Onshore Oil and Gas – License awards and environmental monitoring

Department for Energy and Climate Change written statement – made on 17th December 2015.

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Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change

14th Onshore Licensing Round

I am pleased to inform the House that the Oil & Gas Authority (OGA) – the UK’s oil and gas regulator – has today announced that licences for a total of 159 blocks are being formally offered to successful applicants under the 14th Onshore Oil and Gas Licensing Round.

A Petroleum Exploration and Development Licence (PEDL) gives the licensee exclusivity over an area of land for onshore hydrocarbon exploration, appraisal and extraction, including for shale gas and oil as well as conventional forms of oil and gas. To be clear, a PEDL does not itself give any permission for operations to begin. Before the licensee can begin any operations such as drilling, hydraulic fracturing or production, they must be granted a number of further permissions and consents. These include, for example, planning permission, environmental permits from the Environment Agency, scrutiny by the Health and Safety Executive, and OGA consents under the provisions of the PEDL.

The 14th Onshore Oil and Gas Licensing Round was launched on 28 July 2014 and closed on 28 October 2014. A total of 95 applications were received from 47 companies covering 295 Ordnance Survey Blocks. Following scrutiny of the applicants’ competency, financial viability, environmental awareness and geotechnical analysis, and following the decision not to award PELDs in Scotland and Wales, 159 blocks were taken forward for further consideration.

In August 2015, the OGA announced its intention to offer PEDLs covering 27 blocks. In addition to this, 132 blocks were subsequently subjected to further detailed assessment in accordance with the Conservation of Habitats and Species Regulations 2010, and a public consultation on that assessment was carried out. Following the conclusion of the consultation process, the OGA is now satisfied that the approval of the 14th Licensing Round, and the offer and eventual award of each of the PEDLs under Round, will not have an adverse effect on the integrity of any protected European site. As a result, the OGA is today offering PEDLs for a total of 159 blocks. For 75 of these blocks, the PEDL will contain a condition that prohibits all or specific activities in parts of the block.

The 159 blocks covered by today’s announcement will be incorporated into 93 onshore PEDLs. A map of the licence blocks being offered can be found at: https://www.gov.uk/guidance/oil-and-gas-licensing-rounds.

Gas is central to our long-term energy security. The gas used to heat our homes is amongst the cheapest and most secure in Europe, despite the decline in our domestic gas production from the North Sea. However, we cannot be complacent. We currently import around half of our gas needs, but by 2030 that could be as high as 75%. That’s why we’re encouraging investment in our shale gas exploration so we can add new sources of home-grown supply to our real diversity of imports.

This Licensing Round will see the great majority of the UK’s shale prospectivity licensed to be explored and tested. The 14th Onshore Licensing Round has attracted a high quality of proposed work programmes and a mix of conventional and unconventional proposals. About 75% of the blocks being offered relate to shale oil or gas.

Once the companies being offered these licences accept these offers, they will be issued with PEDLs covering the blocks which they have been awarded, and will subsequently be able to begin planning their future strategies for exploration activities.

I have today written to all Members of the House within whose constituencies licences are being offered.

Environmental Monitoring

Following the award of funding in the Autumn Statement 2014, DECC has grant-funded a research consortium led by the British Geological Survey to support it to create a baseline of environmental data in the Vale of Pickering, North Yorkshire, as well as expanding the consortium’s existing base-lining activity in the Fylde, Lancashire. Applications for shale gas activity have been made in each area. The Government wishes to ensure that a robust and independently gathered baseline of data on environmental conditions, such as the quality of ground-water or air and the levels of seismic activity, is in place prior to the start of shale gas operations in these areas, which are dependent on consents including planning permission. If shale gas projects take place in future in these areas, future data can be checked against these “baseline” data. This would allow any significant changes to be flagged for further scrutiny.

The Government regards such independent baseline data as important to building public trust in the first exploration-phase wells developed by the UK shale gas industry, in addition to the industry’s own monitoring data, which is provided to regulators. Our aim is therefore to provide support for appropriate baseline monitoring for areas identified for the first exploration-phase wells. This work will be reviewed periodically alongside the development of the industry.

This statement has also been made in the House of Lords: HLWS430