French Energy Giant to Invest in UK Fracking

French resource company (and energy giant) Total is set to invest up to £13 million in the immediate future in the fledgling UK Shale Gas (fracking) industry.

A forty per cent stake of two exploration licenses in Lincolnshire will be turned over to the multinational owned by IGas Energy. It is the first such investment of its kind in hydraulic fracturing industry in the UK. Chief Energy executive of IGas, Andrew Austin, hailed the milestone as “a further endorsement of the potential that exists.” It bolsters the findings of the British Geological Survey: 1,300 trillion cubic feet of shale gas may lie beneath the north of England. To quote Joe Lynam, a BBC Business correspondent, a recovery of ten per cent for a resource this size could satiate national energy demands “for almost fifty years.”

Recent developments, however, have helped reinvigorate the intense debate centred on the hydraulic fracturing practice. A balance between economic profitability and environmental sustainability has been advised by many. A significant number of anti-fracking lobby groups have evolved to counter the stance of the Government on fracking. They fear that any development of the practice will be uninhibited and will be to the detriment of environmental and social well-being, rather than to improving them.

Developments within political circles in County Fermanagh serve as a case in point. Local politicians have proposed a local referendum on fracking. Many in the local community (justifiably) feel that their efforts to form an opinion on the process are curtailed by a lack of Governmental clarity. In the words of a local Sinn Féin councillor, “one of the things I am hearing is that people’s voices are not being heard and decisions are being taken miles away from where the actual mechanics of fracking are going to happen”.

On the other hand many politicians have hijacked the fracking agenda: a contentious issue generally promotes voluminous and continuous discourse. This, in a way, might also be construed as a betrayal of public confidence. Northern Ireland Minister for Environment Mark Durkan denounced the Fermanagh developments in an interview to BBC Radio Ulster:

“Tourism is the key economic driver in Fermanagh. What impact is the virtual rape of the Fermanagh countryside going to have on tourism there?”

It is disturbing that a politician would sensationalise their stance on a complex issue and lace it with hyperbole, but it is not surprising. When viewed in panorama, the fracking debate is dynamic; and varies with respect to each locality under consideration. On the other hand these localities (and their associated communities) tap into the wider, integrated National Grid to obtain their electricity (excluding Northern Ireland where an energy pact is currently in place).

A July 2013 Ofgem report into the health of the UK energy sector proved to be both damning and harrowing. It believes that spare energy margins could plummet to as low as 2% by 2015. To put this in the context of a Domesday scenario, if each household were to simultaneously trip their kettle, major and uniform blackouts could take place. Ofgem’s Chief Executive, Andrew Wright, was quick to vocalise his anxiety: “Britain’s energy industry is facing an unprecedented challenge to secure supplies... Preventive action taken now will help protect consumer supplies”.

The logical conclusion (on the part of the Government) is to galvanise major shifts in the balance of energy sources. There is already evidence of real and tangible progress. October 2013 saw George Osborne endorse Chinese funding in future UK-based nuclear projects. Within a matter of days EDF Energy (yet another French consortium), kept afloat by a sizeable proportion of Chinese investors, agreed to development Somerset’s Hinkley Point C site. While the developments were encouraging they are not sufficient in their own right to remedy the UK’s skewed reliance on North Sea gas and foreign coal, oil and gas. It will provide no positive feedback for the looming date of 2015. Couple this with legal conflicts concerning the Republic of Ireland – An Taisce, the National Trust for Ireland, are considered legal action over the decision.

“Despite the nuclear power plant being nearer to the coast of Ireland than it is to Leeds, the UK decided not to consult with the Irish public about the decision before it granted consent in March,” it said. “The first time many Irish people learned about the nuclear power plant proposal was when the decision was announced.” The UN Implementation Committee of the Convention on Environmental Impact Assessment in a Transboundary Context have also expressed concern.

Hydraulic fracturing is thus understandably attractive to a British Government obligated to ‘keep the lights on’. A sense of immediacy surrounds the issue, heightened by the finite term of the ruling Government: which, regrettably, when pared back reveals an ugly truth: pandering to votes rather than to the higher cause. Fracking in the United States (which went from blueprint to production within a decade) demonstrates that it can provide rapid energy stability.

The UK Government is not alone in this. Other nations within the European Union are equally worried over long-term security. Instability in the Middle East has catalysed the energy agenda (in addition to, one hopes, the monumental humanitarian crises in Syria and the surrounding region).

A joint 2011 paper between King’s College London and the European Centre for Energy and Resource Security put forward some justifications for the recent fracking ‘gas glut’: “From a global perspective, unconventional gas has far-reaching geopolitical implications. It has the potential to balance the EU’s energy equation by breaking a market dominated by a few suppliers.”

It also proceeded to flag the many emotive issues common to the communities of Fermanagh and Balcombe alike.

“Important questions about future market structure, the regulatory environment, political risk, investor confidence... (all) need to be answered.” Its chief insight was the identification of fracking as a redeeming player in the energy market. “With local unconventional gas availability enabling gas-to-gas competition, negotiating power is shifting from a hitherto sellers’ market into a more balanced and favourable market for buyers.”

This is an important point. It serves to unify the chief objections of many to the practice of Hydraulic Fracturing in their local environment. The economic benefits must not become alienated from their ultimate purpose (the betterment of societal well-being). Germany is a favourable case in point. Despite each federal State advocating its own energy policy things appear to move forward. Perhaps the same logic might be applied to UK fracking in the future, taking into account the fully-fledged economic and environmental impacts for the higher cause.