Cuadrilla are free to frack: Osborne’s plans on shale gas

A lot of noise has been created around George Osborne’s plans for shale gas. A detailed look, however, shows many holes and a tendency to shy away from difficult questions. This DECC document (see Chapter 5) reveals details about possible new regulation, the operation of the next oil and gas licensing round, as well as ignoring some key facts.

It also reveals the government is going to write a lot of reports. Cynics might suggest they are trying to bore us into going away.

Dig through the drone-speak, however, and a salient fact emerges. Pending details on a mysterious “Office for Unconventional Gas and Oil” (OUGO), there’s no extra regulation, and no acceptance that gas wells invariably leak.

If Ed Davey – in his announcement on fracking next week – gives no extra powers to OUGO then Cuadrilla are free to frack.

Osborne’s shale strategy: a synopsis

Current developments
The report starts out saying that there’s gas. Lots of gas. No sh*t, Sherlock.

But there’s a problem. “If exploration is successful, early production is likely to be seen in the second half of this decade, but any substantial contribution to the UK’s gas supply is unlikely until further into the 2020s.” (5.14)

That’s odd. Plans by Cuadrilla and Dart Energy (amongst others) forsee production starting within the next 12 months. Indeed, Dart has a live planning application for production wells in Airth, Scotland. So why is DECC saying it will take until the 2015?

Environmental Contamination
Meanwhile, the threat of environmental contamination is brushed aside with this simple contradiction “Many of the incidents reported…have been found to be unrelated to shale gas or fracking. However, there have been instances of methane in water due to unsatisfactory construction of the wells”

What this paragraph is alluding to is that oil and gas industry – not just fracking – is a filthy business. It’s not fracking that’s causing the problem, they say, it’s the drilling of wells. Except the last bit didn’t actually get said. Oops!

This attempted greenwash is in fact the industries biggest problem: gas wells – conventional and unconventional – leak. In 2006 the Norwegian Petroleum Safety Authority sampled 406 of 2,682 North Sea gas wells. 18% of wells had leaks. 7% were completely shut in owing to integrity issues.

In the Gulf of Mexico leaks were found in over 11,000 casing strings in over 8,000 wells, according to the US Mineral Management Services.  Later, in 2004, the MMS reported 6,650 of 14,927 Gulf of Mexico wells were leaking. And in the North Sea in 2009, the Society of Petroleum Engineers’ forum ‘North Sea Well Integrity Challenges’ surveyed 100 participants. These indicated that an average of 1,600 out of 4,700 North Sea wells had at least one anomaly. See more leaks here.

Attempting the ’it’s not fracking’s fault’ gambit is a favourite industry tactic. Of all the text in the report, this line smacks most strongly of the involvement of lobbyists in its creation.

Thankfully you rarely hear mention of the UK having ‘world class oil and gas regulation’ any more. This was a typically refrain a year ago from (typically) pompous Tory MPs who- surprise – usually held shares in oil & gas companies.

However, the report deems existing regulations to be fine (this despite the parliamentary committee advising the opposite in early 2012). What this actually means is that little or no regulation will happen – companies will continue to do the regulating themselves, and the Health and Safety executive can remain safe in the knowledge its inspectors will not have to move from their desks. (section 5.19)

There’s a new caveat, however: if a well goes into production “additional regulatory resources may be required in response to the increased scale of activity.” (5.19)

You can bet that that keyword “may” was fought over long and hard.

The secretive world that is oil and gas licensing gets some (breif) light in the document. Preparations for the next (14th) licensing round were, it seems, halted after Cuadrilla’s earthquakes.

No-one has been sure whether new licenses are pending; now DECC says it’s going to do a new report (a “Strategic Environmental Assessment”: fancy!) and public consultation before going ahead with new licenses. That should take the bureaucrats six months. Questions arise as the production of this report: who is involved in the decision making? Who has access and foresight of what’s going on?

Tax Breaks
Finally, it’s been revealed that Big George will give his friends in the shale gas industry some nice tax breaks. Are you listening Baroness Hogg & Lord Brown? Details to be announced in the March 2013 budget.

Office for Unconventional Gas and Oil
A nice place for frackers to hang out and … oh, hang on: “working with Defra and other Government Departments, will join up responsibilities across Government, provide a single point of contact for investors and ensure a simplified and streamlined regulatory process.” It’s not clear whether frackers will have to wait for the creation of this extended coffee house… oh, f*ck it, let’s just get drilling.

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