UK could ramp up fracking to boost post-Brexit energy supplies
Published 20/07/2016 | 02:30
After Brexit, the UK is being tipped to shift energy policy to favour domestic production including so-called fracking for gas.
A temporary ban was introduced in 2011 on the hydraulic fracturing - or "fracking" - technology used to extract gas from shale rock, but sections of the industry hope for support from new prime minister Theresa May.
Stephen Bowler, chief executive of London-listed shale gas developer IGas, told Reuters that Brexit made the case for shale more vital: "An independent Britain needs an independent supply of energy. Security of supply becomes even more important now."
Shale gas had a poor start in Britain. The first well to be fracked, near the seaside city of Blackpool in Lancashire, was abandoned when some of the work there triggered an earth tremor that resulted in an 18-month ban on the technology.
More recently, low energy prices have added to strains. "The weak gas price certainly doesn't help the economics. But there's still a lot of potential there," said David Round, analyst at BMO Capital Markets.
"You'd expect costs to come down once you get a few years into the development."
Two months ago, Third Energy received the first planning approval for a shale gas fracking well since 2011. It says it will start hydraulic fracturing at its Kirby Misperton site in North Yorkshire before the end of the year.
Environmental group Friends of the Earth and a residents' anti-fracking group have applied for judicial review of the decision at London's High Court.
Other shale gas developers, including Ineos, IGas and Cuadrilla Resources, are now banking on government support for domestic energy sources and an offer of compensation to landowners to reinvigorate their campaign.
Cuadrilla aims to produce gas next year in the northwest, subject to planning approval, and Bowler's IGas plans to test first gas in northern England by 2018.
The UK government has already changed planning rules to speed up shale gas projects by giving the communities minister ultimate decision-making power on planning applications. A decision on whether to grant a permit under these new rules to Cuadrilla is due by October 6 and will be a first indication of government support for shale gas under the new prime minister. Australian engineer AJ Lucas owns 45pc of Cuadrilla.
Coal-fired plants are due to close in coming years, making Britain more reliant on natural gas. Britain's network operator said last week that the country may have to import 93pc of its gas by 2040 if economic growth slows and domestic gas production is not supported.
Shale supporters say relying heavily on imports would make Britain more vulnerable to events out of its control that could divert supply.
Still, environmental campaigners intend to challenge shale gas, which they say would undermine Britain's target to reduce carbon emissions by at least 80pc below 1990 levels by 2050.
"Theresa May should not be under the illusion that fracking is the answer to the UK's energy needs," said Daisy Sands, head of energy at Greenpeace.
In a 2013 protest at the Cuadrilla-managed Balcombe oil exploration site south of London, demonstrators chained themselves to gates. Some were arrested, including Caroline Lucas, the Green Party's only MP. (Reuters)