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What does the forthcoming round of shale gas licensing mean for the industry?

17-01-2014

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The UK government recently announced that the 14th round of licensing for shale gas production will become available in 2014, after a report from the Strategic Environmental Assessment (SEA) concluded that the energy source does not present a threat to the environment. Some firms have already begun exploratory drilling to determine how much gas is in the UK.

However, if a lot of shale gas is found, the UK could soon see a production boom, which would be excellent news for the oil and gas industry. Just how big an impact will it have though and how will it affect employment?    

Current state of oil and gas in the UK

The oil and gas industry estimates that even if the government reaches its target to source 15 per cent of the UK's energy via renewable resources by 2020, the country will still demand on oil and gas for 70 per cent of its needs. Oil and gas is expensive to import, so it is important that the UK produces as much as possible from its own shores. It is estimated that 40 per cent of the country's oil and gas reserves have not been extracted from yet, which should tide the UK over for some time.

However, the government also believes that by the year 2030, 70 per cent of oil and gas will have to be imported from somewhere else; unless energy firms are able to find shale gas resources within the UK.

Currently, the government is running a consultation regarding SEA's findings. It is unlikely that any permits will be rolled out until after March, when the consultation is set to finish. One of the biggest concerns about shale gas is the effect it can have on the environment, which is something that needs to be taken into account before the oil and gas industry goes ahead with drilling.

Shale gas is produced by pumping hydraulic fracturing (fracking) fluids, which can potentially contain hazardous chemicals, into the ground with sand and water. One of the byproducts of fracking is it produces millions of gallons of waste water, which can pollute nearby water sources, if not responsibly disposed of. This is a scenario that could be damaging to the environment. This is why robust regulations need to be in place before shale production begins.

Benefits of shale gas

The UK is hoping for a similar shale gas boom to the one the USA has been experiencing. Latest estimates state that North America alone contains around 1,000 trillion cubic feet of accessible shale gas - enough to supply the country for 50 years. By 2020, shale gas could contribute up to half of America's gas supply.

If, as the SEA predicts, the UK has a similar 'high activity scenario', around 4.32 to 8.64 trillion cubic feet of shale gas could be produced. The potential amount would be three times as much as the current gas demand in the UK. The government believes that reducing the UK's dependency on imported oil and gas would lower energy bills. Moreover, the industry would contribute to economic growth and create thousands of jobs.

In fact, it's estimated that employment in the oil and gas industry could increase by seven per cent, meaning around 16,000 to 32,000 new jobs could be created. However, for quite some time there's been a skills shortage in the oil and gas industry, meaning UK workers will need to get themselves qualified in the near future. Otherwise, the majority of the newly created jobs could be given to highly skilled foreign workers instead of Brits. For example, gaining a certification in project management could be hugely helpful when searching for a job in the shale gas industry in the near future.

Moreover, shale gas is a much cleaner form of energy than oil and gas produced from fossil fuels. Shale gas gives off around half of the carbon emissions of coal, so whilst irresponsible fracking can be harmful to the environment, the gas itself could be beneficial.

Half of the UK will be made available for fracking this year, giving oil and gas companies plenty of opportunities to find sufficient amounts of shale gas. If a high amount is found, the results could be highly beneficial to the industry and the UK, especially in terms of employment.

Author: Laura Varley

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