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Frack to the Future – A Brave New Scotland?

scottish independence businessFracking is the latest gambit being used by the Scottish Government, Alex Salmond and the Yes campaign to persuade Scotland that an independent future offers the best outcome of the referendum later this month, with the much maligned energy ‘holy grail’ becoming the nationalists new poster child.

Following on from Sir Ian Wood’s attack on the overestimation of reserves and revenues of economic oil and gas production, the yes campaign has been noticeably on the back foot where their energy argument is concerned.

Now though a report, produced by an organisation called N-56, a business group that “aims to find new economic strategies to boost the Scottish economy”, has claimed that fracking in the North Sea could deliver £300bn in tax revenues to a newly independent Scotland.

The report claims that fracking would:

“Propel Scotland towards the top of the global league table in terms of oil and gas production”

Fergus Ewing, the Scottish Energy Minister, in welcoming the findings said:

“This new report shows the strong possibilities in offshore unconventional and hard-to-reach oil and gas, and shows that when combined with existing reserves Scotland could have almost double the oil and gas reserves we previously thought.

“We welcome the report and are interested in exploring the huge potential benefits for the industry and the country that it represents”

However energy experts pilloried the report’s claims with Gordon Hughes, Professor of Energy Economics at the University of Edinburgh, saying:

“There is a reason that the oil and gas described by N-56 does not appear on most estimates of our remaining reserves — at current prices and with existing technology, it does not make economic sense to extract it.

“It is pure guesswork which developments will be economic 20 or 50 years from now. In the face of such uncertainty, no responsible government would place any weight on the prospect of fiscal revenues from such extraction.”

Whilst Murdo Fraser, the energy spokesman for the Scottish Conservatives, said:

“People will see right through this study as an SNP move to ease concerns over dwindling oil revenues.”

Putting aside the political drivers of such statements, (the founder of N-56 is a prominent Yes campaign board member), it’s conclusions wholly rely on there being “proven [reserves] able to be ‘tapped’ at an economic cost”. That is far from being the case currently.

With hugely divergent claims for the remaining North Sea oil reserves and an over-reliance on strong and consistent returns from nascent technology and unproven reserves, the energy debate within the independence campaign is fraught with holes.

Indeed placing any decision on the future independence of Scotland or otherwise on wishful energy thinking would be very wrong indeed.

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