Industry

UK shale industry threatened by uncertainty over regulation – report

19/2/14
Development of a UK fracking industry could be threatened by uncertainty about the planning and approvals process, according to the Poyry consulting group.

A report published by the company this week warned that investment in shale gas could be deterred because it was unclear whether the UK regulatory authorities could deal with the significant increase in applications needed in the production phase.

“If there is little certainty that shale gas can be brought to market then investment during the exploration phase may not be forthcoming”, the report said. “This will affect the ability of developers to ascertain the full production potential. Indeed, there is a real possibility that some project developers will shy away from investing in shale gas exploration in the UK if they do not believe they can move to the production phase and capture economic benefits over and above their investment in exploration operations.”

The report predicted it could take six to eight years from licence award to commercial production, not including any judicial reviews or legal challenges. “Achieving planning permission has been time consuming,” the report said. “This has meant that very limited exploratory drilling has taken place.” As a result, developers could not determine whether there were commercial quantities of shale gas.

Poyry did not expect commercial production to begin until 2019-2020, although production could be significant by the end of the 2020s. It called for a streamlining of the permitting, approval and consent process. It also said there should be a concerted effort to engage with communities to “convince them of the safety of operations and the economic and community benefits”.

  • On October 8th last year, Poyry gave evidence to the House of Lords Economic Affairs Committee investigation into shale gas. The company quoted from its previous report on shale gas, published in 2012. This predicted that Cuadrilla would begin producing gas from its licence areas in the Bowland shale in Lancashire in 2014, resulting in lower wholesale energy costs and a reduction in the UK’s gas import dependence.The day before Poyry gave evidence, Cuadrilla announced it was abandoning exploration at its Lancashire site of Anna’s Road, near Westby, and in December last year it also abandoned exploration at Preece Hall near Weeton, This month, Cuadrilla said it would be applying for planning permission and permit consents for exploration at two new sites in Lancashire at Roseacre Wood and Preston New Road.

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