I would like to take this opportunity to update Parliament on the progress of our research into unconventional oil and gas in Scotland. The Scottish Government has adopted a clear and consistent approach to emerging technologies that could develop Scotland’s onshore hydrocarbon resources. Our approach to unconventional oil and gas is one of caution while we gather and consider evidence on the new technologies that industry has proposed. That process has already resulted in the decision last month not to proceed with underground coal gasification in Scotland.
Against the backdrop of our cautious, evidenced approach, there are some, such as the United Kingdom Government, who wish to pursue a gung-ho approach to support the industry, and there are others who seek an immediate ban. They do not want to wait for research and evidence and have put forward their views without concern for the differing interests or the views of those who would be affected across Scotland. I have no doubt that both are sincere in their views and beliefs, but it is the job of Government to base our decisions on evidence, taking proper account of public opinions, and to seek a collective way forward. We are deeply sceptical of the UK Government’s approach.
There is much heat on the issue, but our intention is to go through a process that sheds light. In doing so, we must also remember that shale resources in Scotland are located across the central belt in the midland valley—one of the most densely populated areas of Scotland. Communities in those areas would be directly affected by any unconventional oil and gas development, and they must be given genuine opportunities to explore and discuss the evidence and issues in depth and at length.
Our precautionary, consultative approach is the right one and it has been widely supported by communities, industry and other interested parties. To allow us to gather a comprehensive body of evidence and prepare for an inclusive debate and consultation, we put in place a moratorium on unconventional oil and gas in January 2015. That means that no such projects can take place. For the avoidance of any doubt, I note that the moratorium covers hydraulic fracturing, which is also known as fracking, and coal-bed methane technologies.
Today, we have reached a major milestone in the process, and I can confirm that the research reports have now been published in full. The research was carried out by leading independent experts in their respective fields, and the findings will deepen our understanding of the issues. At this stage, the Scottish Government is not making any judgments on the findings. As we set out when we established the moratorium, the publication of the research will now be followed by a period where we and the public can scrutinise, question, challenge and discuss the findings before we begin a public consultation. We have provided the Parliament with hard copies of the executive summaries of the research, and I encourage all members to read the reports at their leisure.
I would now like to draw attention to some of the main aspects of the research that I believe demonstrate the value and significance of the work that we have published today. Central to the work is the economic impact research that KPMG carried out. It identified a number of potential industry development profiles in Scotland, which have informed the other studies. Those scenarios are based on estimates of potential oil and gas resources that have been informed by discussions with stakeholders, including those who represent industry and environmental interests.
That study has quantified the associated economic impacts on the Scottish economy of any prospective activity, using a range of measures including expenditure, gross value added, tax revenues and employment. A number of projections of economic benefit and employment have been put forward previously. This report presents an impartial assessment of the potential impact of an industry in Scotland. KPMG concludes that, under its central scenario, 20 well pads of 15 wells each could lead to cumulative direct expenditure of £2.2 billion in Scotland over the period through to 2062, which would create supply chain impacts and other induced economic impacts amounting to an additional £1.2 billion over the period, and be responsible for supporting up to 1,400 direct, indirect and induced jobs in Scotland at its peak. To put those economic impacts in context, the report states that, on an annual basis, that represents
“on average, 0.1% of Scottish GDP in our Central scenario”.
The report also discusses a number of other potential economic considerations including the use of gas as a feedstock in the petrochemical industry, the impact on local house prices, road use, agriculture, visual amenity, environmental costs and health costs. Given our commitments to carbon reduction and climate change, those impacts must be considered alongside any economic impact.
The Committee on Climate Change was asked to examine the impacts on territorial carbon emissions of unconventional oil and gas activities in Scotland and how those impacts might vary over time. The study sets out three tests that would need to be met for the development of unconventional oil and gas to be compatible with Scottish climate change targets. The tests are emissions being limited through tight regulation, Scottish unconventional oil and gas production displacing imports rather than increasing domestic consumption, and emissions from the production of unconventional oil and gas being offset through reductions in emissions elsewhere in the Scottish economy.
The study also provides a quantitative analysis of potential emissions under a number of regulatory and production scenarios. The committee estimates that, under a high production scenario, CO2 equivalent emissions in 2035 could be between 1.1 and 2.6 megatonnes per year, depending on the strength of regulation. It is estimated that, under the central production scenario, emissions will be 0.6 megatonnes a year in 2035 if the minimum necessary regulation is adopted.
The overall conclusion of the health impact assessment that Health Protection Scotland conducted is:
“the evidence considered was ‘inadequate’ as a basis to determine whether development of shale oil and gas or coal bed methane would pose a risk to public health, if permitted in Scotland.
”
If an industry were to proceed, the report discusses a precautionary approach that would be proportionate to the scale of the hazards and the potential health impacts. Health Protection Scotland notes that that
“could be based on a range of mitigation measures involving operational best practice, regulatory frameworks and community engagement.”
The study that examined transport impacts, which was carried out by Ricardo Energy and Environment, estimates that an individual well pad could require traffic movements to be sustained at around 190 a week for a period of approximately two years during the development phase. Ricardo notes that the main factor that affects traffic flows is the water transportation requirement. It concludes that, if that can be avoided—for example, by using pipelines or reusing waste water—the impacts can be significantly reduced.
Ricardo also observes that any increase in vehicle movements could result in an increase in noise, vehicle emissions, road damage or traffic accident risks. It notes:
“Provided the planning and EIA”—
that is, environmental impact assessment—
“system is properly implemented, any significant impacts would be avoided through the use of appropriate mitigation measures.”
However, the report also states:
“local communities would nevertheless experience an increase in traffic numbers, potentially for an extended period of a number of years.”
The decommissioning study that was carried out by AECOM and the seismicity study that was carried out by the British Geological Survey each reviewed international literature and practice to draw conclusions on potential hazards and what, if any, steps could be taken to mitigate those hazards, including regulatory actions. AECOM concludes:
“There is a low risk of post-decommissioning well failure”.
It also notes that there is potential for improvement in existing regulatory provisions.
The study that the British Geological Survey undertook concludes that hydraulic fracturing is generally accompanied by microseismicity and
“the probability of felt earthquakes caused by hydraulic fracturing for recovery of hydrocarbons is very small.”
The study also observes that improved understanding of the hazard from induced seismicity and the successful implementation of regulatory measures to mitigate the risk of induced seismicity are likely to require additional data from a number of sources, including improved monitoring capabilities.
As we committed to do as part of the moratorium, the Scottish Government has hosted a workshop with regulators. A record of that meeting is now available to view on the Scottish Government’s website.
To ensure that the full range of environmental issues is given due consideration, a full strategic environmental assessment will be prepared and considered before a final decision is taken.
I am confident that the reports that we have published today deepen our knowledge of the evidence and shed light on the issues and choices that the industry presents. I hope that members can tell from the summary of the research that no one study can give a conclusive view on the industry and whether it has a place in Scotland’s energy mix. Some will say that the research shows that the economic impact is low and that the risks are too great; others will say that the risks can be managed and that the potential economic gain cannot be ignored.
The reports rightly do not make recommendations on whether unconventional oil and gas should be permitted. The science and evidence inform the debate, and it is now time for that debate to take place.
I can confirm today that our consultation on unconventional oil and gas will launch on schedule early in the new year. In view of the importance of discussing unconventional oil and gas in the context of both wider energy use and climate change matters, I can also confirm that the launch of the consultation will be co-ordinated with the publication of our climate change plan and the consultation on Scotland’s draft energy strategy.
The consultation, which will cover hydraulic fracturing and coal-bed methane, will not simply be an opinion poll—that would not do justice to the broad and complex range of issues that people care about and which need to be debated. It will continue the process of presenting evidence and encouraging discourse, and it will allow the public and stakeholders to set out their views. Our consultation will give everyone who has an interest in the issue an opportunity to express their view. That is what the public and stakeholders expect, and that is what we are delivering.
Once the consultation closes and the results have been independently analysed and published, we will make our recommendation on the future of unconventional oil and gas, and allow Parliament to vote on it. After that, the Scottish Government will come to a considered judgment on the future of unconventional oil and gas in Scotland.
I know that everyone in the chamber recognises the different opinions that exist on the development or otherwise of unconventional oil and gas. The Government has maintained a consistently sceptical and precautionary approach throughout. In reaching a final decision as a Government and as a Parliament, it is imperative that, at every step, we take a careful, considered and evidence-based approach alongside an informed public debate. Given the significance of the issue, that is the right and proper way to proceed.