New regulator set to oversee shale licensing

Suzie Neuwirth
THE NEW oil and gas regulator created for the UK North Sea will also have powers over onshore activities, including shale gas, City A.M. has learnt.

In a bid to ensure security of supply and bring down energy costs, the government has been supportive of the conventional oil and gas sector and the burgeoning shale gas industry, introducing tax breaks for both.

The next onshore oil and gas licensing round, that will allow companies to bid for shale gas permits, is expected to take place this summer.

“The government agrees that the new Oil and Gas Authority’s remit should extend to onshore and we will consider this in more detail with the onshore industry, focusing on how the new authority should deal with the exploration and subsequent production phases of new unconventional – principally shale – resources,” said a spokesperson from the Department of Energy and Climate Change.

It is thought that the new regulator’s powers will cover licensing rather than environmental issues.

Sir Ian Wood’s review into the UK North Sea earlier this year proposed a new regulator to maximise the area’s oil and gas reserves.

It is unclear whether the regulator will also cover underground coal gasification (UCG) – the process of drilling down into coal and then igniting it to produce gas – which is defined as an unconventional resource.

Aim-listed Cluff Natural Resources has five licences to extract gas from coal deposits under the North Sea and is hoping to drill its first well within the next year, subject to planning permission.

“This has never been done before offshore and it would have considerable implications for this country,” boss Algy Cluff told City A.M., adding that the firm was in talks with refineries over potential supply deals.

Shale gas player Dart Energy is also looking into extracting gas from coal, but onshore, using the coal bed methane process.

It is currently waiting for a decision on its appeal to extract gas from coal in central Scotland.

A spokesperson said the firm would not be looking to tap into North Sea coal as it is “unknown territory”.