The UK has lifted its ban on fracking, reviving a long-running debate

The pipe is seen behind anti-fracking banners at Cuadrilla’s Lancashire fracking site.

Christopher Furlong | Getty Images

LONDON — The U.K. government on Thursday lifted a ban on fracking, citing the need to increase domestic energy supplies following Russia’s invasion of Ukraine.

In her first major speech on September 8, new Prime Minister Liz Truss said the UK’s “ending ban on large shale reserves … could see gas flowing in as soon as six months if there is local support”.

The ban was imposed in November 2019 after several tremors and eventually a 2.9-magnitude earthquake near the UK’s only active fracking site in Lancashire, England. Fracking, or hydraulic fracturing, involves injecting water, chemicals and sand into high pressure fissures in the ground, widening them to allow oil or, in the case of the UK, gas, to be extracted from shale formations. Local residents were concerned about the link — nearly 200 people reported that their homes were damaged by the quake — and made their objections known loudly.

While anything below magnitude 3 is considered a minor earthquake and is relatively common, a 2019 government report concluded that such action was necessary because “it is currently not possible to accurately predict the likelihood or magnitude of earthquakes associated with fracking operations.”

But Truss and his new head of business and energy, Jacob Rees-Mogg, say fracking will play a key role in making Britain a net energy exporter by 2040. They also want to increase North Sea oil and gas production by announcing new oil and gas. exploration licensing round on Thursday, along with increased deployment of hydrogen, solar and offshore wind.

Opinions differ

Trussi’s promise that fracked gas could power homes and businesses within six months follows an estimate by Lancashire site operator Cuadrilla of how long it would take to restart operations.

However, the requirement for local support can push this back much further or even indefinitely.

During the energy crisis, public support for fracking has risen, according to polling firm YouGov, but remained at just 27% in May; while there are campaign groups organized against fracking in the UK who to say they are ready to act.

The devolved Scottish and Welsh governments and the opposition Labor Party also officially oppose fracking. So are many politicians in the ruling Conservative Party, including Mark Menzies, the MP for the Lancashire area where the Cuadrilla site is located. On the news of the ban being lifted, he said it had “proved without a doubt that the geology here is not suitable”.

Even the person who currently holds the reins of the UK economy, Kwasi Kwarteng, the Chancellor of the Exchequer, publicly stated as recently as February, fracking would not help prevent people from rising gas and electricity prices and that “it would take ten years to extract sufficient volumes” while “taking a toll on communities and our precious countryside”.

Salmon

A 2020 review by Warwick Business School found that fracked gas could account for 17-22% of UK energy consumption between 2020 and 2050.

However, According to the London School of Economics, it is unclear how much shale gas (gas extracted from shale formations, shale-rich areas marked for potential fracking) in the UK is technically and economically feasible to extract.

In an earlier study, it was found that shale gas operations themselves would contribute relatively little to greenhouse gas emissions. Critics say the problem is instead the need to reduce the UK’s wider reliance on natural gas, which currently accounts for around 40% of UK energy consumption, and that the focus should be on keeping polluting fossil fuels in the ground.

Environmental groups such as Friends of the Earth also point to reports warning that fracking could “potentially contaminate” groundwater because of the chemicals used in the process; increases noise and industrialization in quiet rural areas; uses large amounts of water; and risks further earthquakes of unpredictable frequency and magnitude.

Cuadrilla says the clay at its site is “very well suited” to fracking and that it would carry out daily seismic monitoring when operations resume. It also states that polyacrylamide – the chemical used in it – has been assessed by the Environment Agency as non-hazardous to groundwater and makes up 0.05% of the fracturing fluid.

A report commissioned by the government in April and published on Thursday found that it is still not possible to accurately predict geological activity as a result of UK fracking operations. But in a reversal of its 2019 position, the government now says more sites need to be drilled for further exploration, while Rees-Mogg told the BBC this week that the government plans to increase the level of seismic activity allowed at fracking sites in the future. .

Commercial viability

Some investors certainly see the potential for a resurgence in activity, with shares of Egdon Resources, an onshore oil and gas company listed on the U.K. alternative investment markets, up 6.3% on Thursday and up 365% this year.

Still, many hurdles remain, analysts say, including regulation, environmental concerns and operational complexity. These are four key areas considered potentially viable for shale gas extraction, and more than 100 sites have been granted fracking exploration licenses but need approvals from various regulatory agencies, along with political support, to move forward.

“While currently high energy prices may improve the potential economic viability of fracking in the UK, this may be less certain in the longer term,” Moody’s senior credit officer Tobias Wagner told CNBC.

“It remains to be seen to what extent companies are willing to invest given the uncertainty and concerns,” he said.

This combination of environmental concerns and logistical difficulties means that fracking has never taken off in Europe, and bans on fracking remain in place in many countries, including Germany – although this is also currently under discussion – France, the Netherlands, Denmark, Bulgaria and the Republic of Ireland.

John Underhill, a professor at the University of Aberdeen and director of its energy transition, told CNBC that in addition to the difficulty of winning over public opinion, the UK’s geology was another obstacle to fracking.

It published a study on Cuadrilla’s Bowland Shale in 2020, which found that exploiting shale gas is “technically very difficult” and that its drilling targets have faults in the ground that could lead to seismic activity.

He added that the geology of the UK is very different from that of the US, where energy independence has been achieved largely through increased oil and gas fracking and where shale horizons are continuous and run for tens of kilometers across unpopulated outcrops.

“While high resource estimates are often quoted, shale gas reserves are only a fraction of these numbers due to the poor quality of the shale, the lack of overpressure and the discontinuity of the shale horizons themselves,” Underhill said.

In a surprise blow to the pro-fracking movement, Chris Cornelius – Cuadrilla’s founding geologist who has since left the company – shared a similar view in Wednesday’s Guardian newspaper, arguing that the obstacles were “technical and economic feasibility” and “socio-political factors”. aligning to scale’ makes him skeptical that there will ever be significant shale gas extraction in the UK