Different Scots and UK fracking rules hinder shale gas investment

Pinsent MasonsBy JENNIFER BALLANTYNE

The development of a UK shale gas industry could transform our indigenous energy sector, offering opportunities for developers, operators, technology companies and creating a significant number of new jobs while strengthening our security of supply.

 

The future challenges be debated by government, industry planning, academic and legal experts in a conference next week (See Events page) – The Fracking Question – in Edinburgh.

The initial findings of a survey commissioned by Pinsent Masons seeking the views of key industry stakeholders on the future of a UK shale gas industry have thrown up some interesting points.

Those who took part thought the Conservative Party should be credited with devising clear policies to promote exploration and production of shale gas, while a number of respondents thought that Labour ‘has not been vocal on the subject of shale”.

 

No opinions were expressed about the stance of any of the nationalist parties but it is fair to say the SNP has been relatively quiet on the subject in comparison with the positive encouragement given by others.

Perhaps not surprisingly, local community opposition is expected to prove the biggest challenge to shale gas being established as a viable domestic resource. While community benefits might provide a financial incentive to people living near fracking sites, it will be critical to a successful shale gas industry to engage with residents and encourage concerns to be addressed at the early stages of development.

Only a small number thought a shale gas industry could be established within the UK within five years, with most believing it will take up to 10 years, and some even as long as 20 years.

There is some concern that the UK government approach to shale gas has been contradictory – on the one hand, generous tax breaks and a commitment to streamlining the licensing regime – but on the other hand, a lengthy planning application process which has to be negotiated by would-be operators.

It would be unusual for shale gas developments to be treated any differently from any other form of development and avoid the planning process, but it will be essential to encourage investment in this sector that the planning process is not made any more complicated or difficult for shale gas development.

The UK government sees shale gas as the answer to a number of the country’s energy, employment and economic issues. But the tangled web of consents that a project requires is complex and we believe more guidance is needed if meaningful development is to take place in the medium term.

The majority of those surveyed supported proposals for a single planning and licensing regime which would be responsible for planning, environment, and health and safety permits.

Despite the contradictory messages, our survey highlights a confidence that the coalition’s policy on shale gas is coherent and enough to foster investment.

Introducing an over-arching regime covering planning, environment and health and safety would certainly improve the appeal to investors and help propel shale gas into the next stage of its development. But there would be challenges in achieving a single regime across the UK, with many elements of the current patchwork of consenting processes being devolved matters.

If shale gas is to become a significant element of our energy mix, it is imperative that both national and devolved governments set out a clear framework into which development proposals can be brought forward and so that companies can factor that into their decision-making on whether or not to invest in the future of shale gas in the UK.

Sir Ian Wood has recently released his interim findings into the future of the UK oil and gas industry. His recommendation of stronger independent regulation should be heeded in the context of the nascent shale industry.

With clearly defined policy at national and local levels, and more efficient and co-ordinated planning and licensing regimes across the UK, industry can focus on how community engagement and the future technology and infrastructure needed to determine whether or not shale gas features highly in the UK’s future energy supply.

Jennifer Ballantyne is a Partner at Pinsent Masons and is one of the keynote speakers at The Fracking Debate.

  • As reported yesterday in Scottish Energy News, Scotland’s White Paper on Independence has fudged the fracking issue, ‘leaving these matters to a future Scottish Government’.

Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed