Written evidence submitted by IGas

About IGas

1. IGas Energy is a leading British oil and gas explorer and developer, producing approximately 3,000 barrels of oil and gas a day from over 100 sites across the country, with significant potential yet to be delivered from our assets.

2. IGas has played a key role in Britain’s onshore energy production; safely exploring, developing and producing onshore oil and gas at our sites for over three decades. Our management and technical teams have many years of experience in onshore energy production and most live and work in the communities in which we operate.

3. IGas is extremely well positioned for the future as we move closer to unlocking Britain’s untapped unconventional oil and gas resources.

The history of onshore oil and gas in the UK

4. Exploration for, and production of, oil and gas onshore in the UK has a long history stretching back over 150 years. The earliest production of hydrocarbons in southern England came from the Sussex area, with gas detected in water wells in 1836 and 1875. Wells drilled subsequently in 1895 and 1896 at Heathfield in Sussex, became Britain’s first natural gas wells, with production of 1000 cubic feet per day (cfd).

5. With the onset of the First World War a secure supply of oil became strategically more important, with oil requirements doubling in 1916 and 1917. As a result the Petroleum (Production) Act 1918 was introduced, which prohibited exploration and production other than by the Crown or under licence from the Crown.

6. Sixteen years later the Petroleum (Production) Act 1934 was implemented, which effectively gave the ownership of petroleum to the Crown and limited surface owner rights. In 1935, the first licences were introduced, with exploration starting in 1936 and commercial discoveries made the following year.

7. Onshore oil production in the UK was dominated by the discovery, in 1973, of the Wytch Farm Oilfield in Eastern Dorset. This oilfield, the largest onshore in the UK by several orders of magnitude, was discovered after a phase of seismic reflection surveying in 1970 and early 1971.

8. The first hydraulically fractured well in the UK happened over 50 years ago and, of the c2,000 wells drilled onshore in the UK, about 10% of them having been hydraulically fractured. Of those that have been hydraulically fracked, there are currently around 120 producing sites with 250 operating wells producing between 20,000 and 25,000 barrels of oil equivalent per day.

9. In June 2013, The British Geological Survey (BGS) in association with the Department of Energy and Climate Change (DECC) estimated gas-in-place of shale gas in part of central Britain was 1,329 trillion cubic feet (tcf) (the UK’s annual consumption is just over 3 tcf).

10. Despite some commentary, the onshore oil and gas industry, and the techniques used by it, are not new.

The risks from fracking operations in the UK, including potential risks to water supplies and water quality, emissions, habitats and biodiversity, and geological integrity

Water

12. The Environment Agency (EA), one of whose responsibilities is the regulation of water quality, has deemed risks to water sources from shale gas exploration are “low”[1] under the current regulatory regime and have committed to using “appropriate controls under the legislation…to manage the identified risks, supported by monitoring and compliance work” [2].

13. This is a view shared by a joint Royal Society and Royal Academy of Engineering report looking at the risk of water contamination from shale gas exploration. This report considered the risk “very low provided that shale gas extraction takes place at depths of many hundreds of metres or several kilometres” [3] – as is the case in the UK.

14. The Chartered Institution of Water and Environmental Management (CIWEM) also agree that risks to groundwater are low, not least due to shale rock existing at considerable depths below aquifers. CIWEM asserted that “contamination of aquifers from mobilisation of solutes and methane is unlikely where shale plays exist at depth in the UK”[4] as contaminants would be required to migrate many hundreds of metres between source rock and sensitive groundwater. Indeed, the CIWEM report goes on to state that “claims by some opponents that the shale gas industry represents a threat to the security of public water supplies is alarmist”[5].

15. With regards to interaction between shale and overlaying aquifers, a study by the ReFINE (Researching Fracking in Europe) project found that there was a less than 1% chance of a stimulated hydraulic fracture propagating upwards more than 350 metres, and that the maximum recorded distance was 588 metres. This study recommended that all horizontal fracking wells are drilled at least 600m below aquifers to minimize the risk of stimulated hydraulic fractures providing a pathway for natural gas to migrate upwards and contaminate aquifers[6].

16. Similar observations have been made by Professor Richard Selley, Professor of Petroleum Exploration at Imperial College London, who has said “for the fluids used in hydraulic fracturing to flow up from the fractured shale to contaminate an aquifer would require a change in the law: the laws of physics. Because the density of fracking fluid is greater than that of fresh water they will not move up under buoyancy[7].”

17. In addition to aquifers, there is also a risk of surface spills at shale sites contaminating water. As part of a suite of measures to mitigate this risk, before any operations commence a thick, impermeable membrane is laid across well pads to prevent any potential spillage of water of other chemicals used in drilling and hydraulic fracturing from getting into nearby soil, groundwater or escaping into the subsurface or the local environment. All rainwater from sites is collected and disposed of in accordance with EA or SEPA regulations.

Emissions, habitats and biodiversity

18. In their review of the potential health impact of emissions associated with shale gas extraction, Public Health England found that “the potential risks to public health from exposure to the emissions associated with shale gas extraction will be low if the operations are properly run and regulated”[8].

19. One element of these regulations is the requirement made by the Department of Energy and Climate Change (DECC) that operators minimise the release of gas into the atmosphere and, when gas can’t be economically used, it must be captured and “flared” to reduce its global warming emissions[9].

20. It is also worth noting that there is no commercial incentive for operators to flare gas, as the gas would otherwise be sold.

21. In terms of methane leakage from wells, this is prevented by a well construction design that includes multiple layers of casing – requiring approval from the Health and Safety Executive (HSE) – and then integrity tested before operation commences. Then, during and after operations independent environmental monitoring is carried out to ensure no leakage occurrs.

22. In addition to natural gas, extraction will potentially produce emissions because of the industrial processes on site such as engines to power drills and compressors to capture gas. It is important to note that many of these emissions are produced in significantly greater quantities from other sources, including industry and transport, and from atmospheric processes. There will also be an existing background level of both primary and secondary pollution. The public health issues that have occurred in America, examples of which are regularly referenced by opponents of onshore oil and gas exploration, have resulted from unsafe practices, such as storing flow back fluids in open pits and using them to de-ice roads – practices that are not permitted under UK regulation.

23. Further demonstrating the commitment of the UK onshore oil and gas industry to mitigate these risks, and complimenting existing UKOOG “UK Onshore Shale Gas Well Guidelines[10]”, UKOOG is also developing “green completion” based on industry best practice, to reduce the emissions of gases into the air.”

24. “Green completion” involves using specialist equipment to collect and separate the initial flow of water, sand and gas, so the gas can be prevented from escaping. According to Professor David MacKay, (DECC’s Chief Scientific Advisor), and Dr Timothy Stone (the Senior Advisor to the Secretary of State), “green completions” should be adopted at all stages following exploration[11]. According to DECC, “green completions and flaring can reduce methane emissions by as much as 95% versus venting straight into the atmosphere[12].”

25. It is additionally essential to recognise that gas and oil are naturally mobile in the UK subsurface, with around 200 natural hydrocarbon seeps, mainly of oil, known onshore in UK. A small number of natural gas seeps from shales have also been recorded, with notable occurrences in the Weald Basin of south-east England[13].

26. As such, to fully understand emission levels caused by operations, baseline levels of methane are recorded. UKOOG is developing further guidelines for comprehensive baseline monitoring of soil, air and water before and during operations. Adherence to these guidelines will be mandatory for UKOOG members.

Geological integrity

27. Seismic activity is a common occurrence in the UK, with the vast majority of events induced naturally. Indeed, in the last two months alone there was one tremor bigger (2.6) than the largest recorded in Presse Hall (2.3) and four that were very similar in size (2.2, 2.1, 2.0 and 2.0)[14]. On average, the UK experiences seismic events measuring 5 (felt by everyone nearby) every 20 years and events measuring 4 (felt by many people) every three to four years. Tremors of 2.0 or below are rarely detectable on the surface.

28. Nonetheless, DECC has put in place regulations which make it a requirement to monitor and respond to even minor levels of seismic activity. Shale operators must use the ‘traffic light system’ to monitor seismicity, which determines whether operations can proceed:

• Green – less than Richter magnitude 0 – safe to proceed
• Amber – magnitude 0 to 0.5 – proceed with caution, at a slower rate
• Red – magnitude 0.5 or higher – operations suspended

29. The Royal Society and the Royal Academy of Engineering state that the traffic light system will mitigate the risk of damaging induced seismicity[15].

Necessary environmental safeguards, including through the planning/permitting system

30. There are many regulations in place, covering different aspects of the shale development process, which provide safeguards for environmental protection.

31. The main regulators are the Environment Agency (or the Scottish Environment Protection Agency in Scotland), the Department of Energy and Climate Change, Public Health England, and the Health and Safety Executive. In addition to this, local planning controls must be satisfied before operations can begin. There are also 17 separate pieces of European legislation covering the process. The UK Government has also published the UK Regulatory Roadmap[16].

Department of Energy and Climate Change (DECC)

32. In considering any request for operatorship, DECC will look at the technical competence of the operator –specifically their:

• capability to supervise, manage and undertake the proposed operations
• scope of relevant insurance coverage

33. In addition to licensing duties, DECC is required to give final consent for drilling.

34. For shale wells, an environmental risk assessment (ERA) is required to be submitted to DECC. If hydraulic fracturing is planned, DECC will require that a fracturing plan to address the risk of induced seismicity is submitted, and will review this plan before these operations are permitted. Finally, DECC will ensure the environmental regulator and HSE have no objections to the proposed operations, before consent is given.

Environmental Regulator

35. The role of environment regulation is handled by the Environment Agency (EA) in England, Natural Resources Wales (NRW) in Wales and the Scottish Environment Protection Agency (SEPA) in Scotland.

36. In England & Wales, onshore oil and gas exploratory activities require environmental permits issued under the Environmental Permitting Regulations (EPR 2010) and other permissions from the Environmental regulator, depending on the methods used and the geology of the site. In Scotland, SEPA requires a construction licence for any borehole greater than 200 metres, under the Water Environment (Controlled Activity) (Scotland) Regulations 2011 and for a water features survey up to 1.2km from the well trajectory.

37. Environmental Regulation requires the following:

• A notice to be served on the regulator under section 199 of the Water Resources Act 1991 to ‘construct a boring for the purposes of searching for or extracting minerals’
• Environmental permits for:
• groundwater activity
• mining waste management
• Industrial Emissions Directive
• radioactive substances activity
• a water discharge activity
• A groundwater investigation consent – to cover drilling and test pumping where there’s the potential to abstract more than 20 cubic metres per day (m3/day) of water
• A water abstraction licence – if the plan is to abstract more than 20m3/day for own use rather than purchasing water from a public water supply utility company
• A flood defence consent – if the proposed site is near a main river or a flood defence.

38. The Environmental regulator is also a statutory consultee during the planning application conducted by the MPA and also in the assessment of the Environmental Impact Assessment if this is required.

Health and Safety Executive (HSE)

39. The Health and Safety Executive (HSE) monitors oil and gas operations from a well integrity and site safety perspective. It ensures that safe working practices are adopted by onshore operators as required under the Health and Safety at Work etc Act 1974, and regulations made under the Act. These specifically are:

• The Borehole Site and Operations Regulations 1995 (BSOR) – These regulations are primarily concerned with the health and safety management of the site for onshore wells.
• The Offshore Installations and Wells (Design and Construction, etc) Regulations 1996 (DCR) – Apply to all wells drilled with a view to the extraction of petroleum regardless of whether they are onshore or offshore and are primarily concerned with well integrity and well control.

40. Note these regulations are “goal setting” and define what the operator must achieve, rather than what they must do – this philosophy is being copied around the world.

41. HSE works closely with the environment regulator and DECC to share relevant information on such activities and to ensure that there are no material gaps between the safety, environmental protection and planning authorisation considerations, and that all material concerns are addressed.

42. The HSE initially scrutinises the well design for safety and then monitors progress on the well to determine if the operator is conducting operations as planned. During drilling activities, the HSE requires a weekly drilling completion and workover report focusing on well control and well integrity.

43. During assessment and inspection activities, HSE checks that the operator has independent well examination arrangements in place.

Independent Well Examiner

44. The Operator is required to set up a Well Examination Scheme and appoint a Well Examiner. The Well Examination Scheme and involvement of the Well Examiner is for the complete lifecycle of the well, from design through to abandonment. The Well Examiner is an independent competent person who reviews the proposed and actual well operations to confirm they meet the Operator’s policies and procedures, comply with the Offshore Installations and Wells (Design and Construction, etc.) Regulations 1996 and follow good industry practice.

45. The well examination scheme requires the Operator to send the following documents to the Well Examiner:

• The well construction programme and any material changes to it
• Regular reports on how the well is being constructed
• Reports on how the well is being monitored
• At the end of the well’s life, a plan for how it will be abandoned.

46. Shale gas well operators will ask their well examiners to examine certain well integrity and fracturing operations in real time, especially during the early stages of a development, to provide a further level of independent assurance. Such periodic site visits will be made at the discretion of the examiner, in addition to assessing documentary evidence of well integrity, to observe and verify that such operations have been executed satisfactorily in accordance with the approved programme.

Minerals Planning Authority

47. Minerals Planning Authorities (as part of local councils) grant planning permission for the location of any wells and well pads, and impose conditions to ensure that the impact on the use of the land is acceptable.

48. The planning system controls the development and use of land in the public interest; this includes ensuring that new development is appropriate for its location taking account of the effects (including cumulative effects) of potential pollution on health, the natural environment or general amenity, and the potential sensitivity of the area or proposed development to adverse effects from possible pollution.

49. The principal issues that mineral planning authorities address, bearing in mind that not all issues will be relevant at every site, to the same degree, include:

• noise
• dust
• air quality
• lighting
• visual intrusion into the local setting and the wider landscape
• landscape character
• archaeological and heritage features
• traffic
• risk of contamination to land
• soil resources
• flood risk
• land stability/subsidence
• internationally, nationally or locally designated wildlife sites, protected habitats and species, and ecological networks
• nationally protected geological and geomorphological sites and features
• site restoration and aftercare.

50. The Department of Communities and Local Government (DCLG) has issued planning guidelines with respect to the sector[17].

Environmental Impact Assessment (EIA)

51. An Environmental Impact Assessment is an assessment of the possible positive and/or negative impacts that a proposed project may have on the environment and, as a condition of UKOOG membership, is required for every site where hydraulic fracturing is planned.
    

The implications for our carbon emissions reduction obligations

52.                                                                    The development of natural gas from shale is consistent with the UK’s national and international commitments to reduce carbon emissions.

53. Generating electricity from natural gas produces around half the emissions of generating electricity from coal. According to figures from DECC, of electricity generated in 2013 (where most recent figures are available), coal accounted for 36.3 per cent and gas 26.8 per cent, mainly due to high gas prices[18]. In addition, natural gas provides heats 83% of the UK’s homes.

54. When working towards a more decarbonised economy, the use of natural gas for electricity production forms a vital bridging fuel. This is a view shared by several influential bodies and individuals:

• The United Nations’ Intergovernmental Panel on Climate Change (IPCC) Working Group 35th Assessment Report, published in April 2014 said “GHG emissions from energy supply can be reduced significantly by replacing current world average coal-fired power plants with modern, highly efficient natural gas combined cycle power plants or combined heat and power (CHP) plants, provided that natural gas is available and the fugitive emissions associated with its extraction and supply are low or mitigated[19]”.
• The UK’s Committee on Climate Change, which advises the Government on meeting the country’s carbon reduction targets, concluded: “UK shale gas production would reduce our dependence on imports and help to meet the UK’s continued gas demand, for example in industry and for heat in buildings, even as we reduce consumption by improving energy efficiency and switching to low-carbon technologies[20].”
• Stephen Tindale, the former director of Greenpeace, said in May 2014 that climate campaigners should support fracking for shale gas. He says that the reason for this is that the use of shale gas would enable the UK to reduce the burning of coal[21].

Conclusion

56. IGas Energy is encouraged by the Environmental Audit Committee’s inquiry and feel that the debate surrounding onshore oil and gas exploration, and specifically those which results in hydraulic fracturing taking place, is one that would benefit from greater clarity

57. We are confident that the Committee will find our evidence of relevance to this inquiry and would welcome the opportunity to provide further information should the Committee feel that it would be beneficial.

31 December 2014