Issue Number: 104   January 2014


To Frack or Not to Frack

In this brief article, MJMEnergy Analyst, Nico Cottrell, explores recent political developments for fracking in the UK.

It has become a cliché to say that politicians can be divisive, though sometimes it is clearly just the best adjective to use. Margaret Thatcher is the archetype of the divisive politician: some wanted to beautify her when she died, whilst others celebrated by eating Maggie 'death-cake', washed down with beer. But another Conservative Prime Minister has divided people recently. David Cameron has recently given his complete, unambiguous support for fracking[1], saying that he is 'all out for shale', creating anti-fracking and pro-fracking camps. He has gone beyond his previous support for shale gas by promising large tax breaks for councils willing to approve of fracking in their area. Cameron also promises that local authorities will receive 100% of the business rates collected from the scheme, which is double the current 50%. His statement on fracking coincides with an announcement by France's Total, which will invest £30 million pounds on exploring for shale gas in the East Midlands, which makes it the first oil major to invest in the UK's fledgling shale sector. There are suggestions that Chevron, Conoco and Shell could also follow suit and invest in the UK shale gas race.

Cameron's support of shale gas is well timed because it has come amidst a large, ongoing debate about the rising costs of energy. Fracking has been presented as an important part of the solution to rising energy costs because it will, Cameron assures us, 'give us cheaper energy for the future[2]'. The example of America is often used by pro-frackers because US gas prices have plummeted as a result of the shale gas revolution. Gas prices dropped from $15 per million British thermal units at the end of 2005 to around $4.50 today. Pro-frackers tell us that the UK will face similar drops in gas prices, which will filter down to consumers. However, given British consumers' growing distrust of the energy companies, some might feel that wholesale prices that the companies pay for gas is largely irrelevant because the companies will charge us what they like. But it is likely that if this happens, the government will intervene either through legislation (such as Ed Miliband's energy price 'freeze' plan) or through penalties.

Whilst money matters, the biggest concern about fracking is what it might do to the environment. Anti-frackers claim that fracking can contaminate groundwater and possibly cause earthquakes. ReFINE, Researching Fracking IN Europe, a Durham University based research group, has recently claimed that whilst there is strong evidence that fracking can cause earth tremors, it is 'not significant' in causing earthquakes. Fracking generates far less seismicity than mining, geothermal activity or reservoir water storage[3]. There is more public concern that fracking could contaminate groundwater supplies. There are horror stories in America where people have managed to set fire to tap water. One man in North Dakota allegedly managed to light water as it flowed from his tap, creating large flames to rise up from the basin. It is reminiscent of a notorious 2010 documentary film 'Gasland' where a Colorado resident achieves something very similar[4]. However, the evidence is not clear whether fracking has been responsible for this, as these incidents could have happened naturally, such as a build-up of methane in pipelines. The risks of fracking are still being researched. Not much is known about fracking in the UK - a topic that is currently ripe to be researched - and more needs to be known before it is ruled out as an environmental disaster ticking time bomb.

Fracking will continue to be hotly debated over the next few years. At the same time, there will be a growing pressure on politicians to find alternative sources of energy: Britain's energy security is threatened by the imminent closure of ageing coal-fired power stations and nuclear power stations, many of which are not going to be replaced. And more than half of the new power plants that the UK needs for its energy security have been postponed, according to the chief executive of the National Grid, because of a lack of confidence in the UK energy market[5]. Will fracking restore confidence to investors? So far so good, as Total has been attracted to the UK's shale gas potential, and there are signs other energy giants could follow suit. It is less certain, however, whether fracking is the safest way to provide the UK with energy security. Only time will tell.

[1] Fracking or hydraulic fracturing is a technique of drilling and injecting fluid (a mixture of chemicals, water and sand) into the ground at a high pressure in order to fracture shale rocks and release natural gas.



[4] Watch the trailer here


January 2014 MZINE