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Next steps for shale gas production

Large scale shale gas production by the 2020s could boost the UK’s energy security, contribute to economic growth, create thousands of jobs and plough almost £1 billion back to local communities through benefit schemes, an independent assessment has found.

In addition, the Government has published a regulatory roadmap for shale gas which sets out the series of permits and permissions developers need to obtain prior to drilling for onshore oil and gas.

This is to provide certainty to investors and local communities about what the permitting process entails.

The Strategic Environmental Assessment (SEA) report, produced by AMEC, sets out the potential economic and environmental effects of further oil and gas activity in Great Britain, including shale oil and gas production, comparing a ‘low activity’ and ‘high activity’ scenario.

The assessment was carried out in preparation for the launch of the next round of licenses being made available for onshore oil and gas exploration and production.

A consultation will now run until March to consider the findings of the SEA and how this affects shale gas production in the UK.

Energy Minister Michael Fallon said: “There could be large amounts of shale gas available in the UK, but we won’t know for sure the scale of this prize until further exploration takes place. Today marks the next step in unlocking the potential of shale gas in our energy mix.

“It is an exciting prospect, which could bring growth, jobs and energy security. But we must develop shale responsibly, both for local communities and for the environment, with robust regulation in place.”

The ‘high activity scenario’ in the SEA assumes that a substantial amount of shale gas is produced during the 2020s, (4.32–8.64 trillion cubic feet), which is up to three times current gas demand in the UK.

Under this scenario, there would be beneficial impacts to the economy, jobs and communities. Employment in the oil and gas industry could be increased by 7 per cent, with 16,000 – 32,000 full-time jobs created.

Local economies would benefit from receiving an initial contribution of £100,000 per hydraulically fractured site.

They could then receive a further 1 per cent of the revenue of each well over its lifetime.

Almost £1 billion could be paid out across the UK under a ‘high activity’ scenario.

High levels of shale gas production could however have some potentially adverse impacts on the environment and communities, including an increase in traffic congestion, emissions and more pressure on water resources. The SEA notes that existing regulatory controls, including the planning system, should ensure that any adverse impacts are minimised.

Government will consider all responses to the SEA before any decision is made on further onshore licensing.

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