First Community Payment under UKOOG Shale Community Engagement Charter
17 August 2017
UK Onshore Oil and Gas (UKOOG), the onshore oil and gas trade association, welcomes the first Community Benefit Fund payment announced today by Cuadrilla.
Ken Cronin, Chief Executive of UKOOG, said: “I am delighted the first payment under our scheme has been made and look forward to hearing and seeing the interesting ways this money will be spent in the local communities over the coming months.”
The £100,000 payment was made to the Community Benefit Fund, which will be managed by The Community Foundation for Lancashire, who will now consult with the local community on which types of issues or projects the funds should be spent.
The UKOOG Community Engagement Charter was set up to acknowledge the important role that local communities play in hosting sites on behalf of everyone in the country. Local communities are set to receive £100,000 for sites that host exploration wells where hydraulic fracturing takes place and 1% of revenue for those sites that produce commercial quantities of gas.
Current estimates show that for the first 400 commercial sites, communities would receive approximately £800m directly and local authorities would receive more than this through business rates.
These 400 sites will reduce the growing and worrying import dependency in the UK by over 50 per cent and create as well as sustain many thousands of highly-skilled jobs.
Newgate Communications: Deborah Saw /Andrew Turner
0207 680 6548
Notes to editors
UKOOG is the representative body for the UK onshore oil and gas industry. 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.
About the community engagement and benefit scheme
The binding industry charter for UKOOG members was published in June 2013 covering the minimum standards of engagement required with local communities alongside a community benefits scheme designed for the first phase of shale oil and gas exploration and production.
The UK onshore oil and gas industry has been in existence for over a hundred and fifty years and has drilled over 2,000 wells, currently producing over 20,000 barrels of oil equivalent per day at 120 sites. The Community Engagement Charter builds on this history by continuing to set the highest standards of openness and transparency and frames our relationship with the communities where we operate.
The benefits mechanism is based on a 1% share of revenue, i.e. before all costs of production are taken into account, and is based on producing wells. In addition, the industry has committed to provide benefits to local communities at the exploration/appraisal stage of £100,000 per well site where hydraulic fracturing takes place.
Uses of the community fund will be agreed in conjunction with the local community and could include (but not be restricted to) community based projects to stimulate economic growth, to improve welfare in the surrounding area or to support energy saving or renewable energy projects.
UKOOG’s recent paper, “Developing shale gas and maintaining the beauty of the British countryside” (http://www.ukoog.org.uk/images/ukoog/pdfs/Developing_Shale_Gas_and_Maintaining_the_Beauty_of_the_British_Countryside.pdf), showed that 400 commercial sites would be sufficient to reduce the UK’s gas import dependency by 50% over the next 20 years. This is based on each site having 10 wells, and each well producing 4 billion cubic feet of gas (bcf), which is potentially a conservative assumption given that wells in the Marcellus region of the US are now averaging 8 bcf. Assuming a gas price of 50 pence per therm, the 1% share of revenue for communities from these 400 sites would add up to £800 million.