Fracking the UK
When Cuadrilla Resources, a company that has cornered shale gas development licenses in the UK, began moving materials and heavy machinery onto its exploratory drilling site in Balcombe on July 25th, protesters from near and far amassed, blocking streets and forming human chains to delay operations. Protesters have maintained consistent presence (and dissent) at the site for nearly 2 weeks. In fact, the UK’s movement is distinguished by its candid “Occupy-esque” nature (sit-ins, storming of company HQs, chanting), and is likely the most vehement environmental campaign the UK has seen in decades. Involving over a dozen arrests so far, activists intend to send a message to Parliament and corporate energy lobbies: unconventional fossil fuel extraction is not welcome in the UK. For those rallying, it’s not a matter merely of the risks associated with the technology, but a matter of tarnishing – or sacrificing – the UK’s sustainable energy credentials.
And yet, other segments of the population are divided. Talk of UK energy security has been defined by crisis: possible winter blackouts in 2015-2016 and electricity shortages (as well as household price hikes) are anticipated, following decommissioning of power plants by 2020. Electricity costs have risen 20%, paralleling a steady increase in gas prices since 2007. In the midst of this pressure, UK policymakers are watching prices plummet in the US (as shale gas comes to absorb a greater proportion of the national energy consumption mix) and longing for the same reliable – not to mention cheap – supply. But the UK is also a more densely populated country with heavier reliance on gas in the transport and domestic sectors. So can the British successfully replicate the US success with shale gas recovery and production? It’s hard to say. Here’s what we know.
Onshore oil and gas in the UK
“There is an an energy revolution underway in the US and China that has dramatically reduced energy costs meaning manufacturing businesses are returning to the US. I want to see that kind of thing in Britain. I want to see families with lower energy bills” – George Osborne, UK Treasury Chief
“With all the fantastic technological advances in small-scale hydro, wind, solar, tide and wave why are we still looking to extract resources which will only last for a couple of years?” -Nicola Peel, international activist and filmmaker
In 2008, the UK disembarked on a national round of bidding for onshore drilling permits, involving massive land allocations for pursuit of both conventional and unconventional energy deposits. But there has been no shale gas extraction in the UK to date. In fact, fracking was nationally banned in 2011 after seismic tremors were felt in Blackpool during Cuadrilla’s first attempt at exploratory drilling. Cuadrilla was forced to suspend operations after the quakes, and the company itself even supported halting fracktivities pending investigations on induced seismic activity and its relationship with fracking. Now that the ban has been lifted (as of December 2012), national regulations are primarily concerned with seismic activity:
- companies must conduct a review to assess seismic risk and the existence of nearby faults
- fracking plans must be submitted to the Department of Energy and Climate Change (the body charged with regulating oil & gas)
- companies must monitor seismic activity before and after fracking operations
When did the interest in fracking first ignite? Before Cuadrilla’s engagement with UK shale gas, there was none. In the 1980s, research on UK shale reserves found no intrigue in British scientific journals and was instead published in the U.S. The UK effectively ignored its shale potential until the mid-2000s, when the British Geological Survey and the Department of Energy and Climate Change re-evaluated on-shore energy terrains. Much uncertainty persists concerning the degree of recoverable deposits in the UK, though the British Geological Survey suspects that over 1,300 trillion cubic feet of recoverable gas are contained within the Bowland shale formation (midland and northwestern UK). No estimates are available for the other shale play in the Weald basin of southern England. Frankly, exploratory drilling would make for more accurate figures and determine commercial viability of shale gas development in Great Britain. Current hype in the media and by energy policy magnates may be premature. Moreover, critics are concerned that because the UK has had little experience with onshore production, its regulatory framework will be insufficient to address the risks involved in fracking. While it’s noteworthy that concerns with seismic activity have been addressed in the regulatory apparatus, it is unclear whether or not inspections into well integrity and methane & fluid contamination will be incorporated too. Furthermore, claims about the land atop significant shale plays are spoken of in familiar terms justified in the US – “desolate” or relatively “uninhabited” land in northeast UK. Frack Off, Greenpeace, and Friends of the Earth have sought to demystify these claims; indeed, of primary concern to nearby residents in Balcombe, besides earthquakes and water contamination, is the proximity of wells to residential areas and the chilling effect nearby drilling may have on real estate prices and housing values. On a lighter note, and in contrast to the American regulatory model for fracking, the UK has decided point-blank to require companies to disclose all chemicals used in well stimulation.
Will the British frack?
Where fracking is concerned, Parliamentary members are enthusiastic but the public is wary. Greenpeace research reveals that 38 out of 62 members in Parliament from southern England have land with existing drilling licenses, suggesting a conflict of private interests in public decision-making. In Balcombe, the community close to Cuadrilla’s exploratory drilling sites, residents have expressed disappointment in the government’s lack of response to widespread, repeatedly vocalized discontent, such as the publication of a survey showing 85% disapproval for proposed fracking projects in the region. The process for leasing land for oil and gas seems to have changed to override local input; security and police forces are spotted escorting drilling equipment to sites amid small crowds of protesters.
It’s tricky for citizens elsewhere to sympathize with one side or the other. The energy crisis looms, and recent news reports suggest widespread unease about what the direction of green policies will mean for electricity supply. Though British Gas is under increasing pressure to freeze the price of gas in order to protect consumers in the forthcoming winter, analysts suspect that the energy giant won’t follow through and household energy bills will rise. On the other hand, Cuadrilla Resources boldly asserts that if it were allowed to complete 100 wells, enough gas would be produced to heat British homes for the next century. Its understandable then, as critique mounts on the government’s failure to ensure security of electricity supply, that parliamentarians remain eager to utilize shale gas and overhaul the national electricity market. At present, over 40% of all energy consumption in the UK is natural gas-based, whereas in the US it is only 30%.
The UK now boasts the most generous tax benefits for shale gas producers globally, and Osborne asserts that the new energy policy for natural gas production will result in an 11% fall in household energy bills. Hopes for cheap energy are coupled with the opportunity to double the UK’s economic growth rate while reducing reliance on imported fossil fuel energy. Other industries aren’t convinced. The lack of funding and investment for these initiatives will inevitably push the costs for a new energy mix onto consumers. On the other hand, another major figure on the horizon, Centrica, just bought a 25% interest and over $62 million dollars worth of shares in Cuadrilla’s projects along the Bowland formation. Other major energy corporations are also keen to invest.
Public anger over unconventional gas extraction may well result in a ban or an ironclad regulatory framework for fracking, as well as narrowing the amount of land that will be earmarked for the industry. But those in favor of a shale gas revolution in the UK assert that protesters lack “economic self-awareness” – what do urbanites in London expect will heat their homes in the future or bolster the public transport sector? Protesters respond with grounded doubts: will there really be sufficient financial benefits that resonate locally? If securing the infrastructure for natural gas extraction and consumption takes a decade (and the energy crisis is due to unfold a few winters from now), will shale gas really cheapen energy and fuel bills in the immediate? Cuadrilla began drilling last Friday, amid public disruptions. If exploratory drilling yields less than expected, Centrica is looking to secure deals with American companies to secure both gas assets and LNG supplies for an energy-hungry Britain. Replacements for old power plants may require a mix of green energy and shale energy, unless the green lobby forces a full transition with cheap and viable alternatives.