Onshore oil and gas industry rejects key conclusions of rushed Environmental Audit Committee report

26 January 2015

UKOOG, the representative body for the onshore oil and gas sector, notes the report and recommendations of the Environmental Audit Committee and fundamentally disagrees with its key conclusion, a call for a moratorium on “fracking”.

Ken Cronin, Chief Executive of UKOOG, said:

“This rushed report ignores the fact that gas is not just a source of electricity but has a major impact on everyday life with respect to products we use, to heat our homes, the cooking we do and the jobs it sustains in industry. The report also ignores most of the evidence of a properly regulated and safe industry in the UK and that gas and renewables work together.

“Calling for a moratorium achieves only one thing - increasing the levels of gas coming from outside the UK at a substantially higher environmental cost and with significant economic consequences. The Government has already announced that the next shale gas sites will not only be regulated by the four different regulators in line with 17 EU directives, requiring up to eight environmental permits per site, but also will be overseen by independent academics. No evidence exists of a failure in the current multi-regulated arrangements.”

The report ignores why gas is so important

The report ignores completely the many uses of natural gas outside of electricity generation, the jobs that these industries support and the vital part that gas plays in all our lives:

Heat: Natural gas is an excellent heating source and, per unit of energy, it is around a third of the price of electricity. It accounts for around 80% of UK domestic, commercial and industrial heating, with 84% of UK homes heated by gas.

Food production: Natural gas is the main component of ammonia (the hydrogen (H) in ammonia (NH3) comes from natural gas), which is widely used in nitrogen-based fertilisers that are needed for food production. Nitrogen fertiliser was applied to 75% of all farmland (both crops and grass) in Great Britain in 2013.

Manufacturing feedstock: It is hard to find a manufactured product where natural gas has not been used at some point in the production process. One of the most common processes is the ‘cracking’ of ethane (which comes from natural gas) into ethylene, which is then used as a building block for everyday products such as food packaging, textiles, adhesives, tyres and window frames. More than 800,000 people work in the UK’s energy intensive industries and their supply chains.

Transport: Natural gas can also be used as a transport fuel, in the form of compressed natural gas (CNG) and liquefied natural gas (LNG). Compared with diesel, natural gas-powered vehicles emit less CO2 and fewer harmful air pollutants, and are quieter. Reading now has a fleet of CNG-powered buses, and there is great potential to expand the number of buses and trucks powered by natural gas rather than diesel.

Taking into account that nearly 300,000 km of pipelines move the gas to more than 20 million British homes and businesses where it is needed , it becomes clear how important natural gas is to the UK and how deeply ingrained it is within society. This becomes even more important when you consider that, within 15 years, over three quarters of the UK’s gas will come from outside the UK – potentially from areas where environmental safeguards are not as high as they are in the UK.

The report recognises the safety and regulatory environment in this country

In the report the Committee recognises the key issue at hand:

“The evidence from a range of government bodies and independent scientific institutions is generally in agreement fracking can proceed in the UK safely and without harm to the environment provided proper environmental safeguards are introduced and adhered to” (Paragraph 30).

The report further comments:

“We share the confidence some of our academic witnesses had in the regulators’ capability to build a robust and effective regulatory system to cover fracking” (Paragraph 73).

It also states:

“Many of our witnesses acknowledged that the existing UK conventional onshore industry has a generally safe history with over 200 producing wells and no pollution incidents from well design” (Paragraph 78). It is worth noting that this includes environmentally-sensitive sites.

A large number of independent reviews in the UK, including from the Royal Society and the Royal Academy of Engineering, Public Health England, Professor MacKay and Dr Stone, Water UK, and the Chartered Institute of Water and Environmental Management, have concluded that environmental and health risks from shale production are low in a properly regulated industry.

The conclusions of these independent reviews were supported in the recent assessments of Cuadrilla’s two planning applications (Preston New Road and Roseacre Wood) by the Lancashire County Council Planning Officer. Although the applications were recommended for refusal, the grounds for this recommendation were noise and, for the Roseacre Wood site, traffic – both of which are common local development issues. On every other environmental and health issue raised by opponents of shale gas development, the Planning Officer’s reports found that the risks or impacts were low and were not grounds for recommending refusal.

The Planning Officer’s reports concluded that, with the exception of noise and, for the Roseacre Wood site, traffic: “The principle of exploration and appraisal for shale gas would be acceptable and that in the proposed location impacts on air quality; archaeology and cultural heritage; greenhouse gas emissions; community and socio economics; ecology; hydrogeology and ground gas; induced seismicity and subsidence; land use; landscape and visual amenity; lighting; traffic; resources and waste; water resources or public health (except for noise) would be low or could be mitigated and controlled by condition to make them acceptable.”

The report ignores key evidence on the role of gas in reducing greenhouse gas (GHG) emissions

The idea of not being able to use gas alongside renewables and reduce emissions has been dispelled by National Grid. In its 2014 Future Energy Scenarios publication , it makes clear that continued use of gas is compatible with emissions reduction targets:

• The “Gone Green” scenario includes all environmental targets met, with a 34% cut in emissions by 2020 and a 60% cut by 2035 – at the same time, renewables are forecast to increase to 15% of the UK’s total energy by 2020 and 32% by 2035.
• In this scenario, the UK’s overall gas use is forecast to be 71.9 bcm in 2015, 73.8 bcm in 2020, 72.1 bcm in 2030 and 64.1 bcm in 2035.

This view is shared by other influential bodies:

IPCC (1): The United Nations’ Intergovernmental Panel on Climate Change (IPCC) Working Group 3, Fifth Assessment Report, published in April 2014, said: “GHG emissions from energy supply can be reduced significantly by replacing current world average coal-fired power plants with modern, highly efficient natural gas combined cycle power plants or combined heat and power (CHP) plants, provided that natural gas is available and the fugitive emissions associated with its extraction and supply are low or mitigated ”. Avoiding climate change will mean reducing coal use before reducing the use of gas.

IPCC (2): The Fifth Assessment Report also states: “In mitigation scenarios reaching about 450 ppm CO2eq concentrations by 2100, natural gas power generation without CCS acts as a bridge technology, with deployment increasing before peaking and falling to below current levels by 2050 and declining further in the second half of the century”. The IPCC has made it clear that it sees natural gas as a key component of greenhouse gas mitigation strategies from now until 2050.

Committee on Climate Change: The UK’s Committee on Climate Change, which advises the Government on meeting the country’s carbon reduction targets, has concluded: “UK shale gas production would reduce our dependence on imports and help to meet the UK’s continued gas demand, for example in industry and for heat in buildings, even as we reduce consumption by improving energy efficiency and switching to low-carbon technologies .”

House of Lords Economic Affairs Committee: The recent report by the House of Lord’s Economic Affairs Committee on shale gas and oil, which looked at extensive evidence from all sides of the debate, concluded: “We consider that development of shale gas in the UK is compatible with the UK’s commitments to reduce greenhouse gas emissions. There is an acknowledged role for gas in the UK’s energy mix as it moves towards fulfilment of its commitments. The carbon footprint of home-produced shale gas would be smaller than that of imported LNG (which needs to be processed and transported). Substitution of home produced shale gas for imported LNG should therefore make a positive contribution to achievement of the UK’s commitments on climate change.”

Additional comments

Taking into account a number of comments made in the Environmental Audit Committee’s report, we would like to make a number of points clear:

Baseline monitoring: On 8 January 2015, UKOOG published environmental monitoring guidelines, which were scientifically reviewed by members of the Society of the Environment. These include monitoring of receptors such as water (including methane in groundwater), air (including fugitive methane emissions) and ecology and are mandatory for UKOOG members. The document provides best practice guidance for establishing environmental baselines for onshore oil and gas activities. It has been developed within the context of the current legislative framework and associated environmental monitoring requirements. This framework is risk-based and relies on objective, site specific monitoring, sampling, testing and scientific analysis, before, during and after the lifetime of the operations. The guidance addresses the environmental monitoring requirements before operations commence to establish environmental baseline conditions.

Venting of methane: No venting will be undertaken unless where an emergency dictates. Green completions are accepted as best available technique (BAT) for the management of wells. All flow back fluids will be stored in tanks with gasses captured. Flaring will be used during exploration, where the volumes of gasses are too low to enable recovery to the gas grid.

Groundwater source protection zones (SPZs): In line with Environment Agency policy, the industry accepts that oil and gas development in SPZ1s will be avoided. In SPZ2s and SPZ3s a risk based approach should be adopted.

Frack-fluid chemical disclosure: This is accepted as best practice by the industry. We are committed to the disclosure of the chemicals to be used and their volumes and percentages.

Post-decommissioning monitoring: Post-decommissioning monitoring is already mandatory under current permitting arrangements. Relinquishment of permits is not allowed until the environmental regulator deems that it is safe.

Inspections: The Environment Agency and Health and Safety Executive already carry out regular unannounced spot checks and audits.

Insurance: Adequate financial controls already exist within the current licensing arrangements.

Underground land access: The Infrastructure Bill will give automatic access rights to underground land below 300 metres for onshore oil and gas and geothermal energy production, bringing it in line with other essential services such as water, sewage and coal. The current system involves significant potential delays and costs without benefit either to the oil and gas industry or the landowner.



Deborah Saw/Jason Nisse 0207 680 6550/07966 224 147 This email address is being protected from spambots. You need JavaScript enabled to view it.

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.