The debate surrounding the environmental impact of unconventional gas production (including shale gas) in the UK is gaining strength, as DECC’s (Department of Energy and Climate Change) 14th Landward Licensing Round approaches.
In July 2010, the government 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 groundwater in a number of US states to be contaminated with methane. This technique involves fracturing of gas-containing rock by the injection of water at high pressure, with a proppant such as sand to sustain fissures and permit the flow of gas.
The allegations were strongly refuted by both the Colorado Oil & 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 the field), demonstrate its potential. In less than four years, the country has moved from being a significant net importer to being almost self-sufficient in gas, and this has in turn contributed to a significant and sustained fall in US gas prices.
Although it is not yet clear whether other regions will be able to replicate this success, in the UK industry has begun to mobilise. Cuadrilla Resources Corporation has drilled a 2,743m (9,000ft) vertical well at Preese Hall, Lancashire.
Hydrofracturing is expected to commence shortly 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 this year, 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 that there is a risk of contamination of groundwater; that the significant amounts of water required for extraction could put severe pressure on water supplies and that climate change may further exacerbate this problem.
They further argue that there are risks of problems in construction and operation that are hard to eliminate, and that very high standards of hazard management will be needed at all times to avoid surface pollution. In addition, in the UK, high population density and the likely proximity of wells to population centres could result in noise pollution, traffic and landscape impact.
Shadow energy minister, Huw Irranca-Davies, is backing the proposed moratorium and challenged the secretary of state for energy and climate change to respond to the Tyndall Centre report.
In his answer, Charles Hendry said: “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 wait for results of the US EPA investigation.
“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.”
The UK Environmental Agency agrees that 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 notes that a permit under the Environmental Permitting Regulations 2010 (EPR 2010) will be required “in 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”.
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. If the regulator considers that the operation of a regulated facility involves a risk of serious pollution, it may serve a notice requiring the operator to cease that activity.
The Environmental Agency will separately consider potential impacts on groundwater levels and flows.
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.
In addition to environmental regulation, the well-established regime applicable to any other oil & gas venture will also apply.
Licences to search, bore for and retrieve gas (including shale gas) include 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).
As indicated at the unconventional gas conference in Aberdeen in February, shale gas production has a potentially important role to play in the UK energy mix.
However, all energy sources have potential risks, as we are only too well aware after events over the past 12 months.
It is up to the regulators and the industry to ensure that these risks are properly assessed and managed.
Penelope Warne is head of energy at the international law firm CMS Cameron McKenna
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