The debate surrounding the impact of unconventional gas production (including shale gas) in the UK is gaining strength as DECC’s 14th Landward Licensing Round approaches. There has been significant parliamentary and press interest in shale gas drilling in the UK.
Shale gas production is a means of liberating gas from underground rock formations using ‘hydrofracturing’ which involves fracturing gas-containing rock by the injection of water at high pressure along with a proppant (e.g. sand) to sustain fissures and permit the flow of gas.
Two wells have already been drilled in the UK – Grange Hill and Preese Hall, near Blackpool, Lancashire, by Cuadrilla Resources. The shale gas pioneer completed its first phase of exploration in December 2010, which involved the opening of a 9,000ft vertical exploratory well at Preese Hall. Hydrofracturing is expected to commence in the first three months of 2011 and last three to six months. Natural gas quantities and the commercial viability of the site will then be evaluated.
As a UK shale sector begins to emerge, so too has public opposition. Researchers from the Tyndall Centre at the University of Manchester published a report in January 2011 calling for a moratorium on shale gas development until there is a more thorough understanding of the extraction process and its impact.
The Health and Safety Executive’s (HSE) Offshore Division Wells Group has been in discussions with Cuadrilla since May 2010. This has been done with a view to ensuring compliance with the Offshore Installations and Wells (Design and Construction, etc) Regulations 1996 as amended, although this regulation is not specific to shale gas production in the UK. Indeed there is no specific regulatory regime for shale gas production and the ‘tried and tested’ formula applicable to any other oil and gas venture will apply. In this context, the power to grant licences to search, bore for and retrieve unconventional gas (including shale) is vested in the Crown. Attached to the licence are the terms and conditions that must be met by the licensee. DECC regulates compliance with those terms and conditions while the risks to health and safety from licensed activities are overseen by the HSE.
Furthermore, shale gas operators will need to obtain a permit for activities associated with the surface works if these involve emissions to surface or groundwater. The permit will set limits on the activity, requirements for monitoring; and require the operator to operate a management system that identifies and minimises risks of pollution. More importantly, if the regulator considers that the operation of a regulated facility under an environmental permit involves a risk of serious pollution, it may serve a notice requiring that the operator cease that activity. Shale gas has the potential to be an important part of the UK energy mix going forward. While the debate will no doubt continue, it is up to the regulators and industry to ensure that the risks are assessed and managed, in order to maintain public confidence in the sector.