The North Sea area has for decades been a source of wealth and provided energy security for many Northern European countries. However, its relatively small oil and gas deposits are depleted rather quickly compared to the massive fields in, for example, the Middle East. The United Kingdom, in particular, is feeling the pinch of North Sea production declines as it loses its spot amongst the top oil and gas producers in the world. There is, however, a way for the country to reverse this decline and regain its reputation. It could increase production through the same innovation that has revolutionized the industry in North America: hydraulic fracking.
According to geologists, the U.K.'s onshore fossil fuel deposits could exceed conventional offshore fields by a factor of ten. British politicians have withheld their approval for large scale projects due to environmental concerns and popular opinion. Past statements by the current Prime Minister and members of his cabinet, however, could be a sign that the political environment is changing in favour of fracking. The PM published an article in the Telegraph in 2014 where he claimed it was time to “give the British people their mineral rights, and get fracking at last”. As Mayor of London he told the Times of London that “the city should leave no stone unturned or unfracked in the cause of keeping the lights on.”
The advantages of hydraulic fracking
The supporters of fracking mostly work in the energy industry with companies such as Cuadrilla, which is drilling experimental wells to exploit the shale deposits. The proponents distinguish two advantages: the economy and energy security.
The industry points out the financial and socially desired effects of additional economic activities. According to Andrea Leadsom, Minister of Business, Energy, and Industrial Strategy, “a shale gas industry will not only boost our economy and create thousands of jobs across the supply chain, but it will also help to guarantee secure energy supply which is an absolute must.” Related: Oil Prices Plunge As China Retaliates With Tariffs On U.S. Goods
Improving the energy security of the U.K. is an important goal. High reliability on foreign producers increases risks for two reasons: first, massive price hikes could negatively impact the financial position of households and companies due to the importance of energy in the overall economy. Second, supply disruptions could have a paralyzing effect on the whole society.
Fearing the consequences of fracking
Opponents of fracking in the UK point to the same arguments as those in the U.S. - the health of residents and the environment. In the U.K.'s case, landscape pollution is another factor.
Fracking is known to carry the risk of contaminating the groundwater and increase exposure to toxic chemicals. Additionally, the technology can lead to seismic activity in the extraction areas. Therefore, the British regulator has set the boundary of 0.5ML on the Richter scale after which all activities need to be halted. Recently, Cuadrilla's experimental fracking well at Lancashire produced an earthquake measuring 1.55ML on the Richter scale, which put the brakes on all activities.
The industry is hoping for the new Prime Minister to ease environmental rules on fracking, which would extend the future of the oil and gas industry beyond the depletion of conventional reserves. However, the geographic characteristics in the U.K. are less beneficial than those of the U.S., where low population density in the extraction areas and favourable depth of the deposits have led to an energy revolution.
The environmental question
Gas producing companies have emphasized the favourable characteristics of natural gas as a bridging fuel for the renewable energy sector. The theory goes that gas-fired power plants can supplement wind and solar power during windless and cloudy days due to the relative clean nature of natural gas compared to coal.
However, according to researchers from Cornell University, the fracking industry is responsible for a significant portion of the world’s greenhouse gasses. Natural gas has global warming potential 84 times greater than carbon dioxide. The research suggests that it is highly likely that the shale revolution in the U.S. may have ignited a significant spike in emissions which has accelerated the pace of climate change.
According to Robert Howarth, author of the paper, “this recent increase in methane is massive. It’s globally significant. It’s contributed to some of the increase in global warming we’ve seen and shale is a major player.”
Despite the new Prime Minister’s seemingly pro-fracking perspective, it remains unclear whether or not he will risk easing the regulatory requirements. Brexit and the probable economic downturn, which has already started, could lead to delaying this controversial decision in favour of rebuilding trust and the economy.
By Vanand Meliksetian for Oilprice.com
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