Shale gas could boost UK balance of payments by £40 billion

PoyryLicensing and developing the shale gas industry – mostly in England –  could boost the UK’s balance of payments by nearly £40 billion (in real 2013 money) by 2035.

According to a new study by Poyry Management Consultants, the benefits resulting from shale gas production from the Bowland basin under Lancashire alone are potentially very significant.

The latest Poyry report states: “We have revised our 2012 analysis to quantify the potential benefits of Lancashire shale. These now include additional corporation tax revenues of £2.7billion and an 11% reduction in gas import dependence.

 “The potential benefits are based only on production from Cuadrilla’s licence area. In reality, if the shale gas industry develops in the UK, the benefits are likely to be much greater.”

The report also finds that commercial production of shale gas in the UK will not begin in 2014/15 as expected but is now more likely to commence by 2020 because the exploration phase is taking far longer than initially envisaged.  There are a number of reasons for this, including the permitting, approval and consent processes.

 The Poyry report concludes: “Regulations are robust and need to stay that way, but streamlining the process is essential – standard rules permits, for example, could be progressed sooner if the resources are made available.

“Investors and shale gas developers face geological uncertainties which cannot be resolved until exploration wells are drilled, hydraulically fractured, and flow-tested.

 “Given the likely time and legislative steps required to design and implement a streamlined permitting system, intense focus is needed now on improving the efficiency of the permitting and regulatory processes necessary to allow the production phase to succeed.

 “Unless such streamlining takes place, we are unlikely to achieve any scale of production of shale gas in the UK. This should be done as soon as possible so that the certainty investors and developers require can be achieved.”

The onshore oil and gas industry in the UK can be traced back to 1850 and has developed ever since.In 1973 the Wytch Farm onshore oilfield was discovered and is now Europe’s largest onshore oil field. Operating successfully in an environmentally-sensitive area, it produces more than 16,000 barrels of oil equivalent each day.

The onshore industry is regulated by the Department of Energy (DECC) with environmental approvals being given by the Environment Agency (EA) and the Scottish Environmental Protection Agency.

To date around 2,000 onshore wells have been drilled. There are currently around 120 operating sites with 300 operating wells producing in excess of 20,000 barrels of oil a day equivalent.

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