speaker 6 oil and gas ukoog - hants
TRANSCRIPT
The UK voice for onshore oil and gas exploration
Oil and Gas development in Hampshire
UK Operators PerspectiveKen Cronin, UKOOG Chief Executive
5 June 2014
Agenda
About UKOOG The history The drilling process Regulation The case for gas Benefits Working with communities
About UKOOG
Enhance the profile of the whole onshore industry (both conventional and unconventional);
Promote better and more open dialogue with key stakeholders; Deliver industry-wide initiatives and programmes; Ensure the highest possible standards in safety, environmental
management and operations.
To create jobs and economic
growth
To provide a UK based
solution to our energy needs
To engage openly with
local communities
To act safely and with
environmental sensitivity
UK Onshore – building on history
Long history >200 wells drilled Largest onshore oilfield in
Western Europe c30 fields at c120 sites Current production c25,000
boepd BGS
Bowland estimates gas in place of 1,300 tcf
Weald oil in place of 4.4 billion bbl
Further studies of Central Belt of Scotland
4
Hampshire – 125 wells to date
Referring to the “industrialisation of the north!” …
“A two-hectare site could potentially support a 10-well pad and a production phase of 100 such pads would require just 200 hectares, or two square kilometres”(Source: IOD Report April 2013)
6
Can we operate in sensitive areas?
The onshore industry has a long established track record of developing oil and gas fields in sensitive areas, examples include:
Site located in the South Downs National Park
In the middle of a golf course
In the middle of housing developments
Adjacent to a local school
Europe’s largest onshore field-Wytch Farm- is located in and around the highly sensitive Poole Harbour area
Pad drilling will help reduce the environmental impact
Managing the environment
Before During After
• A critical element in any operation is returning the environment to its original contours and biodiversity
• Operating with minimal impact – regulatory regimes in place are significantly robust to ensure risks are mitigated
• A measured approach to site development – minimising land-take and disturbance
• No ‘one size fits all’ methodology
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Process
Environmental agreements
Adherence to 17 EU Directives through 8/9 permits All sites involving hydraulic fracturing
Early stage environmental risk assessment (ERA)Environmental impact assessment (EIA)
Agreement with WaterUK Full Public disclosure of Fracture Fluid Composition Full Public disclosure of Flow-back Fluids Full Public disclosure of water sourcing and use/re-use Monitoring system before during and after operations
How the industry is regulated
Regulatory roadmapDECC issues PEDL to operator
Operator conducts ERA (shale gas only)
EIA scope defined by MPAEIA conducted by operator
MPA screens for EIA
Operator makes initial minerals planning
applicationMPA advertises and consults on
finalised planning application
Agree plan for site restoration
Planning decision reached
DECC CONSENT TO DRILL
Agree traffic light system, outline HFP and fracture
monitoringDECC consent to fracture
Operator consults with Coal Authority and obtains permit if required
DECC consent for EWT
MPA – Operator pre-application consultation (best practice)
Planning appeals process
Operator agrees and establishes data -
reporting methods
Operator discharges relevant planning conditions to MPA
satisfaction and prepares site for
drilling
Environmental regulator –Operator pre-application
consultation (best practice)
Operator informs BGS of intention to drill
Operator notifies HSE of intention to drill 21 days in advance
Operator arranges independent examination of well under established scheme
Operator applies for and obtains relevant permits from environmental regulator
Environmental appeals process
Formal engagement arranged by developerOperator engages with local community and statutory consultees
Third Party Review
The health, safety and environmental risks associated with hydraulic fracturing (often termed ‘fracking’) as a means to extract shale gas can be managed effectively in the UK as long as operational best practices are implemented and enforced through regulation. The Royal Society & Royal Academy of Engineering, June 2012
If adequately regulated, local GHG emissions from shale gas operations should represent only a small proportion of the total carbon footprint of shale gas. MacKay & Stone, DECC, September 2013
The currently available evidence indicates that the potential risks to public health from exposure to emissions associated with the shale gas extraction process are low if operations are properly run and regulated. Public Health England, October 2013
Water UK has reviewed recent reports into shale gas extraction, and believes that while there are potential risks to water and wastewater services, these can be mitigated given proper enforcement of the regulatory framework. WaterUK, November 2013
Compared to other fossil fuels the overall water use intensity of shale gas is low, … claims by some opponents that the industry represents a threat to the security of public water supplies are alarmist. CIWEM, January 2014
Third Party Review
Shale gas production could have relatively low rates of methane leakage, similar to conventional natural gas production, if well regulated to ensure measures to stop methane leakage (e.g. ‘green’ completions). This would give it lower lifecycle emissions than our current liquefied natural gas (LNG) imports, and much lower than coal… 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. Committee on Climate Change, September 2013
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 plants, provided that natural gas is available and the fugitive emissions associated with extraction and supply are low or mitigated (robust evidence, high agreement). Intergovernmental Panel on Climate Change, 5th
Assessment Report, Working Group 3: Summary for Policymakers, 2014
We need gas
Uses of gas cannot be replaced overnightby renewables– Total
• 35% of all energy consumed in 2012
– Power• c40% of UK Electricity
– Heat• 83% of UK households
– Feedstock• UK chemical industry contributes £20 billion per year
to the UK economy, provides direct and indirect employmentfor over half a million people (CIA)
2012 UK Gas Balance SheetGWh
Total Supply of UK Natural Gas 452,806 Imports 547,300 Exports (144,023) Other (325) Losses (12,271) Total Supply 843,488
Electricity Generation 214,146 Heat Generation 22,392 Energy Industry Use 55,709 Industry 110,723 Domestic 339,080 Public administration 48,005 Commercial 37,045 Agriculture 1,536 Other 11,048 Non Energy Use 5,949 Statistical Difference (2,145) Total Consumption 843,488
Shale attracts huge benefits
Major economic benefits– Jobs
• 74,000 (IOD)
– Supply Chain• Peak investment £3.7bn per year (IOD)
– Energy Security• By 2030 UK imports could reach 80% (DECC)
– Tax• Important replacement for North Sea revenues
– Lower price volatility– Community benefits
• £100,000 per exploration site• Up to £1.1bn (UKOOG) for production sites• Business Rates
Environmental benefits– Lower emissions compared to coal, LNG and pipeline
Community Benefit Pilot Schemes
For exploration sites that include hydraulic fracturing £100,000 payment to local communities UK Community Foundations a registered charity with a track record in
working with local community will administer the scheme Identify local communities Create community panels Create a trust for the money Assist communities in identification of projects
Scheme arms length from the operator The community decides solely on how the money is spent Pilot scheme feedback will feed into the main scheme
The Supply Chain and Skills Requirements for Onshore Oil and Gas in the UK
“Getting Ready for Shale”
Terms of Reference
What will it take to build a shale gas pad in the UK? Supply chain Skills
What can we do in the UK? What are the gaps? How can we fill the gaps?
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Supply Chain: Main Findings
£33bn spend on potential supply chain
Hydraulic fracturing £20.5bnDrilling & completions £8.2bn
Waste management £2.8bn
Storage and transportation £1.3bn Other £0.5bn
• £17bn - Specialised equipment and skills for hydraulic fracturing
• £4.1bn waste, storage and transportation• £2.3bn steel requirement • Potential new £1.6bn rig manufacturing
industry• New market for existing UK businesses
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High
Spen
d O
ppor
tuni
ty
Category Availability
High
Low
1
2
3
4 56
7
89
10
11
12 1314
£33bn Spend – Capability
Rigs, ancillary equipment and services, waste disposal represents a significant opportunity for UK investment, especially as some of the capability exists today. However gaps exist especially in rig and fracturing equipment manufacture and in new technology requirements around waste water treatment and other environmental considerations. Gaps are exacerbated by the need for capital to bridge the gap between the start-up phase and the need to be ready for full production.
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Jobs: Main Findings
64,500 Jobs in upstream phase
64,532 6,092
39,405
19,036
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Total jobs (FTE) Critical direct site relatedjobs (FTE)
Indirect supply chainrelated
Supply chain induced
Jobs
(FTE
)
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Critical Job Roles
62%
11%
10%
9%5%
2% 1%0
0.2
0.4
0.6
0.8
1
1.2
Total Drilling &completions
Operationssupport
Direct officesupport
Petroleumengineering &geosciences(including
environmentalconsultants)
Hydraulicfracturing
Planningapprovals and
permittingissuance,
health, safety&
environmentalmonitoring
Construction
% o
f tot
al p
eak
jobs
(FTE
)
• Existing capability in the UK today in most categories — however it is constrained and will require investment to meet the industry’s needs
• There is currently limited capability in the UK for hydraulic fracturing engineers. • There are already shortages in related offshore and chemical industries, and
therefore a risk that these are further exacerbated by the take-off of shale
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Community Engagement
Engage in advance of any operations or any application for planning permission;
Provide sufficient opportunity for comment and feedback on initial plans Ensure that the local community gains a clear understanding of the
process including benefits and risks Demonstrate considerate development Publish transparent data Consider local employment Put in place benefit schemes Confirm and publish evidence each year of adherence to charter;
