By SELINA WILLIAMS
LONDON -- The UK backed the use of a controversial process for
extracting shale gas in the country, which the government hopes
will help stimulate renewed investment in Britain's energy
sector as its aging North Sea oil and gas fields start to run
Exploratory hydraulic fracturing, colloquially known as
"fracking," can go ahead, subject to new controls to mitigate
the risks of seismic activity, the government said
The technique has helped unlock gas reserves trapped in
underground shale rock, but critics say the technique risks
damage to the environment.
"It is essential that its development should not come at the
expense of local communities or the environment. Fracking must
be safe and the public must be confident that it is safe," said
UK Energy and Climate Change Secretary Ed Davey.
Shale oil and gas in the US has transformed the North
American energy market and beyond, raising alarm bells among
some members of the Organization of the Petroleum Exporting
Countries who say the group may eventually need to rein in
output to avoid glutting the market as US oil production
Governments in the UK and elsewhere in Europe are hoping
that companies can help replicate the American boom. Major
global oil companies Chevron, Royal Dutch Shell, France's Total
and Italy's Eni have been piling into European shale exploration for the past three
However, their lack of success so far has dented enthusiasm
in Europe, where a US-style shale gas
production boom isn't likely any time soon due to
regulation, public opposition and high production costs, say
some industry experts.
The UK halted exploratory fracking in May 2011 after two
small seismic tremors were detected near the country's only
fracking operations, run by privately held Cuadrilla Resources
in Lancashire, northwest England. There has been no commercial
production in the UK. so far.
The lifting of the ban is important for Cuadrilla - the only
company using fracking to explore for shale gas onshore in the
UK - so it can more accurately quantify how much of the
estimated gas resource of 200 trillion cubic feet can be
The UK has put natural
gas at the heart of its energy policy as it seeks to secure
energy supplies and meet international climate targets.
The Conservative-led government has realigned its energy policy
to encourage the construction of new gas-fired power
stations in efforts to keep the country's lights on as old coal
and nuclear plants close, while it also looks to reduce
greenhouse gas emissions.
"We're very pleased that there is approval to begin to move
forward. It's very significant--it's important not just for
Cuadrilla but for the country to know what we have got," said
Cuadrilla CEO Francis Egan in an interview Thursday.
Exploration is still at an early
stage in the UK making a reliable estimate of the country's
reserves difficult, and shale gas
exploration has yet to attract major oil companies such as
BP and Royal Dutch Shell, who say they are more focused on
prospects elsewhere, including the North Sea.
"We have a broad and diverse business portfolio and look at
opportunities globally all the time," said a spokesman for
Environmental concerns have presented the biggest hurdle to
shale gas development in Europe.
Green groups allege that fracking, a technique which blasts
the rock with sand, chemicals and water to release the gas, can
contaminate groundwater. There are also fears that the drilling
can cause earthquakes.
Campaigners from Greenpeace criticized the government's
decision. "[Chancellor] George Osborne's dream of building
Dallas in Lancashire is dangerous fantasy," said Greenpeace
energy campaigner Leila Deen.
"He isn't JR Ewing and this is not the US. Energy
analysts agree the UK cannot replicate the American experience
of fracking, and that shale gas will do little or nothing to
lower bills," said Ms. Deen.
Mr. Davey said the government concluded that seismic risks
can be managed with controls that include assessment of the
seismic risks and existence of faults before fracking starts, a
plan showing how the risks will be addressed and seismic
monitoring before, during and after fracking. The new controls
include an early warning system to monitor unusual seismic
The lifting of the suspension doesn't mean that fracking
will start straight away.
Mr. Egan said that Cuadrilla, which obtained a license to
explore in Lancashire in 2008, but had to halt fracking last
year following minor earthquakes in the area, is spending
"several million pounds' on advanced systems for seismic
It must also get approval from local authorities, a process
that is likely to take several months, Mr. Egan said. Cuadrilla
is expected to start fracking in the first half of next year in
two or three wells, he said.
In addition to lifting the moratorium on fracking, the UK
government is consulting on tax incentives to open up the
country's potential shale gas reserves and is creating a new
Office for Unconventional Gas and Oil to give investors a
single point of contact and to simplify regulation.
Dow Jones Newswires