Energy Minister, Claire Perry, has confirmed that all operators who apply for hydraulic fracturing consent will have to demonstrate that they can fund any decommissioning costs. Following my request for assurances on this issue, the Minister also said that her officials are working closely with the Industry’s trade body, UK Onshore Oil and Gas, (UKOOG) to ensure that all liabilities for the decommissioning of shale wells are addressed “in the rare circumstances where no rescue mechanism for those companies could be found”.
In her letter Ms Perry agreed that it is imperative to ensure that regulators have sufficient resources to regulate the industry effectively, which is a point I have emphasised repeatedly. She said that she has received assurances from the Health and Safety Executive (HSE) and the Environment Agency (EA) that they have sufficient specialist inspectors in place to deliver the regulatory regime they are responsible for during the current gas exploratory phase. She stressed that, if a large number of wells are drilled to produce shale gas, the number of inspectors would be reviewed at the relevant time.
Ms Perry said that whilst she was determined that regulations should keep pace with development, the system would not allow for excess applications to be considered until the regulator was ready to take a decision. This way there is no likelihood of them not being able to keep pace as has happened, on occasion, in the United States.
I have been pressing hard for assurances that local communities will benefit from shale gas development in their area. The Minister told me that she has instructed her officials to work with operators to improve their offer and to ensure that this happens as quickly as possible. Ms Perry quoted one operator, Cuadrilla, which has already paid £100,000 in community benefits directly to households and she confirmed that she is meeting with the Chancellor very soon to discuss how a shale wealth fund, which has recently been the subject of a public consultation, could be taken forward.
I was also pleased that the Minister agreed to consider my suggestion of a shale gas Tsar who would have responsibility for ensuring that the public has a better understanding of the benefits of shale gas.