Hello. It looks like you’re using an ad blocker that may prevent our website from working properly. To receive the best Tortoise experience possible, please make sure any blockers are switched off and refresh the page.

If you have any questions or need help, let us know at memberhelp@tortoisemedia.com

Drill, baby, drill

Drill, baby, drill

It’s tempting to believe the solution to cutting soaring energy bills is lying beneath our feet. But after a decade dreaming of a US-style shale revolution, fracking has failed to deliver.

Britain’s fracking industry is having a last hurrah. Plans to concrete over two of the country’s few viable shale gas wells were left in doubt this week after Kwasi Kwarteng, the business secretary, told the Commons “it didn’t necessarily make any sense”. At the same time, Boris Johnson has tasked advisors with taking a fresh look at whether fracking could help the UK achieve energy independence from Russia. 

The argument for lifting a 2019 moratorium on fracking is this: there’s now no doubt that energy security equals national security, and proponents say a fracking free-for-all could produce enough natural gas to meet around a fifth of projected UK gas demand between 2020 and 2050. The UK Onshore Oil and Gas (UKOOG) lobby group says drilling 4,000 wells by 2032 would provide 65,000 jobs, a tax take of £200 billion, and another way to level up the North. A UKOOG spokesperson quotes a Liverpool University study that found the largest fracking-caused tremor in the UK had the “surface vibration equivalent of dropping a honeydew melon”. 

It’s tempting to believe the solution to cutting soaring energy bills (see below) is lying beneath our feet. But after a decade dreaming of a US-style shale revolution, familiar hurdles remain:

  • Lancashire isn’t Texas. “The geology of the UK is no good for fracking and commercial shale gas,” says Stuart Haszeldine of the University of Edinburgh. “There are too many geological faults. In the US, the shale is stacked like books. It’s much simpler and safer.” Another key difference is that US landowners own the rights to natural resources on their land, while in the UK they are Crown property. Nimbys are few in the Permian Basin in the American southwest, with a population density of 16 people per square mile. In Lancashire it’s close to 500. UK anti-frack activists are well organised and generally represent the views of the public: a poll last autumn found 45 per cent were against fracking while 17 per cent were in favour. To note: Rishi Sunak, whose constituency is located near shale deposits in North Yorkshire, has avoided taking a stance on fracking. Liz Truss and Robert Jenrick are among those voicing support.
  • The commercial test-case has failed. Cuadrilla Resources, the company that pioneered the first major UK shale gas discovery in 2011, was able to produce 275,000 cubic feet of gas per day at peak flow from its wells. That’s enough to supply just 150 houses year-round. After eight years of engineering experiments – and a 2.9 magnitude tremor – Cuadrilla’s owners were told by the Oil and Gas Authority to plug the wells at Preston New Road, and they’re now considering new uses for the site. Other firms have already moved on: “Fracking is no longer our business model,” says Steve Mason, Director at Third Energy, a company which holds seven licences for onshore exploration in the UK. “We’re a renewable energy company now.”
  • It won’t ease the pain next winter. Even in the industry’s best case scenario – including a swift end to the moratorium and zero planning issues or protests – fracking would meet less than 5 per cent of UK gas demand over the next 5 years, according to analysis by Carbon Brief. Drilling a borehole takes around two months but sourcing the specialist labour required to drill between 10,000 and 40,000 of them is a huge undertaking. The government would also need to drastically relax planning rules – something Kwarteng has already decided to do for wind farms.
  • The global market. There is no reason why UK gas producers would sell shale to consumers below the market price. As the business secretary said, “they’re not charities”. Even in the US, where shale evangelists are many, there is scepticism that the industry can sate a growing global appetite for non-Russian oil and gas. “The only sizeable offsets to the loss of Russian exports are OPEC+ spare capacity, the potential return of Iran’s exports, strategic stock releases, and possibly some Venezuela production if sanctions were eased,” says Bob McNally, President of Rapidan Energy Group. However, US liquified natural gas supply will pick up from next year, and could be a big part of the solution to Europe’s energy crisis.

All things considered, fracking is unlikely to get the green light in Johnson’s emergency energy strategy, which is due to be published within a fortnight. Keeping the UK on track to meet its net zero target will require unabated fossil gas combustion to fall 65 per cent by 2035 and 99 per cent by 2050, according to the Committee on Climate Change. Briefings from BEIS suggest the government wants to stick to that goal, with an emphasis on wind expansion, a trebling of solar in the next eight years and more back-up nuclear. During previous energy shocks – Suez, the 1970s, the Gulf War – the knee-jerk solution has been to drill. This time it’s different.


Energy Number crunch

  • 14– factor by which UK energy bills will rise faster than wages this year.
  • £386– annual rise in the cost of petrol for the average UK family.
  • 6.3m– English households projected to spend more than 10 per cent of their family budget on fuel after the energy price cap rises in April.


A rapid revolution

Episode one of our myth-busting new podcast series with the Centre for Net Zero and Octopus Energy goes live on all podcast platforms tomorrow. Episode two will be available one week early for Tortoise members and Apple+ subscribers on Wednesday 23 March. 


engagement and activism

Clear as mud
Companies responsible for $130 trillion of assets worldwide have written to 10,000 businesses demanding they hand over environmental data. Last year 13,000 companies worth 64 per cent of the global market submitted information to the Carbon Disclosure Project, which keeps a comprehensive dataset of corporate action. Investors want others to follow suit so they can accurately judge how well companies are adjusting to a changing world. They say those that keep quiet are out of touch. According to the CDP, though, only a third of companies that did disclose had “credible” emissions reduction targets and just one per cent provided data on all the points the CDP asks for. Opacity reigns.


eco-nomics

After the deluge
Mayors of two Queensland towns affected by extreme flooding this month are calling on the Australian government to protect homeowners from rising insurance costs. Twenty people were killed and tens of thousands forced to evacuate their homes after extreme rainfall in Queensland and New South Wales, which were hit by devastating floods last year too. Almost 110,000 claims have since been submitted to insurance companies, which now face estimated losses of USD $1.04 billion and may be reluctant to insure homes in future. The government already has a guarantee worth $7bn in place to protect half a million properties in northern Australia from cyclones and related flooding, and is under pressure to extend that to cover the kind flooding seen this month. It’s just the beginning: climate change could add $183 billion to annual property insurance premiums by 2040.


policy

Back to the coal face
A coal-fired power station marked for closure this September could be kept going in a bid to ease the UK’s energy crisis. The Times reported yesterday that government officials had approached EDF to find out whether West Burton A, a power plant in Nottinghamshire, could be kept running beyond its planned closure date. It’s unclear whether it could remain open beyond 1 October 2024 – the government deadline for ending the use of coal to create electricity. The UK’s three coal-fired power stations contributed just 2.2 per cent of the country’s energy needs in the last quarter of 2021, but yesterday the figure was 3.9 per cent.


nature

News in reef
Corals are the canaries in the coal mine of climate change – creatures that, clustered together in reef ecosystems, have for decades shown the damage a warming climate can cause. They are, according to the IPCC, among the most “unique and threatened” systems on earth – but new research gives a sliver of hope that some may endure. A 22-month study of Hawaiian corals tested their resilience to the kind of chronic ocean warming and acidification expected through the rest of the century, under Paris Agreement-level of planetary heating. The study found that at least some of the diverse coral species may survive. The all important caveat: the world is on track to far overshoot the levels of atmospheric carbon dioxide on which their survival depends.

Thanks for reading.

Barney Macintyre
@barneymac


Additional reporting by Ellen Halliday. Graphics by Katie Riley. Edited by Giles Whittell.


With thanks to our coalition members: a network of organisations similarly committed to achieving Net Zero

Visit the homepage to find out more about the coalition and join us.