Global menu

Our global pages

Close

Shale gas - Next steps and the UK’s 14th Onshore Licensing Round – Strategic Environmental Assessment and Regulatory Roadmap published

    • Chemicals
    • Diversified industrials

    09-01-2014

    The UK Government published a Strategic Environmental Assessment (“SEA”) for Onshore Oil and Gas Licensing (the “Report”) on 17 December 2013, as part of its commitment to conduct the next onshore oil and gas licensing round in 2014. The Government plans to offer licences covering more than 37,000 square miles of currently unlicensed areas in parts of England, Scotland and Wales (the “Licensing Plan”).

    (In 2010, the Department for Energy and Climate Change (“DECC”) published and consulted on a previous SEA in preparation for a 14th Onshore Licensing Round. However, this process was suspended following seismic activity near Cuadrilla’s drilling site in Blackpool in April/May 2011. In December 2012, the Government announced the lifting of the suspension and that the SEA process for the 14th Onshore Licensing Round would be restarted in the light of new information since the original 2010 consultation.)

    DECC also published on 17 December 2013 a Regulatory Roadmap “Onshore Oil and Gas Exploration in the UK: Regulation and Best Practice” (the “Roadmap”) setting out the process operators should follow when seeking to drill onshore in the UK.

    The Report

    The purposes of the Report include:

    • setting out the likely environmental impacts of the Licensing Plan;
    • helping to identify measures to enhance positive impacts and reduce negative impacts of the Licensing Plan;
    • allowing stakeholders and the public the ability to comment on the potential impacts of the Licensing Plan and propose improvements to it; and
    • informing the Government’s decisions on the Licensing Plan.

    The Report concludes that further conventional oil and gas exploration and production would not result in any likely significant environmental effects. Development of shale gas could result in such effects, but the impact would be at a local not national level, once the industry reaches the development and production phase. It is not expected that this will occur on a significant scale before the 2020s.

    The positive effects identified include:

    • the creation of 16,000 – 32,000 new full time jobs;
    • the production of more than twice the amount of gas consumed in the UK per annum;
    • a reduction in net greenhouse gas emissions associated with imports of LNG; and
    • significant community benefits as set out in the UKOOG Community Engagement Charter (e.g. £100,000 per well pad where hydraulic fracturing takes place and 1% contribution from revenue over the lifetime of the well).

    The negatives identified include:

    • that LNG or other fossil fuels not used in the UK could be used elsewhere which could lead to an increase in global greenhouse gas emissions;
    • adversely affecting traffic, air and noise quality in local areas due to the expected 14 – 51 vehicle movements to a site each day during exploration and preparation;
    • increasing the burden on existing wastewater treatment capacity if on-site treatment and recycling does not occur; and
    • increasing pressure on water resources.

    The Report explains that existing regulatory requirements, which projects have to meet, will effectively mitigate the potential negative effects of development. In addition, the Report identified additional mitigation measures including site selection, green completions and the use of best available techniques to ensure the effects of the Licensing Plan are acceptable for regulators, decision makers and communities.

    The Report is open for public consultation until 28 March 2014. Once the responses have been considered a Post-Adoption Statement will be produced which will set out how the Government intends to proceed with the 14th Onshore Oil and Gas Licensing Round.

    The Roadmap

    The Roadmap draws together existing regulation relating to onshore oil and gas exploration in the UK. No new legislation is contained in the document, which is designed to act as a “first point of reference” for operators, planners and the public who have an interest in the initial phases of oil and gas development. Whilst the Roadmap is intended primarily for unconventional oil and gas operations a substantial proportion of the process described applies equally to onshore conventional operations.

    It is intended that the Roadmap will be updated as legislation develops and will assist operators by making it clear what needs to be done and when. It focuses on the exploration and appraisal phases of oil and gas development rather than development and production or decommissioning, restoration and aftercare.

    Future activities

    Neither the SEA nor the Roadmap expressly address the potential impact of the anticipated EU Shale Gas Enabling Framework (expected to be announced on 22 January 2013). It remains to be seen how much this Framework will affect unconventional operations in the UK. The UK Government has emphasised its view that current regulation in the UK is sufficient and appropriate. It is feared that any new EU legislation could undermine the Government’s economic plan to kick start shale gas exploration.

    For more information contact:

    Elizabeth Shepherd
    Partner
    Tel: +44 161 831 8215
    elizabethshepherd@eversheds.com

    Greg Hammond
    Partner
    Tel: +44 207 919 4989
    greghammond@eversheds.com

    < Go back

    Print Friendly and PDF
    Subscribe to e-briefings