Chapter 9: Promoting shale gas development
in the UK
249. Although the potential for
shale gas development in the UK appears strong, with the prospect
of significant economic benefits, progress is disappointingly
slow. Despite the optimism of the Prime Minister and other Ministers
about the prospects for shale gas, at the current pace of development
large-scale production is unlikely until well after 2020. We heard
that a main cause of delay is the complexity of the regulatory
process.
250. This complexity is in sharp
contrast to the simplicity of the regulatory regime under which
North Sea oil and gas was developed in the UK in the 1970s and
1980s. Mr Austin told us that "a level of scrutiny and
consideration has probably been given by the Environment Agency
in particular, and by DECC and the planning authorities to a lesser
extent, which is over and above what we have seen for conventional
oil and gas exploration."[546]
Mr Egan said "some of the questions that
come out [of the planning and permitting process] are not strictly
related to drilling 10 wells but 4,000 wells."[547]
251. Other witnesses feared that
regulatory delays would mean that the UK might miss the bus as
potential investors in shale gas, who have other options, looked
elsewhere: Professor Riley told us "The traditional
view has always been that capital chases resources. My worry is
that resources now chase capital … if the UK delays and ponders,
it will not find anybody willing to invest on the scale necessary
and we will only be importing [gas]."[548]
252. Effective regulation is essential
to win and retain public confidence in the face of concerns, legitimate
and exaggerated, about perceived dangers of fracking to public
health and the environment. As Mr Dorner put it, "unconventional
gas can be produced safely but … it is of the utmost importance
for the industry and for Government to take steps to ensure that
the social licence to operate is in place and that they have social
support".[549]
253. A clearer, more coherent
and less complex approach to regulation is needed to facilitate
speedy development of the industry while providing reassurance
to the public that development can go ahead safely. Only the Government
can provide the leadership and reassurance needed. The Chancellor
of the Exchequer's assurance to us that the Government are doing
all they can to give the UK's shale industry a good start in life
is welcome, but there is at present a striking contrast with the
slow pace of progress on the ground and the frustration felt by
the industry over regulatory complexity. The Government have failed
to translate their ambitions for development of the UK's shale
gas into action at the speed needed.
254. The Government must take
decisive measures to quicken the pace of exploration and development
of the UK's shale gas resource, including to:
· simplify the current unwieldy
and slow regulatory structure and accelerate the decision-making
timescales;
· take the lead in reassuring
local communities that with clear and rigorous regulation in place,
shale gas can be developed with low risk to health and the environment;
· set out more clearly the
potential economic benefits for local communities and for the
country as a whole if significant volumes of shale gas can be
developed commercially.
255. A distinct but related concern
is that policy direction within Government on shale development
is fragmented. At least four Government Departments are involved
in decision-making, as set out in Chapter 8, including the Treasury,
the Department of Energy and Climate Change, the Department of
the Environment, Food and Rural Affairs and the Department of
Communities and Local Government. With so many players, clear,
well-coordinated and timely policy-making may be difficult.
256. We recommend that, since
several Departments share responsibility for policy on shale gas,
the Government should take measures to improve coordination, clarity
and speed of policy making and its implementation. We recommend
in particular that the Prime Minister should establish a Cabinet
Committee or Sub-Committee, chaired by the Chancellor of the Exchequer,
to direct and coordinate policy on development of shale gas, with
a mandate to promote well-regulated exploration and development
of the UK's shale gas resource.
257. The UK is exceptionally
fortunate to have substantial shale gas and oil resources. Much
work needs to be done but it is clear that successful development
would bring jobs and relatively low cost supplies of fuel. It
would also be of direct benefit to the balance of payments and
could at least partly reduce the UK's dependence on international
markets at risk of disruption from political instability. Public
concerns about shale gas need to be confronted if the development
of this strategic national asset is to go ahead. Although some
of the concerns are ill founded, others have to be addressed through
a clear and simplified regulatory regime which can build trust
and promote efficient development without more delay.
258. Exploration and appraisal
of the UK's shale resource base have been too slow. Shale gas
and oil are a potential economic prize which the UK should grasp
without further delay. Exploration, appraisal and then development
of the United Kingdom's substantial shale gas and oil resources
is an urgent national priority.
546 Q 77. Back
547
Q 90. Back
548
Q 15. Back
549
Q 106. Back
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