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UK takes measures to boost shale gas exploration

28 July 2014

On July 27, the UK government clarified the rules on hydraulic fracturing (fracking) to develop the country’s shale oil and gas resources, and opened the bidding process for new licences. Companies will be able to bid for onshore oil and gas licences for the first time in six years, with about half the country available for exploration. 

Those granted a licence to begin test drilling will also need planning permission, permits from the Environment Agency and a sign-off from the Health and Safety Executive.

In announcing the 14th onshore licensing round, Business and Energy Minister Matthew Hancock said: "Unlocking shale gas in Britain has the potential to provide us with greater energy security, jobs and growth. We must act carefully, minimising risks, to explore how much of our large resource can be recovered to give the UK a new home-grown source of energy."

New restrictions will apply to drilling in National Parks, World Heritage Sites and Areas of Outstanding Beauty. In a tightening of the guidance, energy companies will have to submit an environmental statement that is "particularly comprehensive and detailed" if they want to use the fracking process on or near protected countryside. It makes clear that the applications "should be refused in these areas other than in exceptional circumstances and in the public interest".

In addition, Eric Pickles, the Communities Secretary, is likely to make a final decision on more appeals related to protected areas over the next 12 months, instead of leaving it to the planning watchdog.

The competition for licences is likely to attract significant interest from energy companies keen to explore Britain's shale reserves, particularly in the Bowland basin of the north-west, the central belt of Scotland and the Weald in the south-east. It is the first time the government has offered up areas of the UK for onshore exploration since experts confirmed the scale of the UK's shale resources.

The British Geological Survey says there could be up to 2,000 trillion cubic feet of gas in shale beds across the UK, although only a proportion of that would be recoverable.
Hancock said the new rules should speed up the process so companies are able to start drilling within six months of putting in applications.

This promise is likely to face one of its first tests in Sussex, where a planning decision on a prospective Celtique Energie fracking site in the South Downs National Park is due within weeks. The county council has rejected a separate application from Celtique in nearby Wisborough Green, just outside the national park, because of traffic concerns, which may now be appealed against by the company and end up in the hands of Pickles.

Simon Walker, director-general of the Institute of Directors, said the announcement marks "another step forward on the road towards a dynamic, productive and well regulated shale industry in the UK".

"There's still a way to go before the industry really takes off, but opening up a new licensing round while increasing safeguards for the natural environment is welcome evidence of the government's commitment to maximising the benefits of a British shale industry," he said.
Ken Cronin, chief executive of UK Onshore Operators Group, said it should be seen as a positive sign for investors that the industry was "one of the heaviest regulated industries in the UK and acts as an exemplar for the rest of Europe."

Environmental organisations are likely to continue their opposition, but other countryside bodies reacted more positively.

Shaun Spiers, the chief executive of the Campaign to Protect Rural England, said the government's change in rhetoric on protecting the countryside would be welcomed. "The government has previously stoked opposition by giving the impression that it is committed to fracking whatever the consequence and however sensitive the location," he said. "If fracking is to happen, we need to proceed with great caution and with the highest possible safeguards."

And the National Trust, which has previously campaigned for an outright ban, also gave a guarded welcome, saying it was "right that the government have recognised the concerns about fracking in special places like national parks and AONBs". However, it called for the new rules to be extended to other special places such as nature reserves and sites of special scientific interest.

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