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High Profile Panel Debates Future of Shale Gas in the UK

14 May 2013

Eleven leading energy industry influencers came together at a round table event hosted by Spencer Ogden to discuss the future of shale gas.

“We don’t know whether the shale in this country will flow or not, but the central argument is that the country deserves to find out.” That was the argument made by Andrew Austin, Chief Executive of IGas during a debate on the future of shale in the UK. “If it doesn’t work, the rest of the conversation is entirely academic.”

Andrew continued: “The advantage we do have is that the one well that has been flow tested in the UK did flow at good rates, which is encouraging.” Though he also admitted that it could be a statistical anomaly.

Much of the argument during the debate focussed on the suggestion that local communities might be offered benefits, for example cheaper energy bills, to persuade them to drop their opposition to fracking. Commenting on this, Angela Knight, Chief Executive of Energy UK said that she believes it is very important that communities have an involvement and that there is sensitivity, not just around this area but around other energy generation projects such as wind farms.

“Do we want more energy security in this country or not? Clearly we do,” said Angela. “What we think needs to happen is, first of all, a proper assessment of what we’ve got, and following that a proper assessment of how much of it is extractable. Local communities have to be involved in that but until we have those basic facts in place you can’t actually make the decision.”

Ken Cronin agreed saying that the, “most difficult part of this is planning. It is ultimately our social license to operate in which we do that.”

Putting his side across, Joss Garman said that the difficulties that have been faced when establishing onshore wind farms will be minor compared to the problems that will be encountered with fracking. He also claimed that most people would prefer to have an onshore wind farm within five miles of their house and referred to an ICM poll saying that: “Only around ten per cent would say the same about shale.”

The audience asked why should communities local to fracking benefit more than others in the country, and might there be a danger that poorer communities would settle for smaller pay-offs than richer communities.

Professor Alan Riley, City University London responded saying that it can’t be denied that there is a degree of disruption in terms of setting up fracking operations, “’s not like having an ordinary conventional well”. Benefits, he said, would help justify the disruption.

On the issue of poor areas of the country benefitting less he said benefits have to, “be established by state regulation. I don’t think it should be by negotiation between the companies and the local communities”. He also stated that: “We should be looking at providing for a percentage of the actual shareholding of the companies to be handed to the local communities...This would give people a sense of ownership which I think is really important.”

Corin Taylor, Senior Economic Adviser at the IoD argued that useful lessons can be learned from other energy industries like the onshore wind industry which devised a Community Benefits Protocol. Something like that, he argued, would help the country avoid the problem of some communities benefiting more than others. Andrew Austin agreed that the UK can learn from the renewable industry and said that said that we need a blend of things, including rates community schemes.

Ken Cronin, Chief Executive of UKOOG, responded: “We should allow communities to benefit in some form...They should also have the ability to put in place what they want to see from community benefits. [It should] not be imposed by the industry or by government, but through a form of consultation where we agree what they want to see.”

Lord Smith also pointed out that it is important to realise that any major energy infrastructure is going to have an impact on a local community. Whether it is a new nuclear power station...a wind farm...or fracking for shale gas; the energy industry has to respect the needs and concerns of the local community.

Wrapping up the argument, Andrew Austin had this to say: “It’s a fabulously English thing to try and divide up the riches before we’ve actually worked out whether or not we’ve got them in the first place.”

Other topics debated during the roundtable included the environmental impact of shale gas and the affect the growing industry will have on the UK energy skills pool.

The full panel at the Future of Shale in the UK debate:

Lord Smith (Chris), Chairman, The Environment Agency Dr James Buckee, Chairman, EnQuest Ken Cronin, Chief Executive, UKOOG Joss Garman, Acting Political Director, Greenpeace UK Corin Taylor, Senior Economic Advisor, Institute of Directors Professor Alan Riley, City University London Angela Knight, Chief Executive, Energy UK Guy Turner, Director, Carbon Markets and Renewable Energy Certificates, Bloomberg Andy Brogan, Global Oil & Gas Transactions Leader & UK Oil and Gas Leader, Ernst & Young Andrew Austin, Chief Executive Officer, IGas David Spencer-Percival, CEO, Spencer Ogden Energy Chair, Sarah Lockett