2014: The year of fracking?

Fracking is a topic that divides opinion, and one which has created a new generation of protest camps at sites as far apart as Manchester, Sussex and Lincolnshire. But why is opposition to fracking so vocal, and do the protesters have a point?

The term ‘fracking’ is derived from the technical term ‘hydraulic fracturing’ and describes a process developed in the 1940s for extracting natural gas and oil from deep inside shale rock formations underground.

The natural resources are extracted via a combination of drilling and forcing water and chemicals into viable shale rock, at extremely high pressure. This pressure causes fissures in the rock face, which allow oil and gas to be released and pumped back to the surface.

Fracking is controversial for a number of different reasons, and the American experience has done little to allay the fears of opponents. Over in the USA, the fracking industry has reversed the fortunes of the struggling gas and oil behemoths, and estimates suggest its proliferation has created a guaranteed supply for the country well into the next 100 years.

Those who argue against fracking do so for a number of different reasons. Health and environmental concerns are a big issue, and in particular with regard to the chemical mix added to the water used to ‘frack’ the rock faces. In the USA, regulations around chemical use and contamination are far looser than in the UK, and it’s not hugely uncommon to read reports of contaminated water supplies and of home-owners being able to set fire to the water in their taps – as a result of the drinking water supply having been contaminated with the natural gas from nearby fracked wells. There have also been reports of residents living close to fracking sites suffering from a range of health concerns, including nosebleeds, asthma, nausea and headaches.

For environmentalists, concerns around fracking include damage to the immediate areas surrounding fracked wells, as a result of the aforementioned and often poorly regulated chemical use, but also to the US’s reliance once more upon unsustainable fossil fuels. Although there is an argument that fracking is less environmentally damaging from a CO2 emissions point of view, the natural resources produced are still mined to be burned. There have also been reports that fracking could cause earth tremors, leading to more safety concerns.

Here in the UK, there is real concern around where fracking leaves the UK’s burgeoning renewables industry. We wrote recently about uncertainty in the market around subsidies and government support for that industry, and if plans to create fracking wells from the north-west across to Lincolnshire become reality, investors will require certainty if they are to continue their involvement and support of sustainable energy sources such as wind, solar and biomass.

Of course, fracking does have its supporters in the UK. It’s certainly true to say that our regulatory system is far more advanced than that of the USA, and fracking companies will be required to monitor for contamination of water supplies, and contain waste fluid created by the process in sealed units. In addition, they will also be required to capture any excess gas, and pump this back into the UK’s pipeline – rather than follow the US’ example, which is simply to burn any excess on site.

Further, US group ExxonMobile has made moves towards creating fracking fluids that can be used without damaging local environments, and is developing these for use in Germany – a country with a smaller estimated reserves than neighbouring Poland or France, but with sufficiently large predicted supplies to fund significant research into these new ‘clean chemicals’.

A further perceived benefit for supporters of fracking is that it will enable the UK to reduce its reliance upon foreign oil and gas imports. Of course, the political instability in the Ukraine has only added fuel to this particular fire and this, combined with the government’s generous tax breaks on profits for fracking companies as announced in the recent Budget, may mean that 2014 really is fracking’s year. Only time will tell.

For more information and advice on renewables and energy law, please contact Stuart Stones on 0161 464 9540, or by email: stuart.stones@ratiolaw.co.uk.

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