UK government lifts hydraulic fracturing ban

The UK government lifted a temporary moratorium on hydraulic fracturing, opening the way for exploration and development of unconventional natural gas just days after UK Chancellor George Osborne announced a push for gas development in his Autumn Statement.

The fracing mortarium was imposed last year while the UK government looked into events around a Cuadrilla Resources Ltd. shale-gas well near Poulton-le-Fylde (OGJ Online, Nov. 3, 2011).

Cuadrilla commissioned a study that found a high probability that fracing of its Preese Hall-1 well triggered seismic events.

The well was completed in a Bowland basin shale, which Cuadrilla has said might hold 200 tcf of gas in place in its 437-sq-mile license area between Blackpool and Preston (OGJ Online, Sept. 22, 2011).

With the moratorium lifted, Cuadrilla still awaits approvals from local authorities to resume fracing operations.

“Today’s news is a turning point for the country’s energy future,” said Francis Egan, Cuadrilla chief executive officer. “Today’s decision will allow continued exploration and testing of the UK’s very significant shale resources in a way that fulfils the highest environmental and community standards.”

Egan believes shale gas production could help offset declining UK North Sea production.

UK Energy and Climate Sec. Ed Davey on Dec. 13 emphasized that fracing must be done safely. “We are still in the very early stage of shale gas exploration in the UK, and it is likely to develop slowly,” he said, adding, “It is essential that its development should not come at the expense of local communities or the environment.”

Shale Gas Europe, an industry group, said shale gas development will attract investment, create jobs, increase UK competitiveness, and generate substantial tax revenues.

“Today’s announcement follows the European Parliament’s rejection of a Europe-wide moratorium on shale gas development on Nov. 21,” said Monica Cristina of Shale Gas Europe. “There is now substantial scientific evidence to support the UK government decision.

“In June 2012, the Royal Society and the Royal Academy of Engineering concluded that the health, safety, and environmental risks associated with the technique can be effectively managed,” Cristina said.

Shale oil and gas plays were developed within a few years in the US, but industry experts say the pace of unconventional development is likely to be slower across Europe.

Chatham House comments

Paul Stevens, senior research fellow with Chatham House in London, noted the UK and Europe face barriers to shale gas development.

“The US revolution was triggered by favorable factors such as geology, tax breaks, and a vibrant service industry,” Stevens said. “However in Western Europe, the geology is less favorable.” European shale has a high clay content, which makes fracing more difficult.

Stevens also noted that the US government helped finance scientific research.

“Yet, there appears to be no appetite in the British government for such funding and the European Commission has ruled out any such involvement,” he said. “Finally, unlike the US, benefits from gas production accrue to governments, not local landowners.”

The UK government has said it is reviewing possible tax incentives to encourage shale gas development and plans to set up an Office for Unconventional Gas and Oil to streamline regulation (OGJ Online, Dec. 11, 2012).

Contact Paula Dittrick at paulad@ogjonline.com.

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