Britain sets out shale rules with new oil, gas licensing round

LONDON Mon Jul 28, 2014 3:36pm BST

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LONDON (Reuters) - The British government took steps to speed up energy exploration including controversial hydraulic fracturing for shale gas on Monday with a new licensing round for companies looking for onshore oil and gas.

Concerns about the potentially dangerous impact of hydraulic fracturing, or fracking, in the search for shale gas has prompted protests in Britain and outright bans on the practice in France and elsewhere.

The licences are the first step in the exploration process but do not give outright permission to drill. Oil and gas exploration companies must also obtain planning permission, environmental permits and health and safety approvals before they can receive final go-ahead to drill in Britain.

"Ultimately, done right, speeding up shale will mean more jobs and opportunities for people and help ensure long-term economic and energy security for our country," said Business and Energy Minister Matthew Hancock.

Britain is betting on the development of shale gas to help curb its growing dependence on imports and to stem a decline in oil and gas tax receipts as output from the mature North Sea basin dwindles.A third of Britain's gas needs can come from its own shale gas by the early 2030s if government policies and economic growth allow firms to invest in gas exploration, the National Grid said this month.

Britain's technically recoverable shale gas resources are estimated at around 26 trillion cubic feet and the government has offered tax breaks to drive investment in a sector which has transformed the U.S. energy market.

However, Britain is still in the early stages of exploring for shale gas and opposition has grown on grounds that it is potentially harmful to the environment and after one project triggered earth tremors.

Fracking involves pumping chemicals, sand and water at high pressure deep underground to release oil and gas trapped in layers of rock.

"The more factors that are favourably met in the UK, the sooner it is likely ...although even in the most favourable circumstances, development is at least five to 10 years away," said Melissa Stark, managing director of Accenture's new energy business.

The government also spelled out steps for companies wanting to drill for unconventional oil and gas such as shale in areas of outstanding natural beauty, national parks and world heritage sites.

Firms would have to submit "environmental awareness" statements to show they recognise the importance of these sites.

Applications for such sites should be refused unless there are exceptional circumstances and it is in the public interest, the Department of Energy and Climate Change (DECC) said.

When an application in such areas is refused by local authorities and the developer appeals that decision, Britain's Secretary of State for Communities and Local Government Eric Pickles will personally consider the appeals for at least a 12-month period, DECC added.

(Editing by Jason Neely)

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