Does Shale Gas have the Green Light Yet in the UK?
Government signals are positive, with the Energy Secretary, Ed Davey, indicating that he hopes to give the green light to shale gas extraction within weeks. This follows an announcement last week by the Chancellor, George Osborne that the Government would be consulting on a “generous new tax regime for shale gas”…so that Britain is not left behind as gas prices tumble on the other side of the Atlantic.
It seems that an announcement on shale gas will be made around the time of the Government’s Gas Strategy, expected in early November.
What else is happening in the UK?
DECC (Department of Energy and Climate Change) states on its website that it considers that a moratorium is not required and that due to the robust controls in place, hydraulic fracturing can be undertaken in a way that protects the environment and human health. A number of favourable reports have confirmed that hydraulic fracturing can be safely undertaken, and further reports have been commissioned by the Environment Agency and DECC on specific aspects of shale gas, including how well design can be used to protect the environment and shale gas prospects in the UK.
DECC is also encouraging the development by UKOOG, the United Kingdom Onshore Operators Group, of guidelines for the UK for the exploration of shale gas which would complement existing legislation. The aim is for these to be produced later this year, and then converted next year into an independently verified standard.
What about internationally?
On an international level, DNV (Det Norske Veritas) is producing a Recommended Practice for the entire life cycle of shale gas extraction. The first version of this Recommended Practice is currently being discussed with industry representatives and regulators. The final version is intended to operate as an international standard.
OGP (the International Association of Oil & Gas Producers) announced at last week’s Berlin Fossil Fuels Forum that it is working on an EU version of FracFocus as a suitable chemical disclosure model for Europe. FracFocus is a project of the U.S. Ground water Protection Council and U.S. Department of Energy which allows the general public to access specific information on a well-by-well basis (via a search of the FracFocus.org website), of the constituents used in hydraulic fracturing.
Shale Gas Europe, a web-based communications platform has been launched, which aims to inform and educate EU decision makers and the media about shale gas in Europe and to ensure that the public debate about shale gas is as balanced as possible. Current members are Chevron, Cuadrilla, Halliburton, Shell, Statoil and Total Gas Shale Europe.
Key events to look out for
The UK Government’s Gas Strategy and the Energy Bill are expected in the next few weeks.
In the meantime the Government’s 14th Onshore Licensing Round is moving forward, with DECC aiming to issue a response to the consultation on its Strategic Environmental Assessment as soon as possible. DECC will then be in a position to invite applications for licences which will confer exclusive oil and gas exploration and development rights for a specified area over a limited period.
Elizabeth Shepherd is Partner & Head of Environment
 at international law firm Eversheds, specialising in environmental law. She and her team are experienced in advising on existing and incoming environmental legislation, often on a multi-jurisdictional basis, where an understanding of the legislative and political climate in the EU as well as individual Member States is key. Elizabeth can be reached at Tel: 0845 497 8215 (Intl: +44 121 232 8215) elizabethshepherd@eversheds.com.
David S Sellers is a partner in Eversheds International Arbitration Group and is the head of the Oil and Gas practice. He is based in Paris. David specialises in both contentious and non-contentious upstream and downstream oil and gas work and energy projects and has extensive experience in infrastructure projects, including public private partnerships and concessions. David can be reached at Tel: +33 1 55 73 40 00 davidsellers@eversheds.com
Related Reading from Eversheds: Courting Shale: The Shale Debate in the European Courts and in the Court of Public Perception