Lancashire as the Centre of Expertise for European Shale Gas Development

Competent, skilled professionals are key to supporting the development of the British shale gas industry.

This was the message delivered by ten panelists who spoke Wednesday at the conference "Shale Gas - Lancashire's next industrial revolution?" organized by the employer group Institute of Directors (IoD) in Preston, Lancashire.

Speakers claimed that competence would boost risk management, increasing the ability of operators to foster acceptance of unconventional gas activities by local communities and politicians.

“A lot of it is about having the right knowledge in place, being sure that the research is carried out to support that. Not just research on geology or technology, but also understanding how the concerns can be addressed,” said Duarte Figueira, Head of the Office for Unconventional Gas and Oil (OUGO).

The government overseer position was recently created within the Department of Energy and Climate Change ‘to promote the safe, responsible and environmentally sound recovery of the UK’s unconventional reserves of gas and oil.’

Facing recent public protests in Lancashire and West Sussex, operators, politicians and scientists underlined the importance of fostering know-how in the industry not only to take advantage of the North West regions' shale gas reserves, but also to minimize any potential risk of environmental impacts.

Close collaboration with Government and local communities will allow for sustainable development of the industry, said Francis Egan, CEO of Cuadrilla, adding that shale gas could reduce dependence on gas imports and generate significant revenues.

“It is an early phase in the process. We will follow all the rules. We will do this properly, we will do it safely. And at the end of the day, you and your elected leaders will decide if you want to go ahead,” said Egan.

Most of the panellists claimed that the creation of know-how would be valuable as this expertise could be then also exported. This would make Lancashire a point of reference for European developments.

“We need to get much more exploration data. We need to know much more about how the geology is behaving deep under the subsurface and whether we can extract gas economically,” claimed Nick Riley from the British Geological Survey, adding that British shale industry is different than its US counterpart.

One of the principle differences from shale gas development in the United States is that the Crown holds the mineral rights; British landholders do not receive a direct benefit from the extraction of gas.

According to Riley, the UK system creates a disincentive for the construction of wells, but at the same time it reduces the environmental impact of shale activities. British wells would be less concentrated and less invasive on the landscape.

Toni Harvey of the Department for Energy and Climate Change noted that the UK basin is smaller than the US Barnett shale gas basin. She suggested that UK developments might be more complex in relation to the differences in geology.

Harvey added that the long-awaited estimates of the British Geological Survey would be released by the end of the summer.

Risks can be managed effectively

The risks posed by shale gas are similar to the ones posed by other economic activities, said Steve Molyneux, Environment Manager for Lancashire.

“The environmental risks are taken seriously and can be managed,” added Molyneux, arguing that operation does require environmental permits, which are risk based and site specific.

Donald Dobson, Member of the Energy Institute, illustrated the regulations, speaking about the Borehole Sites and Operations Regulations 1995 and the Offshore Installations and Wells 1996.

Dobson explained that regulations place responsibility fully on the industry, adding that controls have to be carried out by independent and competent experts.

The Prospect of 74,000 jobs

Although conditions for shale gas production are generally more favourable in the US, the peculiarities of the British system can support a balanced development of the industry, explained Corin Taylor, advisor at IoD.

“We talk a lot about the criticalities compared to the US, but we actually have a few advantages. We do already have a gas transmission infrastructure… We have a more developed water network… We also have high gas prices (in the UK and generally in Europe),” illustrated Taylor, drawing a parallel between the present growth prospects of Lancashire and the past developments in Aberdeen, Scotland.

Aberdeen is the centre of North Sea oil gas production and, as reported by Taylor, has the second highest Gross Value Added (GVA) per person in the UK, after London.

“Lancashire could be better placed than Aberdeen was in the 1960s. It’s got fantastic transport infrastructures,” concluded Taylor.

In a report released yesterday, the IoD suggested that investments in shale gas could create 74,000 jobs, ranging from geologists to drilling experts, from local retailers to cement manufacturers.

The importance to go local

The panellists explained today that local communities have to be granted benefit. This would foster public support and create a better environment for shale gas.

“Vacancies must be filled by workers resident in the area,” stated Joe Howe, professor of Sustainable Development at the University of Central Lancashire, adding that Lancashire could accumulate expertise, which could be then exported. According to Howe, this would foster public acceptance and local engagement.

The Institute of Directors also suggested that a mechanism would need to be found to ensure that local authorities benefit financially from development.

‘The 100% business rates retention proposed by the Energy and Climate Change Select Committee is one option, provided that the baseline is not reset even seven years, and the revenue could be hypothecated to fund economic development projects,’ reads the report.

Dan Byles, Member of the Parliament for North Warwickshire and Bedworth, confirmed that the future of shale gas is strongly related to local decision-making.

“The Budget statement early this year, the creation of the Office for Unconventional Gas and Oil, and recent comments by the Secretary of State Edward Davey, all indicate the determination of the national government … The key now is very much local politics, local decision making,” said Byles, explaining that shale gas should be part of a balanced portfolio.

Byles, Chair of the All Party Parliamentary Group on Unconventional Oil and Gas, aimed at a hybrid system, where gas and renewables would coexist. 

“Lancashire will be well positioned. There is a tremendous amount of goodwill for shale gas,” added Ben Wallace, Member of the Parliament for Wyre and Preston North.

 Read the New IoD Report:"Getting shale gas working"