UK onshore oil and gas industry welcomes Committee on Climate Change report

7th July 2016

UKOOG, the trade association for the onshore oil and gas industry and supply chain, welcomes the report by the Committee on Climate Change (CCC), published today, which states that "shale gas could make a useful contribution to UK energy supplies, including providing some energy security benefits."

The report also confirms that widespread shale gas production is compatible with the carbon budgets provided three tests are met. The UK onshore oil and gas industry has stated often its commitment to work proactively with regulators and other stakeholders to minimise fugitive emissions from onshore oil and gas operations.

Professor Averil Macdonald, chair of UKOOG, said:

"Today's report confirms what we have long maintained – that shale gas production is compatible with the country's need to reduce emissions. The report also shows that shale gas has lower lifecycle emissions than imported LNG. As an industry, we look forward to continuing to work proactively with regulators to minimise fugitive emissions from our operations."

Key points from the report

• With tight regulations, fugitive methane emissions are less than 1%.

• With a high level of shale gas production, fugitive methane emissions would be around 11 million tonnes of CO2-equivalent per annum in 2030. This is around 3% of the average annual allowance in the Fifth Carbon Budget period (the Fifth Carbon Budget recommends a level of 1,765 million tonnes of CO2-equivalent for 2028-32, an average of 353 million tonnes a year).

• Emissions from UK production of shale gas are included within the UK's carbon budgets, whereas emissions from the production and transportation of gas produced overseas are not included – in reality, therefore, shale gas does not add to the UK's carbon footprint.

• The report confirms that lifecycle emissions from shale gas are slightly lower than from imported liquefied natural gas (LNG), and far lower than from coal.

Industry comment on the three tests set out in the report

Test 1: "Well development, production and decommissioning emissions must be strictly limited. Emissions must be tightly regulated and closely monitored in order to ensure rapid action to address leaks."

The four parts of Test 1 are already covered by the existing regulatory regime in the UK.

• "A range of technologies and techniques to limit methane emissions should be required, including 'reduced emissions completions' (also known as 'green completions') and liquid unloading mitigation technologies (e.g. plunger lift system) should these be needed"

The Environment Agency (EA) has already stated that it considers green completions to be a 'best available technique'. Best available techniques will evolve as the industry moves to production. The report recognises that the CCC's view of the current UK situation does not include further techniques and technologies that are likely to be required by the EA. The industry will continue to work proactively with regulators to minimise fugitive emissions from our operations.

• "A monitoring regime that catches potentially significant methane leaks early is essential in order to limit the impact of 'super-emitters'"

Environmental permits will include the need to monitor emissions to air to demonstrate compliance with the permit. In addition, Section 50 of the Infrastructure Act 2015 states that hydraulic fracturing cannot take place unless appropriate arrangements have been made for monitoring emissions of methane into the air.

• "Production should not be allowed in areas where it would entail significant CO2 emissions resulting from the change in land use (e.g. areas with deep peat soils)"

CO2 emissions resulting from a change in land use will be taken into account in the planning process.

• "The regulatory regime must require proper decommissioning of wells at the end of their lives. It must also ensure that the liability for emissions at this stage rests with the producer."

It is the responsibility of the licence holder to decommission the well in accordance with regulations, and the HSE will ensure that the well is properly decommissioned. In addition, the environmental permits can only be relinquished once the EA is satisfied that environmental risks are no longer present or are sufficiently low. Finally, provision for decommissioning and restoration may be required as a condition of the planning permission.

Test 2: "Consumption – gas consumption must remain in line with carbon budgets requirements. UK unabated fossil energy consumption must be reduced over time within levels we have previously advised to be consistent with the carbon budgets. This means that UK shale gas production must displace imported gas rather than increasing domestic consumption."

We agree with this and note that under the higher shale gas production scenario and the lowest gas consumption scenario in the CCC report, the UK is still a small net importer of gas. With North Sea production declining, there is considerable room for shale gas to replace imported gas. The National Grid, in its UK Future Energy Scenarios report, stated this week that the UK could be importing 93% of its gas by 2040. If domestic development stalls. The report also states that the cheapest way to create low-carbon hydrogen is from gas with Carbon Capture and Storage (CCS), and we fully support efforts to develop this technology.

Test 3: "Accommodating shale gas production emissions within carbon budgets. Additional production emissions from shale gas wells will need to be offset through reductions elsewhere in the UK economy, such that the overall effort to reduce emissions is sufficient to meet carbon budgets."

The report states that with a high level of shale gas production, fugitive methane emissions would be around 11 million tonnes of CO2-equivalent per annum in 2030. This is around 3% of the average annual allowance in the Fifth Carbon Budget period (the Fifth Carbon Budget recommends a level of 1,765 million tonnes of CO2-equivalent for 2028-32, an average of 353 million tonnes a year). The Government has confirmed its commitment to meeting the Fifth Carbon Budget, and at up to 3% of the total, shale gas emissions can be accommodated.

It should also be stressed that emission from UK production of shale gas are included within the carbon budgets, whereas emissions from the production and transportation of imported gas are not. Therefore, shale gas does not add to the UK's overall carbon footprint – indeed the report confirms that lifecycle emissions from shale gas are slightly lower than from imported LNG.

The report confirms that: "If these conditions are met, then shale gas could make a useful contribution to UK energy supplies, including providing some energy security benefits." It is clear that the three tests are met by existing UK regulations and policy.

ENDS

Contact:

Newgate Communications: Deborah Saw/Jason Nisse
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Notes to editors

About UKOOG:

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. www.ukoog.org.uk

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