By Ken Warner, managing director, Energy Renewals
The fracking debate was hurtled back into headlines when the controversial process was given the go-ahead in Lancaster and the UK received its first shipment of shale gas from the USA. Less than 24 hours after Labour announced at its annual conference it would ban the practice if the party were to win the next general election.
On 6 October, the government ruled fracking could begin at Caudrilla’s Preston New Road site at Little Plumpton in Lancashire. Even though the Lancashire County Council has previously refused planning permission on the grounds of traffic and noise. Although the company’s application for Roseacre Wood was not given the green light by the government.
Fracking supporters argue it offers a solution to our dwindling gas reserves, a view reinforced by Jim Ratcliffe, the founder and chairman of Ineos, which took delivery of the first shipment of shale gas at its refinery and petrochemicals plant in Grangemouth, Scotland, when he spoke on Radio 4.
Ratcliffe claims US shale gas imports have secured 10,000 Scottish jobs after declining supplies from the North Sea, which has seen the plant operating at less than full capacity for a number of years, also pointing to the revived fortunes of the US, where fracking is now an established industry.
Likewise, Ratcliffe believes fracking could rejuvenate the Uk’s industrial heartland in the same way it has done for America’s so-called ‘Rust Belt’. The industrial North-East are which has suffered as a result of industrial decline.
As well as Lancashire, it is thought areas in North and South Yorkshire and Scotland could have significant reserves of shale gas. He maintains that early issues with the process have now been resolved and it’s a ‘safe and well regulated industry’.
According to Ratcliffe, the American supply is the only way to bring in enough gas at a low enough price to ensure its olefins and polymers business at Grangemouth remains competitive on the global stage.
Despite support of fracking in Westminster, the Scottish government has banned the process in Scotland until a study into its impacts is carried out. The Welsh and Northern Ireland governments have also vowed to oppose fracking until research can determine its effects on the environment.
Concerns for the environment are also highlighted by organisations such as Greenpeace and Friends of the Earth saying that fracking distracts from the government and the energy industry from finding cleaner solutions. They believe the challenge to deliver the Uk’s future energy requirements should be found elsewhere and we shouldn’t back any moves which result in a continual reliance on fossil fuels. The US experience has also prompted environmental concerns including the vast amounts of water required for the process as well as the potential danger for carcinogenic chemicals escaping.
The fracking name comes from the process whereby shale rock is hydraulically fractured to release gas and oil. Currently the process is in the exploratory phase here in the UK. Although the government has issued more than 100 licences, giving firms the go-ahead to take exploration activities in certain areas, but obtaining councils permission has proved difficult. In 2011, fracking was suspended after two earthquakes of 1.5 and 2.2 magnitude hit Blackpool, but the ban was lifted the following year.
With the experience in the US, which has seen an increase in its home oil production and a reduction in its gas prices. As well as providing jobs and offering an estimated gas supply for the US and Canada for 100 years. By enabling electricity to be generated at half of the CO2 emissions of coal, it is little wonder many in the sector believe fracking is a solution we can’t afford to overlook in the UK.
An industry funded body known as the Task Force on Shale Gas has urged the government to start fracking to understand its economic impact and argues that thousands of jobs could be created.
Jobs which rely on the UK’s offshore oil and gas industry have fallen by a quarter since 2014, equating to the loss of 120,000 posts, according to the annual economic report from Oil and gas UK. With exploration at a low the industry says it is ‘unsustainable’. Capital investment in new projects is also down from £4.3bn last year to just £100m this year. Mainly as a result of the plummeting cost of oil. The price drop is not just the result of supply companies drastically cutting their prices to win orders but also due to the cost of extraction having fallen as the process becomes more efficient.
It could well be the promise of jobs and securing gas for our near future energy needs which will see the fracking argument win in the short term, with the go-ahead in Lancashire is likely to be the start of a much wider programme. As much as the public may wish to see cleaner energy sources and most are unlikely to want a fracking operation set up on their doorsteps, are we really ready to risk a reduction in our energy supply, pay increasingly higher costs and turn our backs on the promise of more jobs?