Consultation on unconventional oil and gas in Scotland: the next step in the road to a decision

On 31 January 2017, the Scottish Government announced a consultation on onshore unconventional oil and gas in Scotland, seeking views from stakeholders and the public to allow it to make an informed decision on the future of the resource.

14 February 2017

On 31 January 2017, the Scottish Government announced a consultation on onshore unconventional oil and gas in Scotland, seeking views from stakeholders and the public to allow it to make an informed decision on the future of the resource.

The consultation follows the imposition of a moratorium on planning and environmental consents for unconventional oil and gas developments which was imposed in January 2015. At that time, the Scottish Government emphasised that its position was to take a cautious, evidence-led approach while obtaining and reviewing further evidence in order to determine the likely impact of exploration for and the development of unconventional resources in Scotland.

Studies have indicated that Scotland's geology, and in particular the area of land around Scotland's central belt (the Midland Valley) contains significant quantities of shale gas and oil, as well as coal bed methane.  The central belt is also one of Scotland's most populated regions, and accessing those resources would require the use of technologies such as hydraulic fracturing or 'fracking', which has led to widespread public and political debate on the potential impacts, not all of which has been based on up-to-date and objective evidence.

Expert studies
Following the imposition of the moratorium, the Scottish Government commissioned a suite of six expert studies aimed at providing an objective, evidence led basis for the consultation and, thereafter, the final decision on whether to permit unconventional activity in Scotland.  The studies looked at specific issues around unconventionals in further detail, including the economic impacts, decommissioning issues and impact on Scotland's climate change targets. They were published in November last year and can be accessed here.

The main findings of the studies were as follows:

Economic impacts and scenario development (KPMG)

  • Given that there has been no unconventional oil and gas production in Scotland to date, there are very few studies looking at the potential economic impacts of the industry.  The focus has therefore been largely on the impacts on the North American energy market, where, for example, development of shale gas led to investment in the chemical and manufacturing industry of over $100 billion.
  • In looking at the potential impacts, the KPMG study uses three different production scenarios (central, high, and low).
  • The study estimates that, in the central scenario, cumulative industry expenditure in Scotland would be £2.2 billion through to 2062, adding £1.2 billion to Scotland's economy (equivalent to 0.1% GDP).
  • At its peak, the industry could, in the central scenario, support an estimated 1,400 jobs in Scotland – including indirect jobs in the supply chain and in other sectors of the economy. 
  • Petrochemical companies, in particular, could benefit, as costs of importing/transporting their primary input (as, for example, INEOS are currently doing at their facility in Grangemouth) would be reduced.

Climate change impacts (Committee on Climate Change)

  • The Scottish Parliament has set a climate change target of achieving by 2050 an 80% reduction in 1990 levels of greenhouse gas emissions. Unconventional oil and gas development can be compatible with these targets, but only if 'fugitive' emissions are limited through tight regulation, and offset by achieving further reductions elsewhere.
  • Overall emissions from the production of Scottish shale gas are likely to be similar to emissions from imported gas. Rather than increasing the overall consumption of gas, producing shale gas in Scotland would instead displace high-cost production elsewhere (and therefore have a broadly neutral impact on global emissions).

Understanding and monitoring induced seismic activity (British Geological Survey)

  • Hydraulic fracturing or 'fracking' results in seismic events of low magnitude. The process poses a low risk of causing damaging or destructive earthquakes, or even earthquakes that would be felt on the surface.
  • A substantive network of monitoring stations should be created to ensure reliable and accurate detection of seismic events.

Transport – Understanding and mitigating community level impacts (Ricardo)

  • Additional traffic movement associated with unconventional oil and gas development was unlikely to be significant at a regional or national level.
  • Each well pad could require traffic to be sustained at around 190 two-way traffic movements per week for a period of around two years.  By contrast, a wind farm construction could require between 800 - 1000 two-way movements per week at its peak. 

Decommissioning, site restoration and aftercare – obligations and treatment of financial liabilities (AECOM)

  • The current framework in place in Scotland would be sufficient to manage the risk of well leaks.
  • Such risk of leakage from abandoned wells is likely to be low, and provided that best practice is implemented during well construction and abandonment operations, long-term well integrity can be achieved.
  • There is however a risk that a small proportion of wells may leak, and so it may be appropriate to monitor for such leakage from decommissioned wells for as long as the Scottish Environment Protection Agency deem necessary.
  • It is essential that sufficient funds are available to meet abandonment and decommissioning costs. There are various financial mechanisms, many of which are used in other industries, that can be put in place to provide appropriate security for these costs in order to minimise the risk of operators failing to meet them. 

Health impact of unconventional oil and gas in Scotland (Health Protection Scotland)

  • There is currently not enough evidence available to determine whether development of unconventional oil and gas in Scotland poses a risk to public health.
  • The evidence reviewed justifies a precautionary approach, based on adopting a range of mitigation measures involving operational best practice, regulatory frameworks and community engagement.

One broad overarching theme from the studies is that the public health and environmental risks from the development of unconventional resources can be effectively identified and mitigated through the proper application of the existing regulatory regime in Scotland, although it may be necessary to make some amendments to that regime to ensure that there are no regulatory gaps. 

The consultation document itself takes a balanced view, summarising the findings of the expert studies, weighing up the issues and presenting the arguments both for and against unconventional oil and gas in Scotland.  It does not set out or advocate a preferred position or policy, but rather states that its aim is to create dialogue and allow different perspectives to be communicated.  

The consultation closes on 31 May 2017.

Next steps
Following completion of the consultation, and consideration of the responses, the Scottish Government intends to make a recommendation to the Scottish Parliament, which will take the final decision on whether onshore unconventional developments should be permitted. 

While the SNP leadership have maintained their position that a final decision will be based on objective evidence and the findings of the consultation, there is significant opposition to onshore unconventional activity in its wider membership.  In addition, the Scottish Labour Party, Scottish Liberal Democrats and Scottish Green Party have policies to oppose it. It will therefore be interesting to see how the debate plays out once the consultation has been completed.