The debate surrounding the environmental impact of unconventional gas production (including shale gas) in the UK is gaining strength as DECC’s 14th Landward Licensing Round approaches. In July 2010, the Department’s Strategic Environmental Assessment (SEA) indicated that DECC would “(...) place an explicit expectation on licence applicants to demonstrate an excellent understanding of the environmental sensitivities and potential constraints on blocks both at the application stage and during any subsequent operations”. Much has happened since then.

The 2011 Oscar-nominated documentary Gasland shifted the global spotlight towards the environmental issues around shale gas production. The film revolves around the allegation that hydrofracturing has caused the contamination of nearby groundwater with methane in a number of US states. This technique involves fracturing of 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. The allegations were strongly refuted by both the Colorado Oil and Gas Conservation Commission and America’s Natural Gas Alliance.

While unconventional gas production may still be said to be in its infancy, figures from the US (undoubtedly the leader in shale gas technology and production), demonstrate the potential for exploitation of such resources. Specialists there have been using the expression “Shale Gas Revolution” to allude to the fact that, in less than 4 years, the country has moved from being a significant net importer to being almost self-sufficient in gas. According to IEA 2009 statistics, supply from unconventional sources, including shale gas, led US gas prices to drop from an average of almost $9/MBtu in 2008 to below $3/MBtu in early September 2009.

Although it is not yet clear whether other regions will be able to replicate the US’ recent success, in the UK industry has begun to mobilise. Two wells have already been drilled – Grange Hill and Preese Hall, near Blackpool, Lancashire, by Cuadrilla Resources Corporation. The UK 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 (available here) calling for a moratorium on shale gas development until there is a more thorough understanding of the extraction process and its impact. The report argues:

  • There is a clear risk of contamination of groundwater from shale gas extraction.
  • It is important to recognise that most problems arise due to errors in construction or operation and these cannot be eliminated.
  • That forthcoming US EPA research should provide important new evidence in understanding this issue.
  • Very high standards of hazard management will need to be maintained at all times if surface pollution is to be avoided.
  • Very significant amounts of water are required to extract shale gas and this could put severe pressure on water supplies in areas of drilling.
  • The impacts of climate change may further exacerbate this problem.
  • For the UK, high population density and the likely proximity of wells to population centres could result in certain impacts such as noise pollution, traffic, and landscape impacts being exacerbated.

Shadow Energy Minister, Huw Irraca-Davies, is backing the proposed moratorium and has recently written to the Secretary of State for Energy and Climate Change to ask if he will consider the proposals in the Tyndall Centre report. In his answer, Charles Hendry stated: “[T]he Department has been looking at the Tyndall Centre report. The Tyndall Centre report's key proposal is that shale gas extraction in the UK should be delayed until clear evidence of its safety can be presented, and that we should await for results of the US EPA investigation. As I said (...) there is a robust regulatory regime in place, the technology is understood, and on the basis of available information, the Department sees no need for a moratorium on shale gas activities in the UK. The UK's geology and regulation is different from the US. It should not be assumed that US experience will necessarily be equally relevant to UK conditions or to the UK regulatory framework”.

According to the UK Environmental Agency website, concern over the risks of shale gas extraction through hydrofracturing is unwarranted as the method is “based on technology which has been used and developed over some 60 years”. The Agency has added that a Permit under the Environmental Permitting Regulations 2010 (EPR 2010) will be required “[i]n all cases where the fluids being injected contain pollutants and the injection is into rock formations that contain groundwater, or where the activity poses a potential risk of mobilising natural substances to cause pollution”. Cuadrilla’s website states that the “fracing fluids” used by Cuadrilla consist of 99.75% composed of fresh water and sand. The remainder is made up of polyacrylamide friction reducers (00.075%), commonly used in cosmetics and facial creams, hydrochloric acid (00.125%), frequently found in swimming pools and drinking water wells, and biocide (00.005%), used on rare occasions when the water provided from the local supplier needs to be further purified.

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.

The Environmental Agency will separately consider potential impacts on water resources due to the effect on groundwater levels and flows. Operators are therefore expected to notify the Agency of their intention to carry out drilling, at which time advice on water resource protection measures will be given. Another requirement that might be applicable to shale gas activities relates to the control of abstraction of groundwater. Depending on the applicant’s proposal for the use of water resources for drilling and hydrofracturing, a groundwater investigation consent and abstraction licence under the Water Resources Act 1991 may be required. Such applications would need to be supported by a Hydrogeological Impact Assessment.

Although there is no regulatory regime specific to shale gas production in the UK; 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 Health and Safety Executive (HSE).

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.