In a report out today, the IoD calls for fresh policy incentives from government and industry to kickstart shale gas production in the UK.
According to the report, a successful production phase could result in investment of up to £3.7bn ($5.5bn) a year, supporting 74 000 jobs.
The report claims that shale gas production, with tax rates of up to 62 per cent, could generate significant revenue for the UK, helping to offset a predicted future tax gap of 1.25 per cent of GDP from lower Fuel Duty and North Sea receipts.
The IoD also suggest that shale gas production could reduce gas imports to 37 per cent by 2030, the cost of imports could fall to £7.5bn, and, if production is well regulated, shale gas can have lower emissions than imported gas.
“If shale gas supports the production of chemicals and other goods in the UK, global emissions will also be lower, as UK industry is very energy-efficient,” states the report.
However, to bring about these benefits, it calls for an overhaul of the UK planning process. “Clear guidance should be provided for planning and permitting. The national agencies – the Department of Energy and Climate Change, the Environment Agency and the Health and Safety Executive – should sign off on the sub-surface drilling and fracturing processes, and the local Minerals Planning Authority should concentrate on the surface impacts, including truck movements.”
The IoD also want planning permission to be given for all potential activities on a site during a production phase, rather than covering each well – “otherwise it would be like needing a separate planning application for each turbine in a wind farm. A National Policy Statement should be drawn up, making clear that shale gas developments are part of the UK’s nationally significant energy infrastructure.”
Corin Taylor, senior economic adviser at the IoD and author of the report, said: “Shale gas could be a new North Sea for Britain, creating tens of thousands of jobs, supporting our manufacturers and reducing gas imports.
“Further exploration will be needed to assess the size of technically and commercially recoverable resources. At the same time, partnerships need to be established between industry, government and communities to ensure that development of this vital national resource benefits local people.”
Dan Byles, chairman of the All Party Parliamentary Group for Unconventional Oil & Gas and author of the report’s foreword, said: “Shale gas is about more than simply gas. It is about wider British industry, providing secure energy and raw materials for manufacturers. The North Sea is rightly regarded as a model for effective offshore oil and gas regulation. If we get this right, in future I believe the world could look to the UK as the gold standard for a well regulated and safe shale gas industry that benefits local communities and the nation.”
The report has been welcomed by the UK Onshore Operators Group, the trade body for the Britain’s onshore oil and gas industry.
Its chief executive Ken Cronin said: “This report makes useful recommendations as to how barriers that currently stand in the way of development can be removed to the advantage of local authorities, communities and the industry. We now need to progress with exploratory drilling in order to ascertain how much of the UK’s significant onshore deposits can be technically and commercially recovered.”