Clifford Chance

Consenting UK shale gas projects: risks for investors

5 December 2013

The stakes are high for shale gas development. In the US, the impacts of abundant shale gas extraction have been significant and wide-ranging. US spot prices for natural gas fell by at least 50% in the period between 2008 and 2010, and remain low (compared with global prices), providing a boost for the US manufacturing industry. With increasing domestic energy security, the US is likely to become a net gas exporter in the years to come. With significant shale deposits in Europe and major concerns over energy security and prices, many closer to home would ideally like to replicate this situation in the EU.

However, progress is slow. A small number of companies are involved in onshore evaluation and exploration, but shale gas investment in the UK currently gives rise to a variety of obstacles and risks. There are some common themes including:

•  Concerns around environmental risk and liabilities.
•  Consultation and impact on local communities.
•  Uncertainty and complexity of consenting regimes and regulatory change.
•  Dealing with landowners.

This article considers these risks from a UK perspective and offers some suggestions to investors contemplating shale gas development opportunities.

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