What difference do you think the onshore industry could make to Britain?
Britain needs to secure its future energy mix and offset declining North Sea production. Whilst doing this, it must also reduce carbon emissions from reliance on coal power and ensure an affordable future energy supply for consumers. Gas is vital to Britain, it currently provides more than 80% of our heating needs and around 30% of our electricity generation.
The benefits of the shale industry will be felt across the country in lower imports, higher revenues to the Exchequer, job creation, supply chain development and energy security.
What are the key challenges faced by IGas and other operators?
It is a combination of both above surface and below surface. Above surface is about showing the public that this can be carried out safely and responsibly. Onshore oil and gas regulation in Britain has been recognised as an exemplar by the rest of the world oil and gas has for over three decades been safely explored, developed and produced onshore at IGas sites.
Below surface, while we know there is gas, we still need to establish that we can we make it flow at commercially viable rates. Britain has several advantages over the US because of our existing infrastructure, density of resource and clarity of regulation.
Can an onshore gas industry ever have sufficient scale to be material like the North Sea was in the
Yes I believe it can. Aberdeen welcomed the development of a new offshore industry and the city grew to become the energy capital of Europe and now exports its expertise globally. We could see this replicated onshore in the areas in which we operate.
According to the IOD Report, based on a recovery rate of 10% the combined gas in place estimates of the exploration companies would equate to a recoverable resource of 30.9 trillion cubic feet, nearly two thirds of Britain’s potentially recoverable conventional gas resources.
North Sea tax revenues have been considerable, accounting for more than 5% of total government receipts for much of the 1980s. Shale gas production could also generate significant tax revenue for the country.
What value could this unlock for shareholders? How would such growth be funded?
This represents a tremendous opportunity to be at the forefront of new and potentially significant industry. On completion of the Dart Energy acquisition, IGas will have the materiality and scale that will enable it to find partners at the asset level to help supply the capital that exploiting these resources will require, while retaining the position of operator of choice.
How does IGas engage with communities and ensure their concerns are listened to?
We engage in a number of ways using traditional methods such as face to face meetings, exhibitions, information days and direct mail as well as digital and social media such as microsites for local projects. We run a public information line as well as a freepost address and online enquiries so that the public can reach us through whichever medium they feel most comfortable with.
What role does onshore gas have in decarbonizing the British economy? Is it consistent with our climate change targets and renewable industry policies?
Natural gas is a vital component of Britain’s energy mix – not only electricity for generation but also for heating and cooking.
According to the European Commission’s landmark ‘Energy Roadmap 2050’ report, gas must play a key role in the transition to a greener energy future, and is critical for the transformation of Europe’s energy system from fossil fuel to renewables.Gas produced locally would generate lower emissions than imported gas, as it doesn’t have to be transported from places like Russia and Qatar. Gas also produces half the CO2 generated by burning coal, which currently accounts for 31% of Britain’s electricity. Developing our shale resources will help us move away from coal and decarbonize our economy.
Who regulates IGas’s activities?
The industry is regulated by a number of statutory bodies including the Environment Agency (EA) in England, Scottish Environment Protection Agency (SEPA) in Scotland and Natural Resources Wales (NRW) in Wales, Health and Safety Executive (HSE) and the Department of Energy and Climate Change (DECC). Onshore oil and gas regulation in Britain has been recognised as an exemplar by the rest of the world. In addition the industry is governed by 14 separate pieces of European legislation.
What are the wider community benefits of IGas’s operations?
We are committed to the environment and the communities in which we operate and we have a long track record of engaging with local residents and we operate our own Community Fund.
There is a much wider opportunity for communities in addition to the direct community benefits of £100,000 when wells are tested and 1% of revenue at production. DECC has announced that Councils will be able to keep 100 per cent of business rates generated from shale gas extraction sites. Together these benefits are potentially worth several million pounds.
As we proceed with the exploration of shale there is an opportunity for local and national businesses of all sizes in the supply chain. The recent EY Report “Getting ready for UK shale gas”, commissioned by UKOOG, has highlighted an enormous opportunity for Britain with potentially £33bn spend in the next 15 or so years. The report also outlines the need for some 64,500 jobs (direct, indirect, induced) at peak production.