UKOOG responds to publication of DEFRA report
1 July 2015
UKOOG, the representative body of the UK onshore oil and gas industry, is pleased that DEFRA has resolved the uncertainty over its “Shale Gas Rural Economy Impacts Report”, which has now been published in full.
As DEFRA itself says this report is “not analytically robust” and is a review of existing literature. It is in danger of extrapolating the experiences of other jurisdictions that have different regulation, planning regimes and geologies.
Several positive impacts are acknowledged by the unredacted report, including on jobs, energy security and local public services – which would benefit financially from operations in local areas. Impacts on water, noise, landscape and air quality were said to be low with impacts on tourism neutral.
The report indicates that house prices near shale gas sites may fall as a result of “negative perceptions” but admits the “evidence…is quite thin and the results are not conclusive”. The experience in the UK of homes near major oil and gas production sites does not show any negative impact. For example, near Wytch Farm, in Dorset, the value of a detached home in the adjacent area has risen by 48% over the last nine years and near the well at Singleton in Sussex prices have increased by 68% in the same period. The only review of actual impact of shale gas sites, by surveyors JLL, found that property prices actually rose.
The report also claims that insurance costs may have to go up for homes near shale gas sites, yet the Association of British Insurers has contradicted this and has not indicated any increase in costs for homes near fracking sites.
Ken Cronin, chief executive of UKOOG, said: “It is a shame that this report has become such a cause celebre as it is merely a review of literature and brings nothing new to the debate or any new information in a UK context.”
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Wytch Farm area – around Poole, BH20 5JR
According to home.co.uk, since September 2006, house prices have generally fluctuated, and slightly increased. In September 2006, the average asking price for all properties was £303,899, which increased by 28% for the average in June 2015, of £390,031.
Avg. detached September 2006 - £369,098; June 2015 - £544,503
Avg. Terraced September 2006 - £235,700; June 2015 - £283,537
The value of a detached home in this area has increased by 48% over the last nine years despite being directly adjacent to Western Europe’s largest onshore oil field which at one point was producing 110,000 barrels of oil a day. Since 1995 when the field was at near peak production house prices have increased by between 196 and 372 percent.
Singleton – area around Chichester, PO18
According to home.co.uk, since September 2006, property prices have significantly increased. In September 2006, the average asking price for all properties was £425,670, which increased by 68% for the average in June 2015, of £713,775.
Avg. detached September 2006 - £554,262; June 2015 - £1,023,649
Avg. flat September 2006 - £298,317; June 2015 - £283,400
Although the value of flats decreased by 5% over this period, all other residential property types appeared to increase considerably, ranging from increases of 39% to as high as 85%.
UKOOG is the representative body for the UK onshore oil and gas industry, including exploration, production and storage. The organisation’s objectives are to enhance the profile of the onshore industry, promote better and more open dialogue with key stakeholders, deliver industry wide initiatives and programmes and to ensure standards in safety, the environment and operations are maintained to the highest possible level. Membership is open to all companies active in the onshore industry including those involved in the supply chain.