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UK Lifts Shale Gas Fracking Moratorium

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The UK government has officially lifted a 2019 moratorium on hydraulic fracturing (fracking) of shale gas formations in England, saying the move is intended to strengthen the country's energy security.

Business and Energy Secretary Jacob Rees-Mogg said that in light of the current energy crisis it was an "absolute priority" to explore all sources of energy and open the door to the drilling and fracking of shale formations.

"It's right that we've lifted the pause to realize any potential sources of domestic gas," he said.

The government said it would consider future applications for hydraulic fracturing in areas where there is local support.

“Developers will need to have the necessary licenses, permissions and consents in place before they can commence operations," it said.

Polls have tended to show low levels of public support in the UK for shale drilling and fracking, and very few countries have achieved significant oil and gas production from fracked shale formations. The exceptions include the US, Argentina and China.

Tremors

Fracking has proved controversial in the UK due to environmental concerns and pressure from environmental campaigners and local communities. A moratorium remains in place in Scotland and Wales.

The moratorium in England was put in place by the Conservative government in 2019 after regulators concluded that it was impossible to estimate the probability or magnitude of earthquakes that might be triggered by fracking operations.

That move followed tremors at Cuadrilla Resources' site in Lancashire in northern England that exceeded the regulatory threshold. As a result, Cuadrilla was unable to complete exploration drilling.

Aspiring shale developers complained at the time that the rules were unworkable. Advocates have suggested that the threshold for tremors should be set no higher than for other types of industrial activity, such as quarrying.

"We need to revisit the seismic limits to ensure that shale gas extraction can be done in an effective and efficient way," Rees-Mogg told members of parliament on Thursday.

The minister drew fire from lawmakers about the Conservative party's 2019 election manifesto pledge to keep the fracking ban in place "unless the science shows categorically that it can be done safely."

Asked about the "local support" condition for shale development, Rees-Mogg said shale drillers could win over communities by offering them perks.

Challenges

A review, published on Thursday, by the British Geological Survey, concluded that forecasting the likely occurrence of fracking-related earthquakes and their magnitude "remains a scientific challenge."

The review, commissioned by the government earlier this year, also said that assessing the risks was difficult because only three wells have been fracked in the UK.

In addition to concerns around seismicity, experts cite several other factors that cloud the long-term outlook for shale gas development in the UK.

The geology is complex, so estimates of initial gas-in-place tend to overstate the potential recoverable volumes. The industry has said that it would require 20-40 wells to be drilled and fracked to deliver a more realistic estimate.

And even under an optimistic scenario, "it's not something that’s going to deliver this decade," Mike Bradshaw, professor of global energy at Warwick Business School, said recently.

Ratings agency Moody's said "it remains to be seen to what degree companies are willing to invest at scale given the uncertainties and concerns around fracking."

Nevertheless, the government’s move was welcomed by would-be UK shale developers such as upstream minnows Cuadrilla and IGas, and petrochemicals giant Ineos.

The latter company recently renewed its offer to the government to drill a test shale gas well "safely and without harm to the environment."

German Shale Debate

Elsewhere in Europe, fracking is banned in France, Bulgaria, the Netherlands, Denmark, Ireland and Germany and no country is producing oil or gas from shale formations.

However, Germany is taking another look at the matter, given that it has been hit hard by a big drop in deliveries of Russian gas this year.

"It is a very controversial discussion," the head of Germany's Wintershall Dea, Mario Mehren, told Energy Intelligence recently.

“In theory, in Germany, we have a legal framework that would allow for the kind of exploratory projects, to see if the shale potential is actually as big as all the experts in Germany say."

"But frankly, to do that you need … support by politicians at federal level, at regional level, but also acceptance in society. Currently, I do not see that," Mehren said.

He also pointed to the lack of oil-field services infrastructure in Germany and the fact that even if companies were able to tap the country’s shale gas potential it would take several years to get the gas out of the ground.

"In other countries, either the potential is lower than it is in Germany or it's even less acceptable," he said.

For more coverage of the Ukraine crisis, visit Ukraine Crisis: Energy Impact

Topics:
Shale, Policy and Regulation, Gas Supply, Gas Demand, Ukraine Crisis
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