The discovery of significant shale gas reserves near Blackpool potentially represents a major step forward in diversifying and securing the UK’s energy supply, particularly if replicated elsewhere. Shale gas in the UK could be commercially viable but it is not yet a panacea to all the UK’s economic ills. 
 
The UK government has made it clear it wants to benefit from the practical and regulatory lessons learnt in the US. The Environment Agency (EA) plans to exchange information about best practice with the US Environmental Protection Agency (EPA). In addressing the shale development “learning curve”, an understanding of the US experience will provide valuable lessons to inform government policy and commercial approaches.
 
There are undoubtedly differences between the tactics that will be adopted, e.g. in the US landowners own the rights to natural gas and benefit directly from royalties; UK landowners cannot benefit directly from shale gas reserves which, like coal and oil, are owned by the Crown. The approach to exploration in the UK will also be hampered by the lack of land available for well drilling and a high population density.
 
However, whilst the gas/land ownership and permitting processes in the UK will be different, the technology, expertise, and regulatory issues that will arise will be similar to those encountered in the US.
 
These issues range from the handling of environmental and safety concerns to an ever-changing regulatory and public policy landscape, as well as a wide range of stakeholder groups including lobbyists, NGOs, environmental protest groups and the wider public. Thankfully the lessons learnt offer valuable insight as the UK embarks on a race to commercialise its shale gas potential.
 
One prime example of this is the fact that carbon capture capabilities and greenhouse gas emissions will be key factors as UK government policy develops, as will compliance with chemical related regulations such as REACH. This was also the case in the US, although the 'greenhouse footprint' of shale gas in the US is not yet fully understood and expert opinion remains divided. The US will use shale gas as a means to reduce its dependency on coal and thereby somewhat reduce carbon emissions.
 
The UK government, which unlike the US is faced with low carbon commitments, has indicated that developing technologies for carbon capture of gas to reduce shale's potential carbon impact will be important.
 
In addition, shale gas production on either side of the pond requires the hydro fracturing – or ‘fracking’ – process to provide a pathway for the natural gas contained in the shale to flow into the well bore and up to the surface. UK regulatory authorities will insist, as have their US counterparts, on procedures to ensure that fracking operations avoid damage to underground water aquifers, ensure that water is obtained from appropriate sources, and provide for responsible treatment and disposal of wastewater produced from fracking operations.  
 
Finally, stakeholder engagement will remain key to the success of any commercialisation in the UK, as in the US. The negative publicity given to fracking, and the concerns that recent seismic activity in Lancashire have generated, suggest that the environmental lobby in the UK will be well entrenched, and will work hard to block development which may be seen as potentially damaging to the local environment. This has been the case in the US too; in New York state for example, fracking has been halted altogether, pending regulatory review.
 
Although most US regulatory activity has occurred at the state level, just last month the EPA announced it is developing national standards for disposal of wastewater from fracking operations, rather than leaving that regulation to the states. Whether regulation of produced water disposal ultimately is controlled by the states or by the federal government in the US remains to be seen.
 
The current view is that there is no need for a moratorium on fracking in the UK, seemingly reinforced by the just released independent research from Cuadrilla Resources on the causes and likelihood of seismic activity, but information continues to be collected and monitored.
 
The discovery and production of shale gas (and oil) in the US has had a dramatic and long-term impact on the US energy market, and we are on the cusp of a similar impact on the UK energy market if UK shale resources are developed, as they almost certainly will be in time. The lessons learnt from the US experience can and should help to guide this journey.
 
 
Lynne Freeman would like to thank her Pennsylvania-based colleague and fellow Reed Smith Partner, Dwight Howes, for his input to this article.