Elements must be in place to develop shale sector

MANY may now feel the momentum swinging towards shale exploration in this country, with the news that Ineos is to share £2.5 billion of rewards with homeowners and communities.

A shale gas drilling well in the United States

However, the Scottish Government has promised “an evidence-based, cautious and considered” approach to developing shale gas and it is worth reflecting that a great deal needs to be right before any operations can begin.

There is no doubt that shale exploration has revolutionised the US energy landscape and both the UK and Scottish governments are certainly open to the idea of developing it as a resource here.

Realising the potential from shale gas, nonetheless, is at least five to 10 years away and there are a lot of critical factors – beyond the simple presence of shale gas and a supportive tax regime – that all have to be right before these resources can be commercially developed.

Any developer will have to look at a region’s geology, the quality of the rock and what is required to adapt technology to the local rock. There are also considerations as to land access and operability, including the availability of water.

The supporting services sector and distribution infrastructure, competition from conventional energy sectors and other alternative energy sources, as well as the available skills are some of the other important factors to consider and, while Scotland has vast experience and talent in oil and gas, this is already being stretched both by continuing North Sea development and now the renewables industry.

As the Government has pointed out, the views of the local community are also very important and that’s why the planning process allows for robust challenges at every stage but, as we have already seen, gaining widespread public support is going to be a challenge.

Some sites do hold out the promise of a sizeable energy resource and, in a world where energy security is increasingly under threat, they do present an opportunity.

However, there are still a number of obstacles to investment and to fulfilling that promise. As with any major capital investment, the development of shale gas will only be successful if all the elements are right.

• Bill McDonald is MD for Accenture Scotland