Fracking Moratorium or Electioneering? December 12th and Brexit May Hold The Key
A month ago, shortly after calling a General Election, the Conservative Government abruptly decided to pass a moratorium on fracking, citing concerns about seismicity. To many, the decision looks like electioneering; a pledge to put fracking on pause while marginal seats in threatened areas can be won.
However, some frontline campaigners have not been fooled by the political chicanery.
The government did not state how the moratorium will be applied, but it seems that only fracking is on pause, meaning that drilling and testing operations aren’t included. The official definition of fracking, as stated in the Infrastructure Act of 2015, is based on the volume of water used per frack, which means that a number of ongoing operations to prospect for hydrocarbons in shallower geology, which use less water are exempt. This together with the political uncertainty means the battle against unconventional oil and gas is not yet won.
Within days of the moratorium, the government appeared to do an about face, with Andrea Leadsom declaring that shale gas was “a great opportunity for the UK” and something that “the UK will need for the next several decades”.
The Ministry of Housing, Communities and Local Government then published the results of their consultation on whether fracking sites should be made Nationally Significant Infrastructure Projects. This appeared to cloud the issue, stating that although it had “taken a presumption against issuing any further Hydraulic Fracturing Consents”, it considered the possibility that “future applications will be considered on their own merits” and that “there could be considerable merit in taking forward these proposals in the future.”
The unpopular technology has met with strong community resistance wherever it’s been proposed. This week, the long-awaited release of a government report, revealed that “low public acceptance of shale” was the principal obstacle to the industry’s ability to develop shale reserves. After a 22 month Freedom of Information request by Greenpeace’s Unearthed, the report remains heavily redacted due to concerns it could question the industry’s viability.
There are concerns that a win for the Tories in this week’s election would enable Boris Johnson to deliver his Brexit deal and enable legislative changes to pave the way for a revival of the industry’s fortunes.
Research by Paul Mobbs suggests that investments in fracking and Brexit are linked, suggesting that Brexit will mean a new push to frack. The infamous Tufton Street acts as a nexus for key lobbyists linked to ‘dark money’ flows originating from the USA.
A series of fracking-induced earthquakes at Preston New Road in Lancashire, peaked with a 2.9 magnitude seismic event in August, which caused structural damage to local properties forcing the Oil and Gas Authority to halt fracking until more evidence could be collated. Even local Conservative MP, Mark Menzies, has now come out against it, suggesting the technology is now unviable on the Fylde. Cuadrilla have been unable to produce viable commercial quantities of gas which has dealt a reality check to investors. In 3 years they’ve only been able to drill one vertical well with two horizontal sidetracks, both of which were only partially hydraulically fractured. Although the company claim to have produced 1.3 million cubic feet of gas, any gas produced was flared, with no proof that any significant volumes have actually been recovered. Equipment has continued to leave the site in recent weeks. Flow testing of the fracked wells has concluded and a minimal operation remains in place.
At the end of November Cuadrilla’s permission to drill and frack at Preston New Road expired. Campaigners responded by taking down their gate camp monitoring post opposite the site.
It has since been revealed that at least 10 of the companies 26 employees have left the company in recent months.
With the potential sale of Cuadrilla mooted, and permission for the nearby Roseacre site denied, this could be the end of attempts to exploit shale gas on the Fylde.
Whilst much attention has focused on Preston New Road, a number of operators continue to attempt to exploit oil reserves in Surrey and Sussex. A cluster of earthquakes, measuring up 3.1 magnitude have been registered in the vicinity of the Horse Hill and Brockham sites. Campaigners have demanded that government extend the moratorium to include the use of acid stimulation.
Acid has been used at various sites across Southern England and is also proposed at West Newton in East Yorkshire and Wressle in Lincolnshire. Egdon’s application in this latter case is unique as it’s proposing to use hydrofluoric acid to stimulate the well. Having already refused the proposal three times, the scheme was subject to a second public inquiry that went ahead despite the moratorium. The decision has now been deferred, suggesting it’s too politically sensitive to announce before the election.
Ultimately, it will be either economics or legislative bans that end the industry’s hopes. Exploitation of shale hydrocarbons is a classical Ponzi scheme which has seen net losses in the USA running to hundred of billions of dollars. The country’s second largest fracking company, Chesapeake Energy, now appears close to bankruptcy following a share price crash, amid reports it’s drowning in over $10 billion of debt.
With even The Financial Timesdeclaring that fracking was a poor investment some 12 months ago, the writing has looked on the wall and share prices in companies such as AJ Lucas (Cuadrilla’s Australian parent company), IGas and Angus Energy have undergone heavy losses over the past 12 months.
Labour have stated they will ban the technology. If they win the election, this ban must be extended to include other unconventional techniques such as acid stimulation and coal bed methane. However, the party currently in power appear to still be enabling it through the backdoor in the run up to December 12th. Huge amounts of money have been invested in Brexit and American investors have been sizing up the UK’s shale reserves, hopeful that sweeping political changes will enable new outcomes. As such, the election result and the resolution of Brexit appear to be key to determining if the decade long fight against fracking can be won.
Photo credit: Guy Smallman