity scenario’ in the SEA assumes that a substantial amount of shale gas is produced during the 2020s, (4.32–8.64 trillion cubic feet), which is up to three times current gas demand in the UK.

Under this scenario, there would be beneficial impacts to the economy, jobs and communities. Employment in the oil and gas industry could be increased by 7%, with 16,000 – 32,000 full-time jobs created.

Local economies would benefit from receiving an initial contribution of £100,000 per hydraulically fractured site. They could then receive a further 1% of the revenue of each well over its lifetime. Almost £1 billion could be paid out across the UK under a ‘high activity’ scenario.

High levels of shale gas production could however have some potentially adverse impacts on the environment and communities, including an increase in traffic congestion, emissions and more pressure on water resources. The SEA notes that existing regulatory controls, including the planning system, should ensure that any adverse impacts are minimised.

Government will consider all responses to the SEA before any decision is made on further onshore licensing.

UK Onshore Operators Group

Ken Cronin, Chief Executive of UKOOG – the representative industry body for onshore oil and gas operators, both conventional and unconventional – said:

“We welcome the opportunity to consult on the Government’s future plans for shale gas and to detail how the UK’s potentially exciting resources of shale gas can be harnessed for the benefit of the country with the minimum of impact on the environment and local communities.

 “The Strategic Environmental Assessment gives a broad range of scenarios which show how shale gas can have a positive impact for UK economy through increased employment and direct benefits for the local communities as well as pointing out how shale gas can bring down greenhouse gas emissions.”

Many of the issues raised in the SEA relating to water usage and wastewater are being addressed through the onshore oil and gas industry’s work with bodies such as Water UK (which includes Scottish Water).

Cronin added: “This is an extremely detailed report and we will study it before making our response as part of the Government’s consultation programme.”

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