Unconventional oil and gas policy: SEA

1 Introduction

Background to the Scottish Government’s preferred policy position on Unconventional Oil and Gas development

1.1 The Scottish Government has taken a cautious, evidence-led approach to considering onshore unconventional oil and gas in Scotland. This included the establishment of an Independent Expert Scientific Panel (‘the Expert Panel’) to examine the evidence on unconventional oil and gas, including hydraulic fracturing, or ‘fracking’, and coal bed methane extraction.

1.2 In January 2015, the Scottish Government announced a moratorium on onshore unconventional oil and gas development in Scotland. This followed the publication of the Expert Panel’s report. The moratorium created space to explore specific issues and evidential gaps identified by the Expert Panel, and undertake comprehensive public consultation. A series of independent research studies were commissioned covering issues such as climate, seismic activity, transport and health impacts and a public consultation was held which received over 60,000 responses.

1.3 On 24 October 2017, following a Parliamentary debate, the Scottish Parliament voted in favour of the Scottish Government’s preferred policy position of not supporting onshore unconventional oil and gas development in Scotland.

1.4 In accordance with statutory responsibilities under the Environmental Assessment (Scotland) Act 2005, a Strategic Environmental Assessment (SEA) on the Scottish Government’s preferred policy position is required to be undertaken and in January 2018, the Government commissioned LUC to undertake this assessment. Once finalised, the policy on onshore unconventional oil and gas in Scotland will be reflected in the next iteration of the National Planning Framework.

Unconventional oil and gas

1.5 The oil and gas industry use a range of techniques to extract oil and gas from underground reserves. Conventional oil and gas reserves can be exploited by drilling a well, with oil or gas then flowing out under its own pressure.

1.6 Conventional deposits are contained in porous rocks with interconnected spaces, such as limestone and sandstone. These interconnected spaces give rise to permeability that allows oil or gas to effectively flow through the reservoir to the well.

1.7 Unconventional oil and gas deposits are contained in impermeable rocks, such as shale or coal deposits. In these cases, the oil or gas cannot easily flow through the reservoir. To extract the oil and gases, techniques such as hydraulic fracturing (commonly referred to as ‘fracking’) or dewatering for coal bed methane are used.

1.8 Most of Scotland’s unconventional oil and gas deposits occur in and around former coalfields and oil shale fields in Scotland’s Central Belt, which contains some of the most densely populated areas of the country, as well as in the area around Canonbie, Dumfriesshire.

1.9 Hydraulic fracturing (or ‘fracking’) is a drilling technique that is used to fracture rock to release the oil and gas contained in those rocks. It is most commonly used to extract oil and gas from shale. The rock is fractured by injecting pressurised fluids into the rock to prise open small spaces in the rocks, which release the oil or gas.

1.10 Coal bed methane is also considered to be an unconventional source of gas. This is because the gas is present in the coal rather than being held in pore spaces. To extract the gas, water is drained from the coal seam to release pressure (known as dewatering). This may be undertaken with or without hydraulic fracturing, depending on local geological conditions.

Unconventional Oil and Gas in Scotland

Introduction

1.11 This section of the Environmental Report sets out further detail on onshore unconventional oil and gas in Scotland. It explains what is within the scope of the assessment, and how different issues are addressed. The information in this section draws on the existing evidence base and references the relevant documents where appropriate.

What is unconventional oil and gas?

1.12 It is important to define unconventional oil and gas as reflected in the preferred policy position. KPMG’s (2016) report “Economic Impact Assessment and Scenario development of unconventional oil and gas in Scotland”^[3], provides a useful definition which is reproduced below and is used for the purpose of the SEA:

The term ‘unconventional’ in unconventional oil and gas refers to the types of geology in which the oil and natural gas are found. For the purpose of this study, unconventional oil and gas includes shale gas, associated liquids and coal bed methane.

1.13 Unconventional oil and gas takes a number of different forms. The sources of unconventional oil and gas as defined by KPMG (2016) include:

• Gas extracted from onshore shale sources using hydraulic fracturing;
• Associated liquids extracted from onshore shale sources using hydraulic fracturing; and
• Coal bed methane (CBM).

What do we use unconventional oil and gas for?

1.14 Unconventional oil and gas can contribute to the provision of natural gas (for energy or energy production) and natural gas liquids as a raw material for the petrochemical industry. These uses are explained in more detail in Scottish Government consultation (2017) Talking “Fracking”^[4]. Both these products are included in the scope of the SEA.

Where are sources of unconventional oil and gas found?

1.15 There are a number of shale deposits in Scotland, most notably across an area of Scotland’s Central Belt known as the Midland Valley which extends from Ayrshire in the west, to Fife in the east. There are also coal deposits from which coal bed methane could be extracted in the Midland Valley and in south-west Scotland.

1.16 The British Geological Society (BGS) estimate that the Midland Valley holds between 49.4 – 134.6 tcf (trillion cubic feet) of shale gas, however there is uncertainty over the proportion of resources viable for extraction The BGS has identified the area of the Central Belt considered prospective for shale oil and gas. This includes the local authority areas of West Lothian, City of Edinburgh, East Lothian, Midlothian, Falkirk, North Lanarkshire, South Lanarkshire, City of Glasgow, East Dunbartonshire, South Lanarkshire, Clackmannanshire, Stirling, and Fife.

What stages are involved in the development of onshore unconventional oil and gas?

1.17 Unconventional oil and gas development involves a number of stages, which take place over different time periods. A prospective development would usually undergo four stages, which are explained in Table 1.1.

1.18 The first stage of development involves the construction of a drilling pad. A drilling pad is a base built to provide space for the drilling rig, piping and storage equipment, and other site facilities such as mobile cabins for workers. Pads are usually around the size of a football pitch (5,000-8,000 square metres). The average height of a typical drilling rig is about 38 metres, which is equivalent to a 10 or 11 storey building. Drilling rigs are temporary features, and are on-site while drilling takes place. The initial phases of production entail similar activities to an exploration and appraisal phase. Once these activities cease, the primary activities at a site would be maintenance and movement of goods from the site, although further wells may be drilled. The final stage of decommissioning involves restoration of the site, the wells are plugged and surface infrastructure is removed.

1.19 Coal bed methane development involves:

• exploration to locate suitable deposits, drawing on a combination of geological information and data from existing boreholes and previous gas and oil production;
• drilling of two or more boreholes into the target coal seam, with deviations running horizontally along the coal seams;
• dewatering of the coal seams using high capacity pumps to reduce the pressure within the coal, in turn allowing the release and capture and movement of methane gas to surface facilities for processing and use;
• Where there is low coal seam permeability, additional borehole drilling, including the horizontal linking of boreholes, and hydraulic or other fracturing of the coal seam may be used to increase flow;
• Disposal of pumped water (production water), either to sewer or surface water (following any required treatment) or by reinjection into the coal seam;
• Site restoration will take place once production ceases. Boreholes are plugged, surface infrastructure removed and aftercare monitoring regimes implemented. Decommissioning and site restoration may take place sooner if the boreholes prove to be unviable.

Table 1.1: Typical stages of unconventional oil and gas development^[5]

Stage 1	Stage 2	Stage 3	Stage 4
Exploration	Appraisal	Production	Decommissioning
Initial phase of testing commercial viability of a site. Boreholes to obtain core samples to analyse the rock structure and viability for oil or gas production. Seismic surveys may also be undertaken. Horizontal drilling and hydraulic fracturing tests may be undertaken to test flow properties.	Commercial viability of a site is explored further. Concrete drilling pads and roads are built. Drilling rigs will be erected. Additional boreholes are drilled accompanied by horizontal drilling. Hydraulic fracturing tests may be undertaken to test flow properties.	If a site is suitable for production, more wells will be drilled and hydraulically fractured with accompanying site activity. After around two years, the major on site activity will cease and will be replaced by routine maintenance, although some further wells may be drilled.	Site restored to original condition. Wells are plugged and abandoned. Surface infrastructure is removed. Aftercare monitoring regimes put in place. This work could take place at any stage of a development if site does not develop into the next one.
2—6 years		Approximately 15 years	2-5 years

What is the likely scale of development of unconventional oil and gas in Scotland, without the preferred policy position?

1.20 There is considerable uncertainty over the likely scale of development of unconventional oil and gas in Scotland in the absence of the preferred policy position. This includes uncertainty over the proportion of resources viable for extraction, which influences the scale of development that would otherwise occur. However, KPMG (2016) sets out three potential exploration, appraisal and extraction scenarios, for the development of the unconventional oil and gas industry in Scotland, in the absence of the preferred policy position:

• Central: 20 pads of 15 wells (each built over 11 years starting in 2023-2024) and two CBM pads of 15 wells^[6].
• Low: 10 pads of 10 wells (built over nine years starting in 2027-2028) CBM as central production scenario.
• High: 31 pads of 30 wells (each built over 13 years starting in 2021-2022) CBM as central production scenario.

1.21 It is however recognised that there remains considerable uncertainty even within these scenarios, not least around whether and to what extent the necessary permissions and licenses would be forthcoming. In line with best practice, the SEA will therefore utilise these scenarios to inform the assessment of a ‘broad range of impact scenario’. This is further explained in Section 2 Methodology.

What is the existing evidence base for unconventional oil and gas in Scotland?

1.22 The SEA is based on information within the existing evidence base, including the following research commissioned by the Scottish Government.

• Independent Expert Scientific Panel – Report on Unconventional Oil and Gas (Scottish Government, 2014)
• Economic Impact Assessment and Scenario Development of Unconventional Oil and Gas in Scotland – A Report for the Scottish Government (KPMG, 2016)
• Compatibility with Scottish greenhouse gas emissions targets (Committee on Climate Change, 2016)
• Unconventional Oil and Gas Development: Understanding and Monitoring Induced Seismic Activity (British Geological Survey, 2016)
• Unconventional oil and gas development: understanding and mitigating community impacts from transportation (Ricardo Energy & Environment, 2016)
• Unconventional Oil and Gas Development in Scotland: Decommissioning, Site Restoration and Aftercare – Obligations and Treatment of Financial Liabilities (Aecom, 2016)
• A Health Impact of Unconventional Oil and Gas in Scotland (Health Protection Scotland, 2016)

Plus:

• Talking “Fracking” – A Consultation on Unconventional Oil and Gas (Scottish Government, 2017) Scottish Parliament – Statement on Unconventional Oil and Gas (Scottish Government, 2017)
• Preferred Policy Position statement on unconventional oil and gas (Scottish Government, 07 December 2017), updated October 2018.

1.23 Any additional documents are referenced in this Environmental Report.

Scope of the SEA

1.24 The development of the preferred policy position falls under Section 5(3) of the Environmental Assessment (Scotland) Act 2005 (the “2005 Act”). A Strategic Environmental Assessment (SEA) is therefore required. The required stages comprise scoping and the preparation of an Environmental Report, analysis of the responses to the consultation on the Plan and the Environmental Report and the production of a post-adoption statement.

1.25 The Environmental Report is being consulted on alongside the Preferred Policy Position statement for an 8 week period between 23 October 2018 and 18 December 2018.

Strategic Environmental Assessment

1.26 The SEA Directive^[7] is given effect in Scotland through the Environmental Assessment (Scotland) Act 2005 (‘the SEA Act’)^[8], and is a means to assess, report and consult on the likely impact of the plan, programme or strategy on the environment and to seek ways to minimise adverse effects, if likely to be significant.

1.27 The SEA process comprises a number of stages as identified in Table 1.

Table 1.2: Main stages of SEA

Stage A: Setting the context and identifying environmental objectives, establishing the baseline and deciding on the scope.

Stage B: Developing and refining reasonable alternatives and assessing effects.

Stage C: Preparing the Environmental Report.

Stage D: Consulting on the Preferred Policy Position and the Environmental Report.

Stage E: Monitoring the significant effects of implementing the Preferred Policy Position.

1.28 An overview of how the Environmental Report meets the requirements of the SEA Act is included in Appendix 4.

Report Structure

Structure of the SEA Report

1.29 The Environmental Report is fully compliant with the reporting requirements of the SEA Act. The Environmental Report includes a non-technical summary and is structured as set out below:

• Summary – provides a non-technical summary of the information contained in the Environmental Report.
• Chapter 1 Introduction – describes the background to the Scottish Government’s preferred policy position and outlines its content; the purpose of SEA and the Environmental Report; key dates and milestones; and, the structure of the Environmental Report.
• Chapter 2 Methodology – describes the method used in carrying out the SEA; the approach to reasonable alternatives, and describes any difficulties encountered and data limitations.
• Chapter 3 Relationship of Plans, Programmes and Strategies and Environmental Protection Objectives - describes links to other plans, programmes and strategies and how these have been taken into account in the SEA process;
• Chapters 4 - 14 SEA Findings - identifies environmental problems and presents the findings from the assessment of the preferred policy position and reasonable alternatives.
• Chapter 15 Mitigation – describes the mitigation measures that have been considered and incorporated to avoid or mitigate any potential (significant) adverse impacts.
• Chapter 16 Monitoring – presents a proposed framework for monitoring the significant effects identified in the Environmental Report.
• Chapter 17 Conclusion– summarises the key findings from the SEA and describes the next steps to be undertaken.

1.30 The main body of this report is supported by a number of appendices:

• Appendix 1 – Environmental Baseline and Figures
• Appendix 2 – Review of Plans, Programmes and Strategies
• Appendix 3 – Consultation Authority responses
• Appendix 4 – Meeting the requirements of the SEA Act.