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Shale Gas and Private Property

The sorry tale of shale – what it means for private property

According to David Cameron shale gas, and its sourcing methodology ‘fracking’ is “good for our country” whilst Lord Browne of BP fame claims it has the potential to “poison our children”.

Both represent vested interests, the Prime Minister being faced with a very real energy crisis that successive regimes have done nothing about and Lord Browne still retaining his affinity with the oil industry, an industry that faces a very real threat from the potentially abundant supply of cheap gas.

But there is another position, one that doesn’t focus on the economic good or the environmental bad but rather concentrates on something far more ephemeral – the concept of private property.

The British Geological Society have estimated that there is a potential ‘mid-range’ level of 1,329 trillion cubic feet of shale gas across what it known as the Bowland basin, an area extending from Chester to Scarborough.

This mid level estimate pales compared to a high-end scenario of 2,281 TCF. Whilst those numbers are huge (1,329 TCF is the equivalent of 37,600 km3) the actual deliverable volume is unclear. On a very conservative estimate however, if just 10% of the mid range level of shale gas under the Bowland basin was recoverable, that is 130 TCF, this would still be enough to fulfil all of the UKs gas requirements for half a century.

Over such a period of time advances in technology and understanding would be expected to render currently unobtainable reserves as economically and socially viable sources. Truly shale represents a potentially seemingly never-ending supply of cheap gas.

As a result, shale gas has the potential to both revolutionise the energy industry and deliver a huge economic and commercial benefit to Britain.

Exploiting these reserves is claimed to potentially present a multi billion pound opportunity for business in the UK and has the capability of generating 64,000 new jobs. That’s the findings of a report by UKOOG, the United Kingdom Onshore Operators Group. Admittedly this is another vested interest group but the figures stack up with the industry needing to outlay up to £25 billion over 15 years in order to deliver on its promises.

The report broke down the investment into:

  • £17bn on specialised fracking equipment and skills,
  • £4bn on waste, storage and transport,
  • £2bn on steel and a further
  • £2bn in a new rig manufacturing industry

All good news for the UK economy, but it is that first element, fracking, which threatens this potentially revolutionary fuel source.

Fracking is the term used to describe the process of hydraulic fracturing which is the activity whereby water, sand and chemicals are pumped at very high pressure beneath the ground in order to fracture the rock formations and release the natural gases trapped inside.Opponents claim that this process can pollute the ground water levels, and still has the potential to release greenhouse gases and even in extreme circumstances that the artificial pressure being created below ground is a potential cause of earthquakes.

Until now, this has been the main opposition to shale gas and fracking, however another front has opened up in the debate.

Despite the fervent environmental opposition, the government support for fracking operations shows no signs of abating with controversial proposals under discussion which could lead to a change in the ‘trespass’ laws that would enable companies to drill under privately owned land without formal permission.

Even for advocates of shale gas this represents a major controversy.

DECC said:

“Like any other industrial activity, oil and gas operations require access permission from landowners. Operators prefer to agree this through negotiation with the landowner but there is an existing legal route by which they can apply for access where this can’t be negotiated. We’re currently considering whether this existing route is fit for purpose.”

Indeed the current law dictates that landowners have no rights to the oil or gas under their property however the Supreme Court has determined that exploration companies could be found to have trespassed if they had not gained landowner consent to drill under their land.

Under the proposals the coalition is considering, in effect the trespass ruling would be rendered obsolete as part of an ‘Infrastructure’ Bill

The government’s sympathies clearly lie with the exploration companies and not the landowners. Something that most people, of whatever environmental disposition, would be understandably uncomfortable with.

This is further exacerbated or depending on your view fancifully justified by claims that campaigning environmental groups could use the existing ruing to buy up land and obstruct fracking activity.

Celtique Energie, the British-based oil and gas exploration company, are currently being prevented from prospecting for oil in Fernhurst, West Sussex. However there is no sign of environmentalists, this is simply five landowners unhappy that the company is attempting to access reserves under their property.

Regardless of your opinion on the environmental impact of fracking, the potential for legally enshrined land grabbing must present the biggest threat to public acceptance of shale gas.

Meanwhile David Cameron continues to pinpoint shale gas as critical for the future energy security of the UK.

Whilst the potential land grab is unpalatable, Cameron has proposed £100,000 for a community or landowner where a test well is fracked as well as 1% of the revenue generated from the site.

Furthermore local councils will be able to retain business rates generated from fracking in their areas.

Shale, the potential saviour for the UK as a secure energy nation therefore now seemingly brings not only environmental concerns but also civil liberty concerns and calls into question the very concept of private property.

Whilst these issues have always existed, with fracking having been carried out for many years already and the oil industry’s experience of the trespass rule, it has never before been seen on this scale, and never before with this level of threat to individuals and communities.

The sorry tale of shale is likely to continue for many months and years to come. Until these two main fronts are tackled, environmental concerns and the notion of private property, then the potential shale revolution remains as far away as ever.

And that’s very bad news indeed for those anticipating a glut of cheap energy coming over the horizon any time soon.

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