UK Government Lifts Shale Gas Production Moratorium

UK Government Lifts Shale Gas Production Moratorium
The UK government has lifted the moratorium on shale gas production in England.

The UK department for Business, Energy and Industrial Strategy (BEIS) has announced that, to bolster the UK’s energy security, the government has lifted the moratorium on shale gas production in England and confirmed its support for a new oil and gas licensing round.

BEIS revealed that the government will consider future applications for hydraulic fracturing consent, adding that developers will need to have the necessary licenses, permissions and consents in place before they can commence operations. The department highlighted that the decision to lift the shale moratorium comes alongside the publication of the British Geological Survey’s (BGS) scientific review into shale gas extraction, which was commissioned earlier this year.

The review recognized that we have limited current understanding of UK geology and onshore shale resources, BEIS noted, adding that “it is clear that we need more sites drilled in order to gather better data and improve the evidence base”. BEIS stated that lifting the pause on shale gas extraction will enable drilling to gather this further data, “building an understanding of UK shale gas resources and how we can safely carry out shale gas extraction in the UK where there is local support”.

The department also revealed that a new licensing round is expected to be launched by the North Sea Transition Authority (NSTA) in early October. This round is expected to lead to over 100 new licenses and the NSTA is expected to make a number of new blocks of the UK Continental Shelf available, BEIS outlined. The department also revealed that the UK is scaling up renewables, nuclear, and lower carbon energy sources “to boost Britain’s energy security in the long term”.

“In light of Putin’s illegal invasion of Ukraine and weaponization of energy, strengthening our energy security is an absolute priority, and, as the Prime Minister said, we are going to ensure the UK is a net energy exporter by 2040,” Business and Energy Secretary Jacob Rees-Mogg said in a government statement.

“To get there we will need to explore all avenues available to us through solar, wind, oil and gas production - so it’s right that we’ve lifted the pause to realize any potential sources of domestic gas,” he added.

Commenting on the UK’s latest shale development, Charles McAllister, the director of policy, government and public affairs at industry body UK onshore oil and gas (UKOOG), said, “UKOOG welcomes the new Written Ministerial Statement, which formally lifts the moratorium on hydraulic fracturing in England and seeks to better support the industry throughout the life cycle of development”.

“UK shale gas offers evident economic, environmental and geopolitical benefits not provided by a continued over-reliance on energy imports. The BGS report clearly states that more data collection is needed in the UK and we are ready to provide proposals to government to do just that,” he added.

McAllister noted that UKOOG continues to support the UK’s transition to net zero and said “every single costed net zero compliant scenario recognizes the need for natural gas and oil throughout and at the outcome of our 2050 goal”.

“The development of a UK shale gas industry, amongst other technologies, provides a credible path for the UK to become an energy exporter by 2040, following on from 2021 where the UK produced the least amount of energy in over 50 years,” he said.

Also commenting on the UK’s shale news, Cuadrilla Resources Limited CEO Francis Egan said, “I am very pleased that the government has quickly and decisively followed up the Prime Minister’s announcement of two week ago with … [the] WMS”. 

“Communities across the North of England stand to benefit most from … [the] announcement. Cuadrilla is determined that a portion of all shale gas revenue should be delivered to local residents as a community dividend. This would mean each producing shale gas site could generate potentially hundreds of millions of pounds for local households, families, and communities,” he added.

“On top of this, a thriving shale gas industry will drive job creation across the North of England, generate much needed tax revenues for central and local government, and help tackle spiraling gas prices. Lifting the moratorium will help the shale industry unlock UK onshore natural gas in quantities sufficient to meet the UK’s needs for decades to come,” he continued.

Offering his insight into the UK’s latest shale development, Tobias Wagner, the vice president and senior credit officer at Moody’s, warned that, “while currently high energy prices may improve the potential economic viability of … hydraulic fracturing in the UK, it may be less certain over the longer term”.

“So it remains to be seen to what degree companies are willing to invest at scale given the uncertainties and concerns around fracking,” he added.

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