Commercial-scale UK shale gas extraction possible before 2020 – INEOS
Tom Brown
18-Dec-2015
LONDON
(ICIS)–Commercial-scale shale gas extraction remains a
possibility in the UK before the end of the decade, but the
onus is on the government to ensure that the legislation
around the sector works smoothly, an INEOS director said on
Friday.
Moves by the government to expedite the delays in the
planning approvals process following protracted deliberations
over applications by Cuadrilla in Lancashire, eventually
leading to the government taking the decision away from local authorities, were
welcomed by INEOS.
“The government has done quite a lot to facilitate the early
development of shale, I think the combination of the various
legislative changes they have made to make sure the planning
permission works expeditiously are enough to mean we can
explore,” said Patrick Erwin, commercial director of INEOS
Shale.
“I think there will need to be more reforms as we move
towards large-scale production,” he added.
The company more than tripled the land in the UK it has
permission to explore for shale this week in the latest
tranche of the UK’s 14th onshore oil and gas licensing round,
bringing its total to 1m acres and making it the largest
player in the nascent UK shale industry.
Although the sector has been slow to develop, due to a
temporary moratorium in 2011, legislative challenges and
bitter public opposition, the potential remains for
commercial-scale shale gas extraction in the country before
2020, according to Erwin.
“There is nothing technically in the way of exploring these
basins in the next two-to-four years and being in a position
to start meaningful production toward the end of that decade.
The thing that will slow that down is if government cannot
deliver on making the planning system work,” he said.
INEOS has stakes in all of what are thought to be the UK’s
most promising shale basins, Erwin said, and the company
intends to begin the work of community outreach and starting
to seek planning permission in most of the geographic regions
it has licences.
“We don’t know which of these are going to work until we do
the exploration work, so there has to be a parallel track
approach,” Erwin said.
Although the geological, legislative and infrastructural
conditions in the US shale gas industry differ from anywhere
in Europe, INEOS is looking at shale gas projects in areas
such as Fort Worth, Texas, for lessons on how fracking in
more densely-populated regions can be achieved.
The company is also offering a 6% revenue share from the
proceeds of any productive shale plays, with 4% going to
landholders in the area and 2% to the local community, as a
means of surmounting the lack of mineral rights conferred on
property owners in much of Europe compared to the US.
The revenue share and detailed community dialogue ideas were
initially rolled out in Scotland, where INEOS bought up shale
gas exploration rights across swathes of the country, but the
process ran aground after the government instituted a
moratorium on fracking while additional research was carried
out.
“We respect the process going on in Scotland, the
moratorium’s made it a bit difficult to justify investment at
the moment,” Erwin said.
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