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UK fracking go-ahead boosts shale gas industry

Government overturns objections to project at Lancashire site

A worker at Cuadrilla Resources’ fracking plant near Preston © Gabriel Szabo/Guzelian

Britain’s shale gas industry has won a significant victory after the government overturned local council objections to a fracking scheme in Lancashire, clearing the way for the first exploration since an earthquake halted drilling five years ago.

Sajid Javid’s decision was the clearest sign yet of the government’s willingness to push through shale gas development in the face of fierce opposition from local communities and environmental groups.

The communities secretary said shale gas had “the potential to power economic growth, support 64,000 jobs, and provide a new domestic energy source, making us less reliant on imports”.

Mr Javid ruled that Cuadrilla Resources should be allowed to drill four horizontal wells at its Preston New Road site near Blackpool, the first time permission has been granted in the UK for a form of fracking that would extend beneath homes.

A decision was deferred on a second set of four wells at the nearby Roseacre Wood site but Mr Javid said he was “minded to allow” the project if concerns about its impact on local road traffic could be overcome.

At the same time, the push for alternative sources of hydrocarbons took a blow in Scotland, where the Scottish National party administration blocked a propsal to extract gas from under the Firth of Forth using a controversial coal-burning technique. There is already a moratorium on shale gas fracking in Scotland.

Advocates of fracking said the English ruling was a breakthrough in the push to unlock Britain’s shale gas resources after a near-standstill since exploratory drilling by Cuadrilla in Lancashire caused small earth tremors in 2011.

1: Brine, sand and chemicals are injected at high pressure into a well up to 3,000 metres deep.
2: The pressurised mixture causes the natural fissures and layers in the rock to crack.
3: Sand particles hold the fissures in the shale open allowing natural gas to flow up the well.
4: Natural gas flows out of the well into storage.

Francis Egan, Cuadrilla’s chief executive, welcomed a decision he said would “create new economic growth opportunities and jobs for people in Lancashire and the UK”.

Campaigners say fracking — which involves pumping large volumes of water, sand and chemicals under the ground at high pressure to release gas and oil trapped in rock — pollutes groundwater, causes geological instability and, ultimately, undermines efforts to tackle climate change. Frack Off, a coalition of local groups, has called for a demonstration at Preston New Road on Saturday and vowed to try to disrupt drilling.

The Labour party, which has promised to ban fracking, said the decision “bulldozes local democracy” and “risks locking Britain into an old-fashioned dirty energy infrastructure” when it should be investing in renewable power.

Lawyers said the ruling greatly improved the prospects for approval of fracking elsewhere in the UK. Claire Dutch, a partner at Hogan Lovells, said Mr Javid’s ruling was “extremely positive” for the industry because of the “great weight” he had attached “to the national need for shale gas”.

“He has concluded that concerns over public health, visual amenity and environmental issues can be overcome by planning conditions,” she said.

Geological surveys have indicated sizeable shale gas resources in England across large parts of the north, the Midlands and the south-east. However, there remain big economic and geological obstacles and many analysts are sceptical of the UK’s ability to replicate the shale gas boom that has transformed the US energy market.

“The jury’s still out on whether the economics of developing a UK shale industry really stack up. This is particularly true now, when the world is awash with cheap liquefied natural gas,” said Richard Black, director of the Energy and Climate Intelligence Unit, a think-tank.

When Lancashire County Council rejected an application by Cuadrilla to explore for shale gas near Blackpool in June 2015, the decision was celebrated by opponents as “a Waterloo for the fracking industry and a triumph for local democracy”.

Mr Javid’s decision on Thursday to overturn the council’s ruling and grant planning permission had those same campaigners declaring “a new low in the government’s plan to force fracking on the UK”.

Greenpeace, the environmental group, said it “makes a mockery of the government’s claim to champion local democracy”.

The furious reaction — and the promise by activists to continue efforts to block development — suggest that, while Cuadrilla’s victory marks an important step forward for shale gas developers, it will not end debate over the merits of fracking in the UK.

Advocates see shale gas as a way to bolster energy security at a time when the government is grappling with how to replace coal-fired power — due to be phased out by 2025 — while keeping power bills affordable.

Labour unions, eyeing the job creation potential of a new onshore energy industry in the UK, were among those who welcomed Mr Javid’s intervention.

“The go-ahead will reduce the gas we will need to import from regimes fronted by henchmen, hangmen and head choppers as the UK will need to use gas for years to come to heat our homes and generate electricity on the 60 days each year when there is no wind,” said Stuart Fegan, national officer of the GMB union.

Thursday’s go-ahead for Cuadrilla came a week after the first shipment of US shale gasarrived in the UK for use in chemicals manufacturing at Ineos’s Grangemouth refinery in Scotland. Fracking advocates said this exposed the folly of blocking shale gas development in the UK while importing the product from overseas.

Ineos is among a handful of companies, in addition to Cuadrilla, pressing for access to UK shale resources. Others include IGas, whose shares rose by 23 per cent after Mr Javid’s decision on Thursday raised hopes for approval of other projects.

Sarah Easton, partner at Thomson Snell & Passmore, the law firm, said the ruling set a precedent for local authorities and suggested that planning applications for fracking “may face less delay under [prime minister] Theresa May’s leadership”.

Nottinghamshire councillors this week deferred until November a decision on an application for test drilling by IGas at a former cold war missile site near Bassetlaw after a legal submission from Friends of the Earth.

North Yorkshire council granted approval in May for Third Energy to test frack for shale gas at an existing well outside the village of Kirby Misperton. It would need fresh permission to produce on a large scale, which could lead to several hundred wells in the region.

However, aside from these few isolated projects, the energy industry has generally been cautious about UK shale. Executives at large oil and gas groups say they are sceptical about whether the scale of the opportunity will outweigh the obstacles.

“It all depends on the underlying economics,” says one consultant who has worked with companies interested in UK fracking. “There’s got to be a large quantity of resource in the ground that’s easy to access. Not enough work has been done to demonstrate that.”

While fracking advocates tout the potential for a US-style shale revolution, sceptics highlight the differences between fracking in the wide expanses of North America and the small and crowded British Isles. Thousands of wells were drilled in the US before the economic case for large-scale fracking was proved.

The US shale boom was spurred by a permissive regulatory regime, generous government research and development support and large volumes of equity investment. None of those conditions exist in Britain.

The first shipment of US shale gas to Britain arrives in Scotland last week © PA

Laws governing UK mineral rights provide little incentive for local communities to embrace fracking. Whereas in the US, landowners own the resources beneath their property, in the UK anything deeper than 50 metres is owned by the Crown.

The government has offered payments to local communities to try to increase support but there have been mass protests wherever the drillers have gone.

“One day there will probably be some shale gas produced in the UK but will it be enough to move the needle? The jury’s out,” said the consultant who has worked with shale gas companies.

The relatively high costs of operating in the UK are another deterrent to investment at a time when the global market is awash with supplies from the US, Australia, the Middle East and elsewhere.

James Heappey, Conservative MP for Wells in Somerset, and a member of the House of Commons committee on energy and climate change, is among those who question whether the sums will ever add up for UK fracking. “We’ll be importing cheap American shale gas before we’re fracking on large scale in UK,” he said.


Om Peter

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