Lords blame regulatory log jam for slow progress on fracking

The House of Lords Economic Affairs Committee this week said it was disappointed with progress made on exploiting the UK’s shale gas reserves.  It called on the government to do more to accelerate development of resources and said well regulated development was an urgent national priority.

In its report The Economic Impact on UK Energy Policy of Shale Gas and Oil which followed an extensive investigation earlier this year, the Committee blamed “regulatory log jam” for the slow start. “The Government has made attempts to simplify the regulatory regime for development of shale but these measures have not gone far enough,” said Lord MacGregor, Chairman of the House of Lords Economic Affairs Committee which produced the report.

”Our report shows that unnecessary duplication and diffusion of authority are still rife throughout the regulatory process. The Government must do more to simplify regulation to ensure that exploratory drilling and development can go ahead. Regulation around shale should be robust, but should move quickly and be easy to understand.”

In December 2013 the Department for Energy and Climate Change published a regulatory roadmap aimed at clarifying the process which begins with issuance of a licence by the Department for Energy and Climate Change (DECC) to operators covering set areas. Operators must then negotiate access to the site with landowners and gain permission from the local coal authority if the proposed well encroaches on coal seams.

The operator then needs to seek planning permission from the local minerals planning authority (MPA), which in England means the local county council. In doing this the developer has to consult with the Environment Agency to determine if an environmental impact assessment (EIA) is required. It is expected that each well will require an EIA.

Following the EIA several environmental permits must be sought depending on the site but could include mining waste permits, groundwater permits and radioactive waste permits.  The Health and Safety Executive (HSE) must also be consulted on the well design and this approved by an independent examiner; and the British Geological Survey must be notified of the intent to drill. Finally if planning conditions are met, and all permits approved, DECC will give consent to drill.

However in its report the Committee found this system to be overly complex. “Only exploratory drilling with hydraulic fracturing, then appraisal, can show how much of the UK’s shale resource can be developed economically. But there seems to be a regulatory log jam; the Environment Agency has not received or approved a single permit application to undertake hydraulic fracturing since 2012,” says Lord MacGregor. This is when the moratorium on hydraulic fracturing was lifted.

The report also points out that the UK‘s existing regulatory regime is well regarded internationally but suggests improvements; for example in order to  strengthen public confidence in the safety of drilling sites, well inspectors should be independent and not employed by the company involved in the drilling. It also says that the industry would reduce gas imports, create new jobs, retain petrochemical and energy intensive industries and generate tax revenue.

A report published in February by industry advisory firm Poyry entitled Shale Gas-where are we now?  said that the planning and approvals process is taking much longer than anyone expected and that as a result of the slow progress production is not likely to be able to start until 2019 at the earliest. Previous expectations published in 2012 were that production could commence in 2014 or 2015.



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