by David Birchall and Simone Goligorsky The shale gas sector in the United Kingdom is still in its infancy, but the UK Government has announced recently new measures and incentives to encourage its growth. On 13 December 2012, the Government lifted a temporary suspension of drilling at the only drilling site in the United Kingdom, introduced tighter regulations to manage risk associated with hydraulic fracturing (fracing), set out new tax incentives to help accelerate the growth of the industry, and announced that it would establish a new Government office dedicated to the shale gas sector. Background Fracing involves the pumping of water, sand and chemicals into shale rock at high pressure, for the purpose of extracting reserves of natural gas. Many European countries have been wary of fracing and the practice is currently banned in several countries, including France. The French Government banned fracing in May 2011 in response to pressure from environmental groups. Reports have suggested that exploration permits were revoked from three companies that had announced they were intending to undertake fracing activities, and seven applications for permits were rejected. It should be noted that by the French Government has not banned the exploration of shale gas, just the practice of fracing. Apart from the United Kingdom, the only other European country that has allowed energy companies to undertake exploratory drilling is Poland. Poland is said to have the largest reserves of shale gas in the European Union. As of June 2012, it had granted over 100 licences to foreign companies wishing to undertake exploratory drilling activities in the country. The exploitation of onshore gas reserves has already revolutionised the energy sector in the United States, and the UK Government now hopes that Britain will be able to service some of its future gas demand through the use shale gas obtained by fracing. Europe, as the world’s second-largest gas market, has become increasingly dependent on imported gas, which not only is expensive, but also carries with it all the risks generally associated with an imported product, including the potential for a sudden termination of supply. Reports on Shale Gas The UK Government has commissioned several reports on shale gas in order to assess the potential risks of fracing. These include, inter alia
- Shale Gas Extraction in the UK: A Review of Hydraulic Fracturing by the Royal Society and the Royal Academy of Engineering published in June 2012 (the June report).
- Preese Hall Shale Gas Fracturing Review & Recommendations for Induced Seismic Mitigation, an independent expert report commissioned by the Department of Energy and Climate Change (DECC) published in April 2012 (the April report).