Budget 2013: Energy – Cash for fracking: George Osborne’s offer to local communities by Michael McCarthy, March 20, 2013, The Independent
Local communities whose lives are disrupted by the coming new industry of fracking – the extraction of shale gas – may be compensated with substantial financial grants, Mr Osborne indicated. The Chancellor repeated the pledge he made last December, in his Autumn Statement, that there would be a generous new regime of tax allowances for energy companies to encourage development of the controversial technology. But he went further and signalled that the Government would also look into the possibility of providing compensatory packages of community benefits, to seek to defuse opposition from people living near fracking wells.
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Working out what these should be will be one of the first tasks of the Office of Unconventional Gas and Oil – OUGO – which has been set up within the Department of Energy and Climate Change (DECC) to regulate the anticipated shale gas industry. It will come up with proposals by the summer.
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Mr Hayes’s comments gave nothing away about exactly what benefits might accrue to co-operating communities. However, in a letter to the minister last year, the chief executive of Cuadrilla, Francis Egan, wrote: “There is a certain inconvenience that the local population bears in hosting development of this industry… We consider that there should be financial benefits [to the local population] in the form of a share of the tax take.” It is not yet clear if compensation would come from the Government or from fracking companies themselves, but the procedure is likely to resemble the well-known principle of “planning gain”, whereby a developer is allowed to build houses on a playing field, say, in return for providing the local community with a swimming pool. [Emphasis added]
[Refer also to:
Definition of BRIBE by Merriam-Webster
1: money or favor given or promised in order to influence the judgment or conduct of a person in a position of trust
2: something that serves to induce or influence
EnCana Corporation facing criminal charges
$250000 in community safety projects following Encana deadly sour gas leak ]
Fracking in the UK: Supporters Look to Avoid ‘Reckless’ US Mistakes by Christopher Werth, March 19, 2013, The World
But supporters, like Cuadrilla’s CEO Francis Egan, say it doesn’t have to be that way. “What I keep saying to people is, look it doesn’t have to follow exactly every step of what happened in the US,” Egan says. Egan says he’s also heard horror stories about fracking, but he believes the UK and Europe can learn from a decade of American trial and error. “And it is recognized that the UK regulatory regime is if not the best, up there with the best in the world,” Egan says. The International Energy Agency would seem to agree. It says British and European practices are generally far stricter than those in the US. And Paul Younger, an engineer at the University of Glasgow, says the industry’s record in the US has given fracking a reputation it doesn’t deserve. “It’s been very unfortunate for us in Europe,” Younger says, “because the way things have gone in the States has been to the discredit of the industry as a whole, sadly.”
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Take the way wells are constructed. According to a study conducted last year by the UK’s Royal Society, which Younger contributed to, standard practice in the US is to line wells with two layers of concrete and steel casings. But the report says in the UK, companies use at least three layers of casings, to better guard against leaks. Then, there’s the water. A typical frack well can produce large amounts of contaminated wastewater. In the US, much of that is stored in large open pits, a practice younger shakes his head at. “You know the idea of just digging a pond and sloshing the water in there and hoping for the best, there’s no way in the UK,” Younger says. He says drillers in the UK will be required to use double-lined steel tanks, and unlike in parts of the US, they’ll have to fully treat wastewater before it’s disposed of. Then there’s the most controversial aspects of fracking—the chemicals mixed in that water. In the US, drillers can keep many of these chemicals secret. Not here, says Younger. “There’s no secrecy allowed whatsoever,” he says. “And they will simply not allow anything that would not be permissible in drinking water.” For the time being, Cuadrilla, says it only plans to use one chemical in its test wells—a friction reducing substance called polyacrylamide. Taken together, Younger says, these stricter practices will ensure that the kind of “reckless” mistakes made in the US won’t be repeated in the UK.
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“When you actually dig a little bit beneath the surface, you start to realize that, actually, it’s not regulated at all,” says Mike Hill, a former oil and gas engineer who’s been an advisor on fracking for the Lancashire government. Hill says the UK’s regulatory approach was designed for remote, offshore rigs in the North Sea, not for fracking wells near crowded towns and cities. “And when you move large-scale gas production (or) exploration to within a few hundred meters of large urban conurbations, you need to take into account public health,” Hill says. “And we don’t have regulations for doing that. “In fact,” Hill says, “I think at this stage, we are considerably less protected than (people) are now in the States.” And when it comes to compliance, Hill says UK regulators depend too much on what a company says it does. “There’s no actual inspections at all,” he says. The UK’s Health and Safety Executive says it did inspect two of Cuadrilla’s test wells two years ago, but that the visit was mostly to check worker safety. To assess well integrity, the regulator says it relies on a “dialogue” with the company. But even British lawmakers aren’t sure if that’s good enough. Tim Yeo, who chairs the parliament’s committee on energy and climate change, says he doesn’t know if the existing Cuadrilla operations are being inspected sufficiently frequently. “And as you mention it,” Yeo says, “I will ask some questions and investigate that.” The British government has warned Cuadrilla over failure to report damage to one of its wells. And just last week the company announced it was suspending work at one well site to complete an environmental impact assessment. … And Yeo says specific new regulations will be put in place to ensure that fracking is safe.
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The question is, can you have both low gas prices and tougher regulations? One new report suggests not—that partly because of environmental concerns, the UK won’t see a flood of cheap shale gas. [Emphasis added]
Fracking report by Global Energy Watch Group due out today by Tina Rowe, Southwest Business, March 18, 2013, Western Daily Press
The technical difficulties encountered in extracting shale gas – so-called fracking– mean new wells need to be continually drilled, sometimes on a monthly basis, a new report will reveal today (Monday). The report, by the Global Energy Watch Group will be made public at a press conference in the House of Commons. It comes as another report, by UK scientists, suggests that Britain should use natural gas, including from shale, to replace coal and help cut carbon emissions. … Campaigners from Frack Free Somerset fear that proposed exploration in the area of the old north Somerset coalfield could have catastrophic consequences for the hot springs of Bath, and its tourism industry, as well as other environmental problems. Welsh-based company UK Methane recently withdrew an application to explore for gas exploration work at Hicks Gate, Keynsham, but says it intends to apply for planning permission for a full production facility there. The company maintains that the technology is safe and may benefit the economy and provide a cheap fuel source for the UK. The new British report, from the Grantham Institute on Climate Change and the Environment at the London School of Economics warns that it would be risky to assume gas prices will be low in the coming years or that the UK has extensive supplies of shale gas. … Chancellor George Osborne has provoked controversy with moves that signalled a new “dash for gas” including proposing tax relief for shale gas exploitation, and a gas generation strategy backing use of the fossil fuel for electricity. Fracking was put on hold as a result of the Lancashire earthquakes but Energy Secretary Ed Davey ruled last December that the process could resume in the UK, subject to new controls which aim to reduce the risk of seismic activity.
The Global Energy Watch Group report into the state of the world’s energy supplies will reveal the difficulties the USA is facing in fracking. It says that within days of finding a supply of shale gas the extraction difficulties result in an almost immediate production decline of 7-10 per cent per month. To maintain output a rolling programme of new wells need to be drilled. As a result in Arkansas the Fayetteville Shale Field, covers approximately 800 square miles. To extract the shale gas there are currently 3,068 wells. To maintain production as the wells decline 50 new wells have to be drilled each month. There is only limited potential for shale supplies in the West Country. Campaigners now fear that wells could proliferate in areas such as north Somerset. Wells MP Tessa Munt said yesterday that she welcomed: “This invaluable report. It is of particular interest for Somerset.” Last month Glastonbury Town Council passed a resolution that it would not support fracking in Mendip, or anywhere else in Great Britain. It is concerned that the process might affect the town’s two sacred wells and the local spring water company. [Emphasis added]
Fracking communities should get incentives, says minister, Energy minister John Hayes does not say whether handouts should come from taxpayer or fracking companies by Fiona Harvey and Damian Carrington, March 18, 2013, The Guardian
Communities near shale gas fracking sites should be given handouts to accept drilling in their area, a government minister has said. The suggestion is markedly similar to a proposal made by the fracking company Cuadrilla in a letter to the energy minister John Hayes, released to the Guardian under the Freedom of Information Act, for taxpayers’ money to be offered as a “quid pro quo” to help communities accept wells on their doorstep. In the 11-page letter to Hayes in November last year, the Cuadrilla chief executive, Francis Egan, wrote: “There is a certain inconvenience that the local population bears in hosting development of this industry … We consider that there should be financial benefits [to the local population] in the form of a share of the tax take.” He suggests further conversations to discuss the details. Hayes told the Guardian it was “absolutely” right for communities to expect incentives, pointing to similar proposals for people living near windfarms and nuclear reactors. “[Shale] should be safe and secure and the community thoroughly engaged. We certainly need to think more about the benefits to communities and I want us to have a whole range of technologies – nuclear, wind, shale – all will receive benefits as appropriate,” he said. Hayes would not say whether such benefits should come from the taxpayer or companies involved in fracking. An environment ministry spokesman said incentives would be offered but the form they would take and who would pay for them had yet to be decided. Officials did not comment on whether the ministry’s move was prompted by Egan’s letter.
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Andrew Pendleton, head of campaigns at Friends of the Earth, said: “This is an outrageous suggestion. The minister should send a very clear no to Cuadrilla. It’s extremely cheeky of them to ask for this – it sounds like they’re asking for extremely scarce taxpayers’ money in order to do what they think will be a very profitable activity. “People are hugely concerned about not just the short-term effects of fracking on them but also about what it will do to climate change. The reality is that there will not be community benefits in the way there are with renewable energy, which people can own and benefit from in the long term. Fracking means big, often foreign-owned companies coming in, making a mess, maybe failing to clean up properly, and leaving long-term damage.” Hayes said it could be more than a decade before fracking took place on any serious scale in the UK, even if companies poured resources into it. Cuadrilla halted work at one of its three drilling sites, at Anna’s Road in Lancashire, after deciding to undertake a new environmental assessment. The setback, disclosed last week, means no fracking or drilling of shale gas wells is currently taking place in the UK, though Cuadrilla could resume exploration this year or next. Residents near proposed fracking sites in Lancashire, Sussex and the West Country have formed groups opposing the drilling, citing concerns over earth tremors, possible contamination of water supplies, gas leaks and other environmental damage. A Cuadrilla spokesperson said: “In the long term, local communities must reap benefits from our activities. In consultation with these communities, we will develop a community benefit scheme which allows them to share in the success of future gas production sites.” [Emphasis added]
[Refer also to comment in response to the article by Ms. Tina Louise, St. Anne’s, Lancashire UK:
This proposal is making whores of the community – pimped by the government, fracked by the energy sector
U.K. driller Cuadrilla halts fracking at Anna’s Road, Lancashire, over environmental concerns
Freedom of Information Results – Correspondence Between UK Government and Cuadrilla
