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Britain must emulate US shale gas success – House of Lords

UK government lawmakers call for UK to simplify legislation to make way for fracking industry

(Pic; BHP Bilton)

(Pic: BHP Bilton)

By Gerard Wynn

Britain must simplify its environmental regulations to try and match US gains from exploiting shale gas, a panel of lawmakers said on Thursday.

The report, written by a panel of 13 Lords from the country’s upper parliament, described shale gas development as an “urgent national priority” and lamented “unnecessarily complicated” legislation which it said was hobbling the industry.

Its central recommendation was for the government to establish a high-level panel to direct shale gas policy, helping coordinate rules presently governed by a range of agencies and four government departments.

It found that the Environment Agency, which regulates the industry, had not received any requests for licences since a moratorium on fracking was lifted two years ago.

“We strongly support the Government in their objective to exploit these resources but believe they need to do much more to encourage exploration and get development moving,” said the report, “The economic impact on UK energy policy of shale gas and oil”.

“There is no reason why effective regulation should not be transparent and speedy as well as rigorous. Delay is not only costly and wasteful, it can also drive investors elsewhere.”

“A clearer, more coherent and less complex approach to regulation is needed to facilitate speedy development of the industry while providing reassurance to the public that development can go ahead safely.”

The report said Britain could emulate US success in shale extraction, which has slashed gas prices.

“The shale gas revolution in the United States has illustrated the economic opportunity offered to the United Kingdom by its own shale gas resources—if they can be developed successfully,” it said.

The report also found that UK shale gas extraction faced key differences which may make it difficult to match the US success, including a smaller resource, higher population density, wider environmental controls, and public rather than private landowner ownership of mineral rights which reduced local financial benefits from extraction.

Energy security

Shale gas development exploits a production technique using horizontal drilling and hydraulic fracturing (fracking) to release gas from shale rocks.

The House of Lords report dismissed public concerns about the environmental impacts of fracking including methane leakage in the groundwater and atmosphere, finding “most of it unfounded”.

However, it acknowledged the problem of additional traffic, one of the biggest concerns voiced in shale gas protests, which rises sharply as a result of vehicle movements for example transporting water and waste during fracking.

“The Committee recognises that development of shale, like any other industrial activity, would cause an increase in traffic and disruption in some places, especially during periods when wells were being drilled. Although planning controls may mitigate disturbance, there should be a role for the industry’s community benefits scheme to compensate those affected individually.”

In the United States, massive shale gas development has helped cut wholesale natural gas prices sharply, to $2-5 per million Btu from 2009-2014, compared with $5-13 from 2003-2008.

US gas prices are now a fraction of those in the EU, causing concern among European policymakers that the bloc may lose its competitive edge.

The energy security benefits were a major focus of the British House of Lords report.

“It would reduce imports and help maintain security of supply,” the report said of UK shale gas.

“This would be especially valuable given the continuing fall in output from the North Sea and Europe’s reliance on Russia, its biggest gas supplier, highlighted by the crisis in Ukraine.”

“If the UK does not develop its shale resources in a timely fashion, it runs a serious risk of losing the energy intensive and petrochemical industries which depend on competitively-priced energy and raw materials and which employ around 250,000 people.”

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