Shale gas supply chain SMEs say a single regulator isn’t necessary

The Onshore Energy Services Group, the trade association that represents SMEs in the onshore oil and gas supply chain, has today welcomed the first interim report from the independent Task Force on Shale Gas, but argues that its central conclusion about a new regulator is fundamentally flawed.

Commenting on the report, Lee Petts, chief executive of the OESG, said: “It is clear from this report that effective public consultation at all stages of development is important, and that more needs to be done in order to build public confidence in the regulations that exist to protect people and the places where they live.

“But creating a single regulator isn’t the way to do this.  The existing regulatory oversight has been shown to work successfully for decades.  Industry, government and the regulators need to do a better job of making clear the protections that exist, how they are enforced and by whom, and how regulated businesses are held to account if they fail to follow the rules.

“Creating a new regulator will be unnecessarily time-consuming and costly for the taxpayer, with no guarantee that it will do anything to improve public confidence.  More delays now will also put existing supply chain SMEs, which already face an uncertain future, under even greater pressure.”


Adequate and proven

The current regulatory framework is undeniably complex to those that aren’t familiar with it.

But that doesn’t mean it doesn’t work.

For instance, since 1999, the Environment Agency (EA) and Health and Safety Executive (HSE) have worked jointly as the competent authority responsible for policing high hazard sites under the Control of Major Accident Hazards Regulations 1999.  The approach has proven very effective.

In the onshore oil and gas industry, 19 wells were drilled in the UK last year alone, with the EA and HSE making appropriate regulatory interventions when necessary and demonstrating that the system of regulation is adequate and fit-for-purpose.


Unnecessary cost and delay

Merging two or more entities, and their respective practices and cultures, is always fraught with problems.

It’s likely that new primary legislation will need to be enacted in order to create a new regulator, which will be unnecessarily costly to the taxpayer considering that there are no guarantees that a single regulator will improve public confidence.

The Task Force report indicates it could take 2-3 years to achieve, during which any additional delays could harm the sector – putting existing supply chain SMEs, which are already facing an uncertain future, at serious risk.


Doing more to build public confidence

The Regulatory Roadmap published in 2013, whilst a helpful first step, might still seem largely impenetrable to members of the public that are unfamiliar with the topic.

More needs to be done to explain:

– the key duties imposed by the relevant regulations

– how compliance is enforced, and by whom

– the punishments that can be applied in the case of non-compliance

The OESG, as the voice of trusted SMEs, would be very pleased to engage with the Task Force, operators, regulators and public stakeholders in order to produce an accessible guidance document of this nature in a bid to help build further confidence and trust in the existing regulatory framework.  It has already launched its own series of factsheets to explain the processes of onshore energy extraction.

In the longer-term, there is a pressing need for more exploratory wells to be drilled and hydraulically fractured so that the public can see the regulatory regime in action.