Govt opens bidding for onshore oil and gas licenses

Tuesday 29 July 2014

Limited companies in the UK oil and gas sector are set to see demand for their services rise further, as the government moves to grant more fracking licenses.

Ministers have opened the bidding process for businesses wanting to secure a license to seek out onshore oil and gas.

Details are now available on how to apply to take the first step for starting drilling. However, a license does not equate to an absolute agreement and any further drilling applications will require planning permission, permits from the Environment Agency and sign-off from the Health and Safety Executive.

Business and energy minister Matthew Hancock said: "Unlocking shale gas in Britain has the potential to provide us with greater energy security, jobs and growth. We must act carefully, minimising risks, to explore how much of our large resource can be recovered to give the UK a new home-grown source of energy. As one of the cleanest fossil fuels, shale gas can be a key part of the UK’s answer to climate change and a bridge to a much greener future."

In addition to opening up the licensing bidding process, communities minister Lord Ahmad of Wimbledon sought to clarify the government's approach to unconventional hydrocarbons.

This was done in the form of additional planning guidance for areas of outstanding natural beauty, world heritage sites, national parks and the broads.

Lord Ahmad claims this will help to protect Britain's environment and ensure operational best practices are followed.

"Ultimately, done right, speeding up shale will mean more jobs and opportunities for people and help ensure long-term economic and energy security for our country," Mr Hancock said.

In order to ensure businesses are following the rules relating to unconventional hydrocarbons, communities secretary Eric Pickles will be giving consideration to recovering planning appeals arising from these types of developments for the next 12 months and potentially beyond.

Lord Ahmad commented: "Effective exploration and testing of the UK’s unconventional gas resources is key to understanding the potential for this industry – so the government is creating the right framework to accelerate unconventional oil and gas development in a responsible and sustainable way."

The Department of Energy and Climate Change will also require statements of Environmental Awareness to be submitted with licensing applications to the areas identified by Lord Ahmed. This is in order to demonstrate that the company understands the environmental sensitivities relevant to the area proposed.

The increase in fracking is sure to drum up demand for contractors in the oil and gas sector.

However, the market is incredibly competitive, with international hotspots such as Houston attracting many limited companies overseas.

Consequently, organisations embarking on fracking activities in the UK will need to ensure they can source the talent they need.

Businesses will also need to be aware of public backlash, as there is fierce opposition to increasing fracking in Britain. Critics say the new proposals give Eric Pickles the power to overrule local authorities to allow fracking in beauty spots.

By Victoria McDonnell

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