Myles Kitcher, Managing Director at Peel Gas & Oil, discusses
an eventful year for the shale gas industry.
started 2015 full of anticipation with David Cameron stating in January that
his Government is "going all out for shale" and that councils will be
entitled to keep 100% of business rates raised from shale gas sites.
shale gas is vital for the Northern powerhouse. Not only will a thriving shale
gas sector provide the fuel for industry across the north but it brings its own
Consulting’s for Peel Gas & Oil earlier this year demonstrated that
developing a supply hub in the North West could see Northern economies benefit
from a £30 billion boost through capital spending and deliver 13,000 jobs.
Yet with the
14th licensing round expected to deliver a vast amount of new
licenses across England during 2015 we have seen a year of hiatus. We are only just
moving into this next and crucially important phase for shale gas in the UK
with the announcement that 93 licenses have been awarded this week.
hasn’t been a quiet year for the industry with a number of announcements and
policy changes setting the scene for a busy 2016.
Peel Gas & Oil launched
& Oil was launched in early 2015 with the business looking to maximise the economic and supply chain benefits to the North of
England from the emerging shale gas industry. We are working alongside current
and prospective onshore license holders as a development partner, providing
integrated property solutions for the industry. Drawing on the
Peel Group’sskills and assets in
land, infrastructure, utilities, transport and planning we are already working
with IGas on a number of sites in the North West and hope to be announcing
further partnerships in 2016.
strong vocal support from Cameron for shale gas, it wasn’t long before the
Government was facing a crucial vote on the Infrastructure Bill with the
cross-party Select Committee calling for a moratorium on fracking. While the
Government managed to avoid a moratorium in England (although not in Scotland
where it was agreed to uphold the moratorium on shale gas exploration until
after the May election, when powers to grant licenses would be devolved to
Holyrood) the Bill passed tumultuously through Parliament. The Infrastructure
Act received Royal Assent in March, with a wide variety of provisions,
including a ban on hydraulic fracturing in
national parks, sites of special scientific interest and areas of outstanding
natural beauty, introduced. However, the Actmarked an important step forward for the industry, with key issues
such as the trespass issue resolved.
week, under secondary legislation, MPs voted to allow fracking for shale gas 1,200m below national parks and
other protected sites. The new regulations were approved
by 298 to 261 votes and despite vocal opposition from campaigners.
In March, it
was reported that IGas had signed a Farm Out and Purchase Agreement with INEOS
on seven of its existing shale licenses in England and Scotland for £30
million. The introduction of a new player into the market, and the investment
they bring, was welcome news for the industry. The chemicals giant were quick
to make their mark with Chairman Jim Ratcliffe announcing plans to give 6% of
its shale gas revenues to homeowners, landowners & communities close to its
Creating a Supply Hub for the Bowland Shale
shale gas is vital for the Northern Powerhouse. In April, Peel
Gas & Oil launched a new report by AMION Consulting which looked at the
potential supply chain benefits across the Bowland Shale. Based on the
development of 100 well pad sites it estimated that developing the sector could
generate a spend of £30 billion up to 2048 and support 13,000 jobs.
Peel Gas &
Oil believes that the development of
a viable and scalable supply chain is fundamentally important to the development of shale
gas. We have been working with potential supply
chain partners to investigate the benefits of locating a supply chain hub in
the North West. This included hosting a supply chain meeting with key
operators, suppliers and stakeholders where the challenges and opportunities of
creating a thriving supply chain in the UK were discussed.
A Conservative majority Government
There were few
that predicted the Conservative victory in the General Election (not least the
pollsters) but what has a majority Government meant for the industry? Given the
predicted (if inaccurate) close outcome of the election it is unsurprising that
any decisions on the 14th round were delayed until the new
Government was in place. However, once in power the Conservative majority
government was quick to assert its support for shale gas. Within days new
Energy and Climate Change Secretary Amber Rudd (replacing outgoing Liberal
Democrat Secretary Ed Davey) announced that fracking rules would be loosened in
an effort to speed up shale gas extraction which would “kick-start a shale
In the first
real test of the planning system Cuadrilla Resources faced refusals of their
applications to explore for shale gas in Lancashire in June – despite officers
recommending one of the applications for approval. Approval for Cuadrilla’s
applications would have marked a significant step forward for the industry. The
disappointing delays caused by the local refusals have certainly contributed to
the relative hiatus seen during 2015.
Rudd and Communities Secretary Greg Clark were swift to respond, with the
announcement that shale gas planning applications will be fast-tracked through
a new, dedicated planning process. The new measures introduced included
identifying councils that repeatedly fail to determine oil and gas applications
within the 16 week statutory timeframe, with subsequent applications
potentially decided by the Communities Secretary. Cuadrilla has since appealed
the decisions with a Public Inquiry starting in February and Greg Clark to take
the final decision.
was not the only one to be pressing ahead with planning applications in 2015.
Third Energy has submitted an application to North Yorkshire County Council to
carry out shale gas exploration at its existing well in Kirby Misperton. A
decision on this application is expected in the New Year.
Amber Rudd sets out new direction for energy policy
energy secretary Amber Rudd confirmed plans to shut all coal-fired power
stations by 2025. She spoke of the central role of gas in UK energy security
and in particular how investment in shale gas could provide home grown energy
supplies and economic benefits. This comes at a time when Britain has signed up
to the global climate change agreement agreed at the United Nations conference
in Paris last week, with Amber Rudd already stating how shale gas production
has a part to play in meeting climate change obligations.
licensing round awarded
The year has
certainly ended on a high with the announcement that 93 new
onshore hydrocarbon licences have been created across 159 blocks in the UK under the 14th Onshore Licensing Round. This follows the ‘pre-award’ of 27 blocks in August, where the Oil & Gas Authority (OGA) issued a
consultation on the Habitats Regulations Assessment (HRA) of the 132 blocks
What next for 2016?
Peel Gas &
Oil is looking forward to the opportunities 2016 will bring. With a larger
number of operators and licenses across the UK we believe the time is now to ensure
that the region maximises the inevitable investment that will follow by
ensuring the supply chain is in place to service the industry.
the time to start thinking about how various well
pads could inter-connect as part of a bigger picture. Shale gas development is
currently dependent on a supply chain delivering a number of commodities for
successful and cost effective implementation. By viewing the supply chain as
part of an overall ‘masterplan’, linking the supply and demand of shale from
production to consumption, developers can demonstrate the overall vision
for an interconnected area.
potential for the natural gas to be extracted in these areas could help to
drive the Northern Powerhouse by securing the low carbon energy future of the
UK as well as creating investment and local jobs across the region.
So what will
2016 bring for shale gas? It certainly looks like momentum is building and with
Cuadrilla’s appeal to be determined and a whole host of new licenses to be explored,
2016 could be a defining year for shale gas.