EUA/APPG newsletter - March 2014

Monthly Newsletter The monthly newsletter from the All Party Parliamentary Group on Unconventional Oil & Gas is kindly sponsored by Energy & Utilities Alliance This monthly newsletter is produced by the APPG on Unconventional Oil and Gas. The cross-party group provides a forum for transparent, evidence-based discussions of unconventional oil and gas development in the UK, and seeks to provide readers with the latest news and parliamentary information.

Membership does not imply either support or opposition, but merely a strong interest in the subject.

Full details on the workings of the Group can be found on the Group’s website: http://www.appgunconventionaloilandgas.com/ For information about joining the Group please email appgunconventionaloilandgas@edelman.com

March 2014 Highlights •

Prime Minister says that fracking is good for the UK 25 March 2014

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“Are we fit to frack” report launched by environmental groups 13 March 2014

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Budget pledges investment in “shale gas revolution” 19 March 2014

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ReFINE report raises the issue of well leakage 25 March 2014

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EU exempts shale gas from tougher environmental regulation 14 March 2014

UPCOMING APPG EVENTS The APPG is currently implementing its programme of activity following a recent meeting with its independent advisory panel. Further details will follow shortly.

RECENT UNCONVENTIONAL OIL AND GAS NEWS BP sees a separate future for American shale gas operations On 4 March, it was reported that BP is putting its US shale gas assets into a separate standalone business to improve its profitability after the fracking boom triggered a glut of cheap gas and squeezed industry margins. All of the British oil company’s onshore oil and gas fields in the US, excluding those in Alaska, will go into the business. Among these are shale oil and gas fields holding 7.6 billion untapped barrels and 21,000 producing wells, which have been hit by a collapse in prices.

Shale gas estimate in North West 'bigger' than previously thought On 5 March, it was reported that estimates of Cuadrilla's shale gas resource in the North West of England may have to be increased significantly upwards. A geologist with the company said there is 330 trillion cubic feet (tcf) of gas in place in its licence area, 50% more than previous estimates. Based on data from two wells that it had fracked in 2011, Cuadrilla estimated that there was around 200 tcf in its licence areas. The more detailed analysis of seismic and well data suggests a significant upgrade to the gas potential of the area.

Shale gas ‘can help countries move towards green energy’ On 6 March, Christiana Figueres, Executive Secretary of the UN Framework Convention on Climate Change, said that shale gas can help countries to meet their climate change targets as long as it results in less consumption of dirtier fossil fuels such as coal. Countries with big reserves of shale gas could exploit them without harming efforts to cut emissions as long as that was part of a “transition” to a low-carbon economy.

“Are we fit to frack” report launched by environmental groups On 13 March, a report entitled “Are we fit to frack?” was launched by a coalition of environmental groups including the RSPB and the National Trust. It contained ten recommendations for making fracking safer. These included calls for all protected wildlife areas, nature reserves and national parks to be frack-free zones, for full environmental assessments to be carried out for each drilling proposal, and for the shale gas industry to pay the costs of its regulation and any pollution clean-ups. In response, the UK Onshore Operators Group (UKOOG) said the vast majority of the ten recommendations are already in place or are in discussion.

BGS report expected to find significant Weald resources On 16 March, it was reported that the upcoming British Geological Survey report on the Weald area, commissioned by the Department of Energy and Climate Change, is expected to find significant shale resources. The Weald basin spans counties including Sussex, Hampshire, Kent and Surrey. Some geologists estimate that the area could hold reserves equivalent to a third of those under the North Sea. Britain has enough shale gas to start exporting, says firm On 21 March, it was reported that UK Onshore Gas, which plans an AIM listing in the next three months, believes its South Wales licenses contain enough gas for it to start exporting. Chairman Gerwyn Williams said the LNG import terminal at Milford Haven could be reconfigured for export and “If it can happen in the US, it can happen here”. UK Onshore Gas has 260,000 acres of exploration acreage in South Wales, with an estimated 18 trillion cubic feet of recoverable gas. It will drill six wells over the next two years to assess the region’s reserves.

ReFINE report raises the issue of well leakage On 25 March, the independent research consortium ReFINE (Researching Fracking in Europe) published a research paper on well barrier and integrity failure. Durham University Professor Richard Davies and ReFINE Project Leader said: “The findings of this research confirm that well barrier failure and well integrity failure in hydrocarbon wells is an issue and that publicly available data in Europe on this seems to be sparse.”

POLITICAL NEWS Shale gas could enhance Europe’s competitiveness On 11 March, a Written Ministerial Statement was made on the EU Energy Council, which took place on 4 March. Energy Secretary Ed Davey had argued that measures to enhance the competitiveness of the EU should include ‘developing indigenous supplies (including shale gas)’.

On 10 March, the Prime Minister David Cameron made an Oral Statement to Parliament on the European Council. In response to a question, he suggested that the EU should be “doing more to support and promote recovering unconventional gas”, to enhance energy security.

EU exempts shale gas from tougher environmental regulation On 13 March, the Environment Secretary Owen Paterson made a Written Ministerial Statement on the European Environment Council. It said: ‘On shale gas, the Commission explained their aim to ensure extraction and exploitation would command support and confidence in all stakeholders. The UK, Poland and Romania stressed the current legislative framework was adequate and questioned the implication that the Commission would bring forward legislation in 18 months’ time.’

MEPs had strengthened legislation on environmental impact assessments; however shale gas was exempted from tougher rules on oil and gas exploration.

Lords debate the Centre for Policy Studies report on fracking On 17 March, the House of Lords held a Short Debate on the Centre for Policy Studies report entitled Why Every Serious Environmentalist Should Favour Fracking. Conservative Energy and Climate Change Minister Baroness Verma welcomed the “general acceptance” among her fellow peers that “shale gas will play an important part in the contribution of gas to our energy needs”. Shadow Energy and Climate Change Spokesperson Baroness Worthington said that Labour’s position was that shale gas “has a role to play but we need a seasoned, mature and rational debate about that role.”

Budget statement pledges investment in “shale gas revolution” On 19 March, the Chancellor George Osborne delivered his Budget Statement, in which he pledged to reduce energy costs for manufacturers. He said the Government was “investing in new sources of energy: new nuclear power, renewables, and a shale gas revolution.”

“The North Sea has a role to play in shale” On 23 March, Business and Energy Minister Michael Fallon’s comment that “the North Sea has a role to play in shale”, was reported in the Daily Telegraph. The article said that the experience and expertise of the UK, and Aberdeen in particular, could be utilised for the benefit of unconventional oil and gas development.

Prime Minister says that fracking is good for the UK On 25 March, the Prime Minister said that shale gas will be good for the UK and could reduce Europe’s reliance on Russian gas imports. Speaking after the Nuclear Security Summit in The Hague, he said that concerns amongst the British public over shale gas development could be addressed “by the end of this year, there should be some unconventional gas wells up and running that we can demonstrate, and I think the enthusiasm for it will grow…I'm confident we'll win the argument, not least by sort of demonstrating that this is a good technology that will be good for our country.”

For information about joining the Group, please email appgunconventionaloilandgas@edelman.com Full details on the workings of the Group can also be found on the Group’s website: http://www.appgunconventionaloilandgas.com/

This newsletter is kindly sponsored by the Energy & Utilities Alliance