Interview: Phil Bloomfield, Senior Manager at Greystar

Natural Gas Europe was pleased to have the opportunity to speak with Phil Bloomfield, Senior Manager at Greystar, provider of services in the oil and gas industry. We spoke about the prospects of shale gas in the United Kingdom, the country moving faster in Europe toward commercial shale gas. We pointed out some room for improvement and the relationship with other countries. According to Bloomfield, externalities are crucial for the UK energy system, while a strong commitment is urgent to foster the nascent UK shale gas industry.

What’s the relationship between what’s going on here in the UK and the rest of Europe? 

The UK has an excellent history for oil and gas production, skills and legislation, our systems of governance are among the best in the world. It is likely that the UK can demonstrate a model of shale gas production that can become replicated throughout Europe. This could provide important supply chain opportunities for UK companies to export skills and services into emerging European markets based on experience gained in the UK. However, Europe and the rest of the world are not sitting waiting for the UK. Ukraine, China and Algeria for example are demonstrating a desire to establish their own shale gas production.

Can the UK learn anything from Ukraine?

Fundamentally the difference appears to be one of Government appetite to achieve energy independence and energy security of supply and to remove oneself from a market for energy where one has no ability to exercise any influence or control on price. Learning need not be restricted to the status of current activities; we should also look to our own history to remind ourselves how cheap indigenous energy supply has before been a key driver of UK economic growth, and in terms of an overall learning curve we should look to the USA and benefit from the large amount of research that has gone into exploration and production over the last decade.

Are there any events that might change the cards on the shale gas table? Could the UK enthusiasm be stopped by external factors?

Energy markets are global: the UK and Europe are not isolated from external competition or factors of global economic forces. Investment capital and skills are mobile and should a route to market be onerous in one nation, the capital and skills required for the industry can easily deploy to more favourable locations. We are seeing that near energy independence in the USA from shale gas and oil production is shaping energy markets in a manner not previously seen. We have availability of cheap coal and the possibility of American LNG exporting. Both of these factors will change the market price of gas and consequently the financial models for shale gas developments in the rest of the world, although neither development is a good solution in terms of efficiency or CO2 emission compared to indigenous gas production for electricity generation and heating.

 So time plays a relevant role in this process, right?

Time delays have a large financial impact for exploration and production companies seeking to begin or in the progression of a development. Perception and realisation of delays also reduce the stability in investor confidence. Both of these points reduce the ability for the UK and Europe to have a financially viable shale gas industry.

 Given this “urgency”, is it possible to streamline the process in the UK? How? 

We have seen some action from Government to clarify and identify the framework for planning consent, permitting and the responsibilities therein. However we still see extensive delays in receiving positive or negative responses in planning consents. Initially it seems sensible that the target for process should be action within the prescribed timescales. When that is successfully achieved and commercially viable, safe and environmentally sound shale gas exploration is benchmarked we would be in a better position to seek to streamline the process overall.

Are there any specifics of the process that need some revision? Or, on the other hand, are there any the processes that don’t need any revision? 

There are a number of overlaps between the planning process and the Environment Agency process particularly around public engagement that could be streamlined to present a more joined up picture and create some efficiency in the process.

What is the role of the Government in streamlining the process? 

The Government has recently announced a review of the processes, with publication expected at the end of the year. The Office for Unconventional Gas and Oil (OUGO) has been tasked with delivering the review.

Can operators and consultants help the government to understand how to streamline the process?

We have the UK Onshore Operators Group (UKOOG) who is representing the industry and already in close consultation with the Department of Energy and Climate Change (DECC), the All Party Parliamentary Group for unconventional oil and gas (APPG), OUGO and relevant ministers and other stakeholders.

What’s the role of public consultation in this context? 

Transparency and public consultation are clearly very important to any emerging industry. Equally successful exploration activities will help to inform and gain public confidence. The industry has been handed a larger task due to an extended period of negative images presented in the main stream media. The industry is working diligently with local communities to relay the facts and dispel myths predominantly generated by organisations that are fundamentally against all fossil fuel use. In addition, the industry has signed up to a common charter with respect to community engagement.

So what is the message for the UK?

One of the key determinates of investor confidence is Government policy and commitment. Recent announcements by Government in the UK have sent a clear signal that they wish to see significant UK shale development.

Basically, you are saying that at this stage everything comes to politics? Is it not a risk in a period emerging economies are doing so much better?

Government appetite and action are keys to enabling the shale gas industry. Then as with any industry we have external and internal commercial factors that govern commercial viability. As energy markets are global, and skills and investment capital liquid, commercial viability of production in the UK and Europe may be lessened by activities in emerging economies. That having been said the UK in particular has a significant infrastructure advantage over many countries due to prior investment in the national and local gas transmission systems. 

Sergio Matalucci