Shale gas is a game-changer for Scottish energy sector

Ballantyne Jennifer_140x
Jennifer Ballantyne, partner in Pinsent Masons

Oil and gas experts will this week (Wed 11 Dec) debate how Scotland could benefit from a shale gas revolution at a landmark Edinburgh conference.

Fracking is credited with transforming the US energy industry, slashing wholesale and consumer gas prices and creating up to one million new jobs.

Sponsored by legal firm Pinsent Masons, ‘The Fracking Question’ is the first policy event to seriously investigate the potential benefits fracking can offer to Scotland and the UK.

Following an announcement by Ineos that it will invest £120 million at its Grangemouth plant to process liquefied ethane imported from US fracking operations, a specialist panel will examine if shale oil and gas can be a game-changer for UK energy security and pricing.

A recent report estimated that over the next 12 years the fledgling shale gas industry could generate up to £5bn in benefits for Scotland and could be worth between £30bn to £50bn to the UK GDP.

Potentially huge fracking gas reserves are believed to be located throughout the Central Belt and spread as far as Aberdeen in the north and Dumfries and Galloway in the south.

Stuart Paton, former chief executive at Dana Petroleum and an expert in unconventional oil and gas, will cite the transformational experience of the US which is set to become a net exporter of gas.

Paton states that in five years wholesale gas prices in the US have dropped 75% and gas production has increased by 30%, cheaper energy has added an estimated 1% per annum to the US GDP, while C02 emissions have reduced.

He said: “Scotland has a very strong oil service sector, with some experience of shale development in the US. Overall, the UK oil and gas industry, both onshore and offshore, has a good track record in field management, environmental and safety issues, with rigorous regulation.

“Local communities remain to be convinced but given that, particularly in Scotland, shale potential is largely in previously industrial areas, a good case can and should be made for development.”

Jennifer Ballantyne, a partner in Pinsent Masons’ energy team, who will consider planning, licensing and regulation issues concerning the development of a shale gas industry, said:

“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 by the Government to streamline the licensing regime have been announced, but on the other there is a lengthy planning application process which has to be negotiated by would-be operators.

“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 voiced and addressed at the early stages of development.

“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.”

Other speakers at the conference, which will be held at the National Galleries of Scotland, include:

  • Professor Gordon Hughes, Professor of Energy Economics at the University of Edinburgh
  • Duarte Figueira, Head of Unconventional Oil and Gas, Department of Energy and Climate Change
  • Ken Cronin, Chief Executive, UK Onshore Operators Group, and
  • John Ireland, Deputy Director, Scottish Government’s Energy and Climate Change Directorate.

 

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Correction; Our article published last week – ‘Friends of Earth rally Falkirk objectors to £500 million Dart Energy shale gas plan’ – should have made clear that this application does not  involve shale gas but rather coal-bed methane and does not entail ‘fracking’. We regret any misunderstanding caused.

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