Fracking in the UK-Energy Security and Financial Prosperity

Should the United Kingdom dive into the fracking wishing well? A few considerations must be taken into account first.
Published: Tue 11 Feb 2014

UK Prime Minister David Cameron says that the country should adopt an “all out” approach to fracking. It’s hardly surprising that the Prime Minister wants to jump in as fracking could create 74,000 jobs, stimulate over £3billion in investment, generate cheaper energy for the future, and increase the country’s energy security. He has even likened the North Sea Oil discovery in the 1970s to today’s shale gas discoveries.

Poor public backing

But, the Prime Minister does not have his country’s backing. A major poll on fracking, carried out by the Guardian in 2013, shows that 40% were in favour of fracking near their homes, 40% were against and 20%, undecided. Most are concerned about the negative impact on the environment-water stress, pollution and climate change.

A number of protests have swept across the country, resulting in arrests. For nearly two months, campaigners have tried to stop drilling at Barton Moss, where an exploratory well is being sunk.

Payouts for supporters-insufficient?

The Prime Minister has even promised local councils that encourage shale gas development, tax breaks worth millions of pounds. Local councils will have the chance to pocket 100% of the business rates collected from fracking firms, as well as £100,000 for every well drilled.

Cash payments have been promised to individuals who live close to fracking sites and local communities will receive one percent of the total profits from shale gas exploration-compared with the 10% demanded by the Local Government Association (LGA). The Government is set to gain 62%.

But, MPs say that communities are not being compensated sufficiently. Greenpeace says that these offers are a “naked attempt by Government to bribe hard-pressed councils into accepting fracking in their area.”

Negatives to be considered

While the Prime Minister and his supporters are willing to plough money into this business of fracking, one can almost understand the UK’s reservations as the facts are somewhat on the negative side and have yet to be tackled:

Shaky economics

UK's fracking pioneer Cuadrilla has spent millions on its explorations but has yet to produce any gas or oil. Based on this, the public have every right to be concerned about Lord Browne’s vow to spend "whatever it takes" to make fracking a commercial reality in the UK. It remains unclear as to how much that will be.

Questionable sustainability

It is questionable as to how big the boost to the UK's broader economy will be. Employment figures may be high to start with but fracking sites only need workers during the initial drilling phase. Once they are in production, they are essentially empty.

Gas won’t be cheaper

Shale gas production will not reduce UK gas prices, according to industry and independent experts. This is mainly because the UK’s fuel deposits are small and will cost much more to extract. UK Gas can be easily exported and will continue to fetch the same price as in Europe. This is in direct contrast to the more positive situation in the US where deposits are plentiful and the fuel is used domestically, reducing prices significantly.

Disruption to living spaces

The trillions of cubic feet of gas that are supposed to be trapped within dense shale formations under the UK, may need a massive expansion of drilling. Many tens of thousands of wells may be needed throughout the countryside. An increasing number of wells will need to be drilled in order to maintain production levels. This is possible in the US where there are sparsely populated areas but the UK is a great deal smaller. This may mean that Britons can expect their living spaces to be disrupted by the wells as their numbers grow.

Promises, promises

Not so long ago, residents near wind farms were promised a share in the economic benefits. But, relatively small benefits have been received. Will the same thing happen to communities near fracking sites?

Frack to fund cleantech

The truth is that shale gas supplies will eventually run out. It is therefore in the UK’s best interest to continue to invest in its renewable energy sector as this will prove to be more sustainable in the future.

This can be done by imposing a tax on fracking. Funds from this should be ringfenced and invested into the cleantech sector particularly energy storage. This will help ‘sell’ the idea to the public. The tax would also mitigate the negative effect of fracking as it lowers the level of shale gas production and reduce carbon emissions, resulting in less damage to the environment in the long term.

This approach will also reduce the UK’s reliance on environmentally harmful power resources. An excise tax on the production of natural gas from fracking, in addition to standard energy taxes should be implemented.

The lure of energy security and financial prosperity is obviously a huge attraction for the Prime Minister and his supporters but we think a balanced view and careful consideration of fracking is needed.

A slowly-slowly approach will probably go a long way as small successes are uncovered. Throwing big money into an uncertain sector may have devastating effects on the rest of the energy industry. A healthy mix of sustainable resources and technological solutions is what the UK should probably aim for.

Expert opinion

Engerati spoke to Terry Engelder, Professor of Geosciences, Appalachian Basin Black Shales Group, Department of Geosciences, about fracking and he emphasised the importance of having a diverse portfolio of energy sources. He said that natural gas from fracking adds to the very mix which is necessary in order for the UK to eventually develop a portfolio of sustainable resources. “Otherwise, it is business as usual with coal and other imports.”

He adds, “I think the important issue is that no energy is free. There are risks with all approaches. A diverse portfolio is best. The reward is that lights burn at night and folks stay relatively warm in the winter.”