Matthew Hancock, the newly appointed energy minister this week announced that the UK was once again open for business for fracking, the controversial technique for gas extraction.
Fracking involves pumping water, sand and chemicals into the ground at high pressure to hydraulically fracture shale rocks and extract oil and gas trapped within them.
As part of Hancock’s announcement a huge swathe of the UK totalling 37,000 sq miles was offered up for competitive tender with energy companies keenly anticipating the potential spoils.
The experience in the US of the shale revolution, of both oil and gas, has seen it decouple from the global energy market and become a self sufficient, exporting energy economy. A situation of which the UK can only current dream.
The Conservatives keenly believe that a similar fracking revolution can happen on these shores however significantly greater opposition has been seen to date by virtue of the smaller land mass and fears of earthquakes and water supply contamination not to mention ugly blots on the English landscape.
With these issues in mind, alongside announcement of the new bidding process, Hancock committed to protection for Areas of Outstanding Natural Beauty (AONBs) from exploration and excavation except in exceptional circumstances.
Hancock said:
“We must act carefully, minimising risks, to explore how much of our large [shale gas] resource can be recovered to give the UK a new home-grown source of energy.
“Ultimately, done right, speeding up shale will mean more jobs and opportunities for people and help ensure long-term economic and energy security for our country.”
Stopping short of an outright ban an outright ban on drilling in AONBs, the government has nevertheless placed a higher bar on companies being granted permission to do so. Energy companies will be required to produce what is described as a “particularly comprehensive and detailed” environmental statement demonstrating their understanding of local sensitivities and that guidelines will instruct that applications “should be refused in these areas other than in exceptional circumstances and in the public interest”.
However that “exceptional circumstance” could be as simple as an abundant supply being found in an AONB at which point the government veto could be played authorising drilling on the ‘protected’ site.
Nevertheless Shaun Spiers, the chief executive of the Campaign to Protect Rural England welcomed the announcement saying:
“[We] will want to look at the details of this new round of licencing, but this change in rhetoric is very welcome.
“The Government has previously stoked opposition by giving the impression that it is committed to fracking whatever the consequence and however beautiful the location. If fracking is to happen, we need to proceed with great caution and with the highest possible safeguards.
“There is also a need to differentiate between shale oil and shale gas. While there are strong arguments that shale gas can be less damaging than alternatives such as coal, we would argue that shale oil should not be exploited anywhere in the UK, and certainly not in protected areas.”
The “14th Onshore licensing round” will invite companies to bid for the rights to exploit as yet unexplored areas of the UK a process through which thousands of fracking wells could be established and equally many abandoned as uneconomic having already impacted the landscape and local community.
The key focus for the bidding process is expected to be the Bowland basin in the North West of England, the Weald in the South East and across Mid Scotland. Opinions differ on the volume of gas available and also the viability of extraction however the British Geological Survey has estimated that reserves are available to a level at which they could meet the country’s gas needs for up to 40 years.
The licences therefore are likely to be keenly contested however there is further work for bidders and government to do before the hoped for revolution can occur.
Energy companies will be required to obtain planning consent ultimately from the Communities Secretary and not local government, permits from the Environment Agency and permission from the Health & Safety Executive.
In addition the government has committed to speeding up the process in order to enable companies to commence drilling within six months of their application where currently the lead-time is around 15 months.
Ken Cronin Chief Executive of UKOOG, the UK Onshore Operators Group said licences would improve energy security in the UK.
“This new licencing round is all about focusing on the extraction of gas and oil at commercial rates.
“The fact that the onshore oil and gas industry is one of the heaviest regulated industries in the UK and acts as an exemplar for the rest of Europe should be seen as a positive sign by all new investors”
Lord Ahmad of Wimbledon, a minister in Eric Pickles’ Communities department who will have the ultimate say on planning, said:
“Effective exploration and testing of the UK’s unconventional gas resources is key to understanding the potential for this industry – so the Government is creating the right framework to accelerate unconventional oil and gas development in a responsible and sustainable way.
Business bodies welcomed the news as a potential precursor to cheaper energy cost and a more competitive export economy with Simon Walker, director-general of the Institute of Directors, saying that the announcement signalled:
“Another step forward on the road towards a dynamic, productive and well regulated shale industry in the UK.
“There’s still a way to go before the industry really takes off, but opening up a new licensing round while increasing safeguards for the natural environment is welcome evidence of the government’s commitment to maximising the benefits of a British shale industry.”
Germany too has announced the end of a moratorium on fracking with the recent decision to allow limited trials.
As dependency for energy on unstable regimes becomes ever more apparent and worries mount across the continent, and with green dominated Germany joining the club, the holy grail of shale is clearly not dead yet, not by any means.