Estimates of shale gas resource in North of England published, alongside a package of community benefits

Energy Transition Group
28 Jun 2013

The Government has announced findings from the first independent study conducted by the British Geological Survey, of the potential volume of shale gas in the Bowland Basin and beyond, which covers 11 counties in the North of England.

Scientists from the British Geological Survey have estimated on a central scenario that there is likely to be some 40 trillion cubic metres (1,300 trillion cubic feet) of shale gas in the ground in this area.

While this does not mean that this amount could be extracted for use, the report published today will give industry and regulators an indication of how best to plan future exploratory drilling, so that they can determine how much of the gas would be able to be commercially recovered. This is expected to be substantially lower than the total amount of gas in place because of technical and commercial limitations on the level of extraction.

This comes on the same day as the Government uses its long-term infrastructure investment plan to unveil a package of reforms to enable shale gas exploration. Though it is early days for shale in the UK, it has the potential to contribute to the UK’s energy security, increase inward investment and growth.

The Government has also welcomed a package of community benefits that has been brought forward by industry today. Companies have pledged to engage with communities early (prior to any application for planning permission), and to provide community benefits in areas where shale is commercially extracted.

These will include £100,000 for communities situated near each exploratory (hydraulically fracked) well, and 1% of revenues from every production site.

Energy Minister Michael Fallon said:

“Shale gas represents an exciting new potential energy resource for the UK, and could play an important part in our energy mix.

“The next step for industry is to establish how much gas is technically and commercially recoverable.

“With the package announced today on planning, environmental regulations, and community benefits, it is clear that we want to encourage a shale industry that is safe and that doesn’t damage the environment.

“Development must be done in partnership with local people. We welcome the commitments from industry on community benefits.

“This will provide a welcome boost for communities who will host shale exploration and production as well as offering strong assurances that operators will engage with them and work to the highest health, safety and environmental standards.

“From money off bills, playgrounds, sports halls or regeneration schemes, people will see real and local advantages from shale gas production in their area.”

The package of community benefits announced today includes:

  • A community engagement charter, setting out industry’s commitments to consult openly and honestly with communities at all stages, including in advance of planning permission applications.

  • At exploration stage, £100,000 in community benefits will be provided per well-site where fracking takes place

  • 1% of revenues at production stage will be paid out to communities.

  • Operators will publish evidence each year of how these commitments have been met.

  • This Charter and offer to communities will be regularly reviewed as the industry develops, and operators consult further with communities.

These announcements are part of the spending round the Chief Secretary to the Treasury announced today, which also include:

  • New guidelines on the planning and permitting regime for shale gas developments to make the process for approving developments clearer and more streamlined.

  • A consultation on tax incentives to encourage exploration of shale gas areas.

Shale gas development is in its early stages in the UK, but there are already 176 licenses for onshore oil and gas exploration currently issued.

It is up to licensees who are interested in shale gas to come forward with plans to explore shale’s potential, engaging with local communities and gaining the necessary planning permissions and permits.

Government expects considerable interest from developers in the 14th onshore licensing round which we plan to launch next year.

A key role for gas is also consistent with the need to decarbonise our economy. It is the cleanest fossil fuel, and much of the new gas capacity needed would effectively be replacing ageing coal capacity.

Gas is also important for balancing out the increasing levels of intermittent and inflexible low-carbon energy on the system. Unabated gas generation will continue to play a crucial role in our generation mix for many years to come, and the amount of gas capacity we will need to call on at times of peak demand will remain high.

In the long term, the development of cost-competitive Carbon Capture and Storage should ensure gas (and coal) can continue to play a full role in a decarbonised electricity sector.

The BGS is doing further work to establish the amount of shale gas in the Weald Basin in the South East of England.

The BGS report can be found on the British Geological Survey website

Industry response can be found on the UKOOG website