Fracking the UK’s Shale Gas Regulatory Regime : an overview of the planning and permitting framework May 2014 The production of oil and natural gas from shale formations is becoming a trend, many countries with technically and economically recoverable unconventional resources endeavoured to explore how shale formations may benefit the economy and achieve energy security. The trajectory of shale gas development in the UK is highly supported by the government; in the Gas Generation Strategy Paper published by the UK government on 5 December 2013, it is recognised that shale gas production would decrease reliance on imports and thus enhance the UK’s energy security. Moreover, the UK Institute of Directors report on UK Shale Gas Potential explains that the in the UK there is a potential of production peaking at around 1.13 trillion cubic feet (“tcf”) per year and a sector that could support around 70,000 jobs and secure net benefit to the Treasury in tax revenues. On this basis, there has been a growing interest in the benefits of exploring the UK’s shale gas but a combination of technical challenges faced in shale gas operations, a stern opposition by environmentalists and concerns on the adequacy of the legal framework have slowed the progress of the emerging UK shale industry.
The UK’s Shale Experience The UK’s newfound interest in the shale industry and in employing hydraulic fracturing is not unprecedented. Onshore exploration and production can be traced back to circa 1850 and since the 1950s approximately 200 wells were hydraulically fractured both onshore and offshore. The first onshore hydraulic operations for extracting shale gas in the UK were conducted in 1991 and 1992 in West Sussex and Cheshire respectively. Interestingly enough, the operations were so indigenous to the UK that the main active component in the fracturing fluid used was marmite! The fact is nonetheless, that until recently, exploring for shale gas was not financially viable and conventional resources were preferred as they require simpler technology and less cost to produce. This is because shales differ from conventional sources in that they are organic rich, fine grained sedimentary rocks and they are both the source of and the reservoir for natural gas. Although shale gas, like natural gas, is mostly composed of methane, it requires sophisticated technologies to drill and stimulate the gas bearing zones as it is tightly locked in small spaces within the reservoir rock. Shales are less porous than other types of rock and their pores are so small that render them relatively impermeable to gas flow. In the US however, advanced technologies were employed to mechanically increase permeability making the production of shale gas commercially viable. The process involves drilling a borehole into the shale horizon once it has
been explored; this is so a borehole can access a larger volume of rock. This is followed by or rather combined with hydraulic fracturing (“fracking”) which entails pumping water or liquid at high pressure into the rock and so inducing fractures which increase the permeability of the rock. The combination of horizontal drilling and fracking is what made the production of shale gas possible but nevertheless; the process is further complicated by the geology and the mechanical properties of rocks, stress fields and the employment of relevant stimulation processes. One look at the global energy sector is enough for one to see that due to this technology, we are entering into a revolutionary aeon of unconventional hydrocarbon exploration and production. The hyped US shale production has changed the international energy market and has set an example for other countries to learn from and follow suit. In fact, the US is not the only major player in the rising shale market; countries such as Argentina, Canada, China and Russia not only have a leading role in production but also in developing technical know-how. The industry has globalised and many other countries, particularly states that lack conventional resources, such as Chile, Jordan and South Africa are happy to explore the prospects of shale production to benefit their economies and achieve energy security. As the Petroleum Economist puts it, “only a brave man would now bet against the emergence of a truly global shale-gas industry.”