Scottish onshore oil and gas industry could create 3,000 new jobs and £4 billion in tax receipts – if Sturgeon lifts fracking ban

Ken Cronin
Ken Cronin

More than 3,000 jobs in Scotland – and £4 billion in tax income – could be created by an onshore Scottish oil and gas industry.

And UKOOG, the industry body representing the onshore oil and gas sector in the UK, has called on the Scot-Govt to lift its ban on fracking for shale gas and to set up a new Scottish regulatory framework to allow exploration to proceed.

The call also urges the Scot-Govt to realise a ‘significant economic opportunity’ by ending the moratorium on unconventional oil and gas exploration.

The association believes that the lifting of the moratorium should be accompanied by the introduction of a regulatory forum to address any additional guidance on regulation identified in the research and the creation of the necessary bodies within the Scottish system to allow for the devolution of onshore oil and gas from Westminster.

Ken Cronin, chief executive of UKOOG, said: “Many of the wilder claims about health and environmental impacts have been thoroughly debunked by the Scottish Government’s own research.

“We do not believe that the outcomes of this extensive research give any reason to justify continuing the moratorium on onshore oil and gas extraction.

“We strongly believe that there is a significant economic opportunity for Scotland but we recognise that as a result of a deeply polarised debate and an extremely unfair depiction by some of the onshore oil and gas industry there is still much to do to ensure local communities within the central shale belt have proper information.

“Our conviction that a moratorium is no longer justified is underlined by the fact 30 wells have been drilled in the last 20 years and gas has been produced in the central belt of Scotland. This has happened without incident – to the environment or to public health.”

UKOOG has set up a public information website (www.gas4scotland.scot) to explain how we use gas in Scotland, where we get it from now and what the future could look like for both the economy and the environment if shale gas were to be extracted onshore in Scotland.  It highlights the following key points for the Scot-Govt to consider;

  • Within 20 years, the UK will be importing over 75% of our gas costing the equivalent of over £300 per household – money simply going out of the country.
  • Over a 20-year period, the amount of annual tax revenue and community benefit generated by Scottish Shale could be equivalent to all the council tax paid in Stirling, Falkirk and Fife – or equivalent to approximately 2% of Scottish income tax revenue.
  • At present, there is no viable or affordable alternative to natural gas to heat our homes or provide high grade heat and feedstocks to our industry that also meets our climate change targets and keeps people in the jobs they currently have.
  • In Scotland, there are nearly two million homes and over 22,000 commercial businesses that are connected to gas: 78% of domestic heating is provided by gas in Scotland and 43% of all gas consumed is by industry.

Cronin added: “The current argument that all our heat and industrial needs will be met by some other means is currently not credible.

“However, with all the research, polarised debate and simply hot air there is one simple fact that has been ignored;

“Without exploration we cannot know to what extent any of the economic forecasts are on the money.

“The industry believes the science is clear and regulation competent to deal with the safe roll out of the shale industry in Scotland, and previous government commissioned scientific reports have confirmed this.

“However, given the clear need to continue to build public confidence the industry is fully committed to being a partner with the Scottish government and would be keen to share with the Scottish Government the early stage findings from activities in England which would act as a complement to the analysis already completed by the Scottish researchers.”

See also

Fibbing by Friends of Earth with false fracking claims will make Scot-Govt’s final public consultation on shale gas worthless

http://www.scottishenergynews.com/fibbing-by-friends-of-earth-with-false-fracking-claims-will-make-scot-govts-final-public-consultation-on-shale-gas-worthless

UKOOG response to Scot-Govt public consultation on onshore oil and gas exploration

Economic

Onshore oil and gas could make a meaningful contribution to the economic position of Scotland.

Up to 3,100 jobs could be created in Scotland. This excludes any share of the estimated 64,000 jobs that could be created using Scottish expertise by a wider industry in the UK.

The industry has pledged between 6 and 8% of revenue in benefits and business rates to local communities worth up to a total of £1 billion for Scottish communities.

Up to £6.5 billion could be spent in Scotland with an additional £4 billion created in tax receipts. This excludes the positive economic impact on other sectors, such as petrochemicals, of not having to import their raw materials and the impact of Scotland developing and exporting its skills and resources to supply shale companies across the UK and Europe.

The KPMG report was published using DECC’s 2015 low gas price forecast, which is historically low, projecting an average gas price of 43 pence per therm from 2022-2040, and much lower than that before 2022. Since the report was published, gas prices have risen, and are expected to be much higher than the DECC low price scenario used in the KPMG report.  On 22 March, spot prices were 48 pence per therm, compared with DECC’s low estimate of 33 pence per therm for 2017, and futures prices were 50-52 pence per them for 2018-2023.

The KMPG report’s high scenario envisages 3tcf of gas production, which is just 3.75% of the gas resources in the Central Belt estimated in mid case scenario produced by the British Geological Survey (BGS) – this is a low percentage compared to results from other countries.

 

Health

The overall conclusion of the research was that the evidence reviewed was judged not to be of adequate quality, consistency or statistical power to demonstrate a hazard or health risk.  This conclusion is supported by a previous study by Public Health England for the UK Government.

Given the fear created by our detractors about the impact of the industry’s planned activities on the health of children we would like to particularly draw attention to the following key parts of the research:

  • The evidence for a link between UOG activities and physician-reported high-risk pregnancy is inadequate.
  • The evidence for an association between UOG exposure and reproductive and developmental effects is weak.
  • There was ‘inadequate’ evidence to suggest that UOG activities, particularly drilling, were associated with a risk of increased incidence of childhood cancer.
  • There was ‘inadequate’ evidence to suggest that UOG activities were associated with a risk of neurological, cardiovascular or dermatological effects.

 

Transport

The additional traffic movements associated with onshore oil and gas resources are unlikely to be significant or detectable at a regional or national scale, in view of the much greater numbers of traffic movements resulting from other activities.

The contribution of UOG development to traffic and associated impacts such as carbon emissions at a regional or national scale would be slight and comparable to many other industry sectors and activities.

 

Seismicity

The process of hydraulic fracturing is generally accompanied by microseismicity, which is too small to be felt.

The probability of felt earthquakes caused by hydraulic fracturing for recovery of hydrocarbons is very small.

Recent increases in earthquake rates elsewhere have been linked to the disposal of wastewater by injection in to deep wells rather than hydraulic fracturing:

Under EU and UK legislation disposal of wastewater in this manner is highly unlikely to happen, as Flowback is not allowed be injected into the ground

 

Decommissioning

Decommissioned oil and gas wells are unlikely to leak gases if constructed and abandoned to comply with international standards and industry best practice.

The risk of leakage from abandoned UOG wells is likely to be very low.

In the event that surface spillages or leakages occur there is appropriate legislation already in place in Scotland.

Existing post-decommissioning monitoring required by SEPA should be sufficient to identify any post-decommissioning issues.

 

Climate Change

Domestic gas production is projected to continue its decline over the coming decades and most projections suggest that the share of imports may rise over time, even as consumption falls.

There may be benefits for energy security and domestic industry if new domestic sources of natural gas production reduce dependence on imported gas. There is no case, however, for higher levels of gas consumption.

Current evidence suggests that well-regulated domestic production could have an emissions footprint slightly smaller than that of imported liquefied natural gas (LNG):

Furthermore, while the central emissions estimate under the ‘minimum necessary regulation’ case for domestic production is only slightly below that of LNG, the high end of the range is around 50% higher for LNG. Tightly regulated domestic production would therefore reduce the risk that the greenhouse gas footprint of gas supply is high and would also provide greater control over the level of such emissions.

The Committee on Climate Changes ’s assessment is that exploiting unconventional oil and gas by fracking on a significant scale is compatible with Scottish climate targets if three tests are met, which the industry believes are already achievable.

 

Communities

Research shows that communities don’t always trust business and feel better when they are part of the process.

 GMB Scotland welcomes sensible fracking facts

GMB Scotland has welcomed a ‘sensible’ intervention by the representative body for the UK’s onshore oil and gas industry (UKOOG) to the Scottish government’s consultation on fracking.

The UKOOG response and the launch of its new website, www.gas4scotland.scot lays out economic and employment opportunities presented by fracking bringing much needed balance to the debate over Scotland’s energy future.

The industry body’s response follows on from a recent report produced by the University of Strathclyde’s Centre for Energy Policy, ‘Natural Gas in the Energy Policy of the UK and Scotland’, commissioned by GMB Scotland, which states the choice facing Scotland is ‘not one of whether to include gas in our energy mix for the foreseeable future, but where the gas will come from?

The GMB’s Scotland Secretary said: The debate around fracking among Scotland’s political elite is mired in hypocrisy because as UKOOG rightly point out, we’ve been fracking the North Sea for decades and we’ve been more than happy to reap the rewards.

“GMB’s own recent report shows we are increasingly dependent on imported gas and our energy consumption demands cannot be met without gas.  Abandoning our gas production makes no sense and we need to be pragmatic about fracking.

“The vast majority of Scottish homes are heated by gas while fuel poverty levels are on the up. Is the Scottish government suggesting people will have to rip out their gas boilers and replace them with electric heating that will increase bills three fold?

“That’s just not credible and when you factor the prospect of consumers being forced to go cap in hand to countries like Russia and Qatar for their gas needs in the future then we suspect the vast majority of people in Scotland would have similar concerns.

“This is a sensible intervention by UKOOG that tackles the superficial demonisation of domestic gas production and lays out the economic and employment opportunities a properly regulated fracking industry could offer Scotland.”

“The idea that we can affordably heat our homes, power our economy and sustain thousands of jobs without domestic gas production is just ‘pie in the sky’ politics and the main losers will be hard working Scots and the poorest in our society.

 

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