New measures to back UK shale gas exploration

A new package of measures to deliver on the UK government’s manifesto pledge to continue supporting the development of British shale gas was announced on 17 May 2018 by Energy and Clean Growth Minister Claire Perry and Secretary of State for Housing, Communities and Local Government James Brokenshire.

The package includes:

• Streamlining and improving the regulation process for shale applications to ensure decisions are made in a timely way and developers and local authorities are supported through the process. This will include setting up a Shale Environmental Regulator and new Planning Brokerage Service which would focus exclusively on the planning process and will have no role in the consideration or determination of planning applications. The service will not comment on the merits of a case and will also have no role in the appeals process.
• Launching a new £1.6mn shale support fund over the next two years to build capacity and capability in local authorities dealing with shale applications.
• Holding a consultation on the principle of whether the early stages of shale exploration should be treated as permitted development, and in particular on the circumstances in which this might be appropriate.
• Consulting on the criteria required to trigger the inclusion of shale production projects into the Nationally Significant Infrastructure Projects regime.

Energy and Clean Growth Minister Claire Perry said: ‘British shale gas has the potential to help lower bills and increase the security of the UK’s energy supply while creating high quality jobs in a cutting-edge sector. This package of measures delivers on our manifesto promise to support shale and it will ensure exploration happens in the most environmentally responsible way while making it easier for companies and local communities to work together.’

Commenting on the announcement, Michael Burns, Oil and Gas Partner at law firm Ashurst, said: ‘The government's announcements are obviously a positive development, but the shale gas industry is likely to be quite cautious in its optimism given the difficulties that the UK shale industry has had to date. There will be real hope that this set of new measures can set a more positive path forward.’

Lynn Calder, Commercial Director of Ineos Shale, also noted that the announcement was a step in the right direction, but said much more needs to be done. Explaining the hurdles the industry has been facing, she said: ‘The UK potentially has enough home-grown gas to be self-sufficient for years to come. But labyrinthine planning rules make it next-to-impossible to access the energy right beneath our feet.’ She added that UK planning processes have been ‘used to strangle the shale gas industry at birth’, noting that ‘where it used to take three months to get permission to drill a test well, now it can take up to three years. That compares to the US, where it takes just four weeks.

She continued: ‘Test wells are small, conventional wells with no fracking involved. Thousands have been drilled in the UK in the past without any controversy. But now even these simple activities are next-to-impossible to undertake. Here, in the UK, it can cost up to £1.5mn to get permission for a single test well. In the US it costs just £20,000. That is why America has a thriving shale gas industry and is close to energy independence, whereas the UK has none and is increasingly reliant on imports for our power.’

Echoing these sentiments, Francis Egan, CEO of Cuadrilla, said: ‘We very much welcome the government’s announcement today highlighting the national importance that shale gas development has in delivering a safe and secure energy source, whilst meeting the country’s Climate Change obligations…In particular we welcome the measures the government has introduced on making the planning process “faster and fairer” and providing additional resources to help local authorities. Our planning permission to drill and test just four shale gas exploratory wells in Lancashire was granted after a lengthy and costly three year process. These timelines must improve if the country is to benefit from its own, much needed, indigenous source of gas.’