Next steps for UK onshore oil and gas: shale development, environmental regulation and opportunities for sector growth 4 th July 2017

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1 Next steps for UK onshore oil and gas: shale development, environmental regulation and opportunities for sector growth 4 th July 2017 CONDITIONS FOR USE OF TRANSCRIPTS: This document is intended to provide a timely reference for interested parties who are unable to attend the event to which it refers. Some portions are based on transcripts of proceedings and others consist of text submitted by speakers or authors, and are clearly marked as such. As such, apart from where it is indicated that the text was supplied by the speaker, it has not been possible for the transcript to be checked by speakers and so this portion of the document does not represent a formal record of proceedings. Despite best endeavours by Westminster Forum Projects and its suppliers to ensure accuracy, text based on transcription may contain errors which could alter the intended meaning of any portion of the reported content. Anyone who intends to publicly use or refer to any text based on the transcript should make clear that speakers have not had the opportunity for any corrections, or check first with the speaker in question. If in doubt please contact the forum first.

2 Contents About this Publication 3 Agenda 4 Session Chair s opening remarks Baroness McIntosh of Pickering 6 The opportunities and geological challenges for shale extraction in the UK Professor Mike Stephenson, Director of Science and Technology, British Geological Survey (transcript) 7 Assessing the environmental impact of onshore oil and gas production Professor Frederic Coulon, Professor of Environmental Chemistry and Microbiology, Cranfield University (transcript) 10 Priorities for environmental regulation and minimising risks from development Mark Ellis Jones, Programme Executive, Onshore Oil & Gas Programme, Environment Agency (transcript) 13 Questions and comments from the floor (transcript) 16 Supporting the commercial and environmental sustainability of new projects Planning and onshore exploration and production John Blaymires, Chief Operating Officer, IGas Energy (transcript) 23 Next steps for commercialising shale: planning, environmental compliance and infrastructure Simon Tilling, Partner, Burges Salmon (transcript) 26 Andrew Gunning, Partner, RSKW (transcript) 28 Nicola Pitts, Head of Gas Market Change, National Grid, UK System Operator (transcript) 29 Naomi Luhde Thompson, Senior Planner, Friends of the Earth (transcript) 31 Questions and comments from the floor with John Blaymires, Chief Operating Officer, IGas Energy (transcript) 33 Session Chair s closing remarks Baroness McIntosh of Pickering (transcript) 40 Session Chair s opening remarks Lord Truscott, former Parliamentary Under Secretary of State for Energy (transcript) 42 Improving the competiveness of UK onshore assets Learning from international experience: best practice, cooperation and opportunities for the UK Professor Chris Ballentine, Chair of Geochemistry, University of Oxford (transcript) 44 The outlook for investment, exploration and production in the UK onshore sector Stephen Sanderson, Executive Chairman and Chief Executive, UK Oil & Gas Investments (transcript) 47 Assessing the challenges to unconventional oil and gas: licensing, skills and technical capacity Ken Cronin, Chief Executive, UKOOG (transcript) 50 Economics of UK shale gas production can developers make a suitable margin? John Williams, Senior Principal, Pöyry (transcript) 52 The social and economic benefits of UK shale gas Graham Dean, Managing Director, ReachCSG (transcript) 55 Questions and comments from the floor (transcript) 58 Session Chair s and Westminster Energy, Environment & Transport Forum closing remarks Lord Truscott, former Parliamentary Under Secretary of State for Energy (transcript) 61 Andrew Best, Forum Lead, Westminster Energy, Environment & Transport Forum (transcript) 62 Comments 63 List of Delegates Registered for Seminar 64 Contributor Biographies 69 About the Core Sponsors of the Westminster Energy, Environment & Transport Forum 72 Please be advised that speakers PowerPoint presentations are included within the transcript itself, just beneath the relevant speaker s text. Please note that not all speakers are able to grant permission for us to include their slides. Westminster Energy, Environment & Transport Forum Important: note conditions of use on front page Page 2

3 About this Publication This publication reflects proceedings at the Westminster Energy, Environment & Transport Forum Keynote Seminar: Next steps for UK onshore oil and gas: shale development, environmental regulation and opportunities for sector growth held on 4 th July The views expressed in the articles are those of the named authors, not those of the Forum or the sponsors, apart from their own articles. Although Westminster Energy, Environment & Transport Forum is grateful to all sponsors for the funding on which we depend, participation in events and publications is never conditional on being a sponsor. As well as funding ongoing operations, sponsorship enables the Forum to distribute complimentary copies of publications, and offer complimentary tickets for events, to Government ministers, parliamentarians and officials most involved in policy. This publication is copyright. Its copying, in whole or in part, is not permitted without the prior written consent of the publishers. However, extracts of the text may be reproduced for academic or review purposes, subject to the conditions of use outlined in the previous page, providing they are accurate, are not used in a misleading context and the author, their organisation and the Westminster Energy, Environment & Transport Forum are acknowledged. We would also appreciate being informed. Westminster Energy, Environment & Transport Forum UK Headquarters 4 Bracknell Beeches Old Bracknell Lane West Bracknell Berkshire RG12 7BW T: F: publications@westminsterforumprojects.co.uk Directors Peter van Gelder Chris Whitehouse Westminster Energy, Environment & Transport Forum Important: note conditions of use on front page Page 3

Westminster Energy, Environment & Transport Forum Keynote Seminar: Next steps for UK onshore oil and gas: shale development, environmental regulation and opportunities for sector growth Timing:

4 Westminster Energy, Environment & Transport Forum Keynote Seminar: Next steps for UK onshore oil and gas: shale development, environmental regulation and opportunities for sector growth Timing: Morning, Tuesday, 4 th July 2017 Venue: Royal Over Seas League, Over Seas House, Park Place, St James s Street, London SW1A 1LR Registration and coffee Session Chair s opening remarks Baroness McIntosh of Pickering The opportunities and geological challenges for shale extraction in the UK Professor Mike Stephenson, Director of Science and Technology, British Geological Survey Assessing the environmental impact of onshore oil and gas production Professor Frederic Coulon, Professor of Environmental Chemistry and Microbiology, Cranfield University Priorities for environmental regulation and minimising risks from development Mark Ellis Jones, Programme Executive, Onshore Oil & Gas Programme, Environment Agency Questions and comments from the floor Supporting the commercial and environmental sustainability of new projects Planning and onshore exploration and production John Blaymires, Chief Operating Officer, IGas Energy Next steps for commercialising shale: planning, environmental compliance and infrastructure Simon Tilling, Partner, Burges Salmon Andrew Gunning, Partner, RSKW Nicola Pitts, Head of Gas Market Change, National Grid, UK System Operator Naomi Luhde Thompson, Senior Planner, Friends of the Earth Questions and comments from the floor with John Blaymires, Chief Operating Officer, IGas Energy Session Chair s closing remarks Baroness McIntosh of Pickering Coffee Session Chair s opening remarks Lord Truscott, former Parliamentary Under Secretary of State for Energy Improving the competiveness of UK onshore assets Learning from international experience: best practice, cooperation and opportunities for the UK Professor Chris Ballentine, Chair of Geochemistry, University of Oxford The outlook for investment, exploration and production in the UK onshore sector Stephen Sanderson, Executive Chairman and Chief Executive, UK Oil & Gas Investments Assessing the challenges to unconventional oil and gas: licensing, skills and technical capacity Ken Cronin, Chief Executive, UKOOG Economics of UK shale gas production can developers make a suitable margin? John Williams, Senior Principal, Pöyry The social and economic benefits of UK shale gas Graham Dean, Managing Director, ReachCSG Questions and comments from the floor Session Chair s and Westminster Energy, Environment & Transport Forum closing remarks Lord Truscott, former Parliamentary Under Secretary of State for Energy Andrew Best, Forum Lead, Westminster Energy, Environment & Transport Forum Westminster Energy, Environment & Transport Forum Important: note conditions of use on front page Page 4

5 Comments Gavin Ward UK General Manager RISC Advisory, London Education or Confrontation? The future of the E&P Industry s Social License to Operate. The success of the US shale phenomenon has captured global media attention. While the benefits realised by US manufacturing and the US economy are substantial, not all consequences have been beneficial. Hydraulic fracturing operations (fracking), an essential component of the path to commercialisation of shale hydrocarbons, have become the pariah of the industry. A combination of well intentioned community concerns, vested interest group rhetoric and misinformation has significantly constrained the industry in many countries and resulted in total prohibition in others. The industry response has been belated and generally ineffective; generalised by individual companies trying, understandably, to protect their immediate work programmes and vested interests. This archetypical response is unlikely to achieve effective and enduring success, as measured by the expedient approval of Social Licenses to Operate. Even in the improbable scenario that short term project focused campaigns have even limited success, tomorrow there will be another community concern, fuelled by a media motivated by short term sensationalism and vested interest groups prepared to prostitute honesty and integrity to achieve self serving objectives. The reality now is that internal board approvals and necessary regulatory and statutory approvals are insufficient to enable drilling to proceed. Today, we also need a social license to operate; the consent, or at the very least, no overt objection from a broad spectrum of non government parties ranging from local communities with a legitimate concern about what activities are going to be carried out, how long they are going to take and the potential impact on their lives; groups who for a variety of reasons believe that drilling for hydrocarbons of any nature, anywhere in the world is simply wrong; vested interest parties that could range from the mining industry to environmental groups and of course the widely acknowledged Rent a Crowd. Whatever your personal views of any of these groups or individuals, the reality is the issues they raise have to be managed. The pervasive nature of social media, desire of the visual, audio and print media for five second bytes, and the general ineffectual response of our industry to objections to our activities means that today there is a lot of hard work to do. The Society of Petroleum Engineers in the development of its most recent strategic plan has recognised this challenge to the industry and has embarked upon a number of programmes designed to inform the general public and, most importantly, school children about the facts about energy all forms of energy not just oil and gas. Other independent technical and geological societies are also involved in outreach programmes but it s a slow process. Some have partnered with organisations like the Earth Sciences Teachers Association and UK Onshore Oil and Gas to help present collaborative and consistent information. More importantly, communicate a message that is heard with open ears. Credible, informed decisions about future energy supply and demand and robust long term energy policies can only be based on fact and objectivity. The long term solution is dependent on a general public, politicians, nongovernment organisations and other vested interest groups having unbiased presentations of the facts and ready access to quality information. That does not mean that there will not be different views nor does it mean that the oil and gas industry will, or should, become the blue eyed public favourite. Governments are empowered to make decisions which are meant to be in the long term interests of current and future generations. If a future UK energy policy does not include a place for shale gas, then so be it... but let s have a fact based debate and decision. Biography Gavin is GM of RISC Advisory. He has a commercial and technical skill set from 29 years at oil companies and has authored papers on risk, volume and value estimation. A Geologist by background, he holds an MBA from Cranfield and is a Fellow of Association of Chartered Certified Accountants. Westminster Energy, Environment & Transport Forum Important: note conditions of use on front page Page 63

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