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UK to offer 27 onshore blocks in 2015

The country will start onshore shale oil and gas exploration as they plan to award 27 blocks from the 14th Onshore Oil and Gas Licensing Round this year

The UK is to start up onshore shale oil and gas exploration and production in the near future, with the Oil & Gas Authority announcing the plan to award 27 blocks from the 14th Onshore Oil and Gas Licensing Round this year. 

That is assuming that the operators receive all the consents and approvals needed – by no means a given, in the light of past experience.

The biggest winners were Igas and Egdon Resources, with seven blocks each. Igas is to operate all seven of its blocks, five of which include Egdon; and Egdon is to operate a further two. Cuadrilla also won the operatorship of two blocks, in Yorkshire. French Total and Engie and Swiss petrochemicals company Ineos were also among the winners.

OGA said a further 132 blocks could be awarded, subject to detailed assessment under the Conservation of Habitats and Species Regulations 2010, the findings of which are now out for consultation.

Subject to the outcome of that consultation, the OGA will announce offers for the second group of licence blocks later in the year. The licences for all offered blocks will then be granted after the terms and conditions have been finalised. 

With almost 100 applications received, the 14th Onshore Round had attracted significant interest and high-quality proposed work programmes from a range of oil and gas companies, OGA said. 

Further approvals will be needed before drilling, however, including from local authorities. So the awards will not automatically lead to exploration and production activity.

A planning partner at international law firm Herbert Smith Freehills Catherine Howard, said: “The award of a petroleum exploration licence does not in itself authorise companies to carry out shale gas exploration (fracking). It simply gives the licensee the right to extract oil and gas subject to obtaining all other planning, environmental and health & safety consents. The real challenge companies face is obtaining planning permission from local planning authorities.” 

Cuadrilla appeals decision

Cuadrilla has challenged the controversial decision by Lancashire County Council to refuse it permission to get gas out of the ground from two sites using hydraulic fracturing. 

Its chief executive Francis Egan said 23 July that he understood that “some people would prefer that we did not appeal but I am confident that we will demonstrate to Lancashire and the UK that shale gas exploration and fracking is not only safe but represents a very real opportunity to create jobs, fuel businesses, heat UK homes and stimulate significant local economic growth.” 

He said the council’s planning officer had been “very clear” that the Preston New Road application was acceptable in relation to noise and visual impacts, which were the reasons the committee gave for refusing the application.

The council was advised to refuse permission at only one site, and its decision to refuse both was interpreted as giving in to local opposition so that a higher authority could take the responsibility for giving consent.

The government took up the cause, defending an industry that it is hoping will provide billions of pounds for the economy and create tens of thousands of jobs. 

In an article in the Sunday Times of 9 August, headed ‘Our country needs shale gas, so let’s go get it,’ energy minister Amber Rudd said the UK could not “continue with a system in which applications are dragged out for months or even years on end,” 

The carrot for the councils is that developers will pay £100,000 ($155,000) for each exploration well they drill and a further 1% of production revenue.

A few days after that, Rudd said that shale gas planning applications would be fast-tracked through a new, dedicated planning process, under government measures announced 13 August. 

They include identifying councils that repeatedly fail to determine oil and gas applications within the 16-week statutory timeframe, with subsequent applications potentially decided by the Communities Secretary. 

She said the UK needed more, domestically-produced energy supplies – “and shale gas must play a part in that.”

Communities Secretary Greg Clark said there was a “huge potential right across the country for safe and sustainable use of shale gas” and the changes “will tackle potential hold-ups in the system.”

UKOOG, the representative body for the UK’s onshore oil and gas industry, welcomed the announcement about the measures and the statement about the importance of shale to the UK. 

Its chief executive Ken Cronin said “recent experience has shown that the planning process is unwieldy and the time taken for planning decisions has soared from three months to over a year”. 

He said it was right that the government was acting to ensure that “the planning process itself is fit for purpose.”

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