LONDON (Alliance News) - The UK government has confirmed speculation that it plans to open National Parks, Areas of Outstanding National Beauty, and World Heritage Sites in the country to oil and gas shale fracking.
The controversy surrounding fracking in the UK has reached a pivotal point. The UK government has affirmed its support for the shale industry, even shunning renewable energy in favour of it, but local councils and a large amount of the public pressure have stood in the way of it progressing its plans.
The amount of opposition against fracking in the UK was highlighted by Lancashire County Council last month refusing Cuadrilla Resources an application to frack a site in the county on the grounds that it would lead to the "industrialisation of the countryside".
That application was one of the first made in the UK since Cuadrilla drilled a fracking well back in 2011.
However, that was not the end to the fracking argument, as the issue was reignited when attention turned to Yorkshire where a proposed site is being considered. Third Energy, a company which has already drilled a well on its Kirby Misperton site near Thirsk and Malton in North Yorkshire, is now hoping to become the first company to frack in the UK since Cuadrilla's well back in 2011.
Yorkshire was already under the spotlight after the North York Moors National Park Authority gave the green light for Sirius Minerals PLC to build the world's largest potash mine under the park.
Back in January, the government made a commitment to an outright ban on fracking in National Parks, Sites of Special Scientific Interest, and Areas of Outstanding Natural Beauty in the UK. It said all planning applications on those sites for fracking should be "refused" "except in exceptional circumstances and where it can be demonstrated they are in the public interest."
However, the government found a way around that commitment, as reports emerged that fracking would be allowed to happen underneath those areas of interest as long as the wells are not drilled on the surface.
That means companies could drill into the ground on the borders of National Parks for example, before drilling vertically underneath to extract gas.
The Telegraph in February quoted Secretary of Energy and Climate Change Amber Rudd as saying: "In the case of areas of outstanding natural beauty and national parks, given their size and dispersion, it might not be practical to guarantee that fracking will not take place under them in all cases without unduly constraining the industry."
On Thursday, the government said: "Ministers also set out their clear commitment to ensure that fracking cannot be conducted from wells that are drilled in the surface of National Parks and other protected areas in such a way as to not impact on conventional drilling operations."
"The UK has one of the best track records in the world when it comes to protecting our environment while also developing our industries ? and we?ve brought that experience to bear on the shale gas protections," the government said.
"We need more secure, home grown energy supplies, and shale gas and oil have a vital role to play ? much better that we use what we have at home than relying on supplies from volatile foreign imports," it added.
Importantly, in the announcement Thursday, the government did not mention Sites of Special Scientific Interest, suggesting the surface ban, which has not yet be implemented, may not apply to such sites.
Sites of Special Scientific Interest are protected to "conserve and protect the best of our wildlife, geological and physiographical heritage for the benefit of present and future generations," according to the government. There are over 4,000 sites in England alone, covering around 8% of the country.
The concession will increase the likelihood that fracking will eventually achieve a breakthrough in the UK in order to increase home-grown production to offset declining production rates from the UK's main source of energy in the UK North Sea.
In 2014, UK petroleum production fell 2.3% to 43.5 million tonnes of oil equivalent from 44.5 million tonnes in 2013. UK petroleum production has continuously fallen in recent years - it stood at 69.0 million tonnes in 2010 - as the North Sea sees investments dwindle due to the North Sea becoming less economic.
That was due to oil falling from around USD112 per barrel in July 2014 to a low of around USD45 per barrel in January before a small recovery to around USD57 per barrel on Friday.
Although the government is in support of fracking, it is also trying to boost the North Sea in another move that has been criticised, especially as the government has made numerous anti-renewable decisions since the general election in May.
The government plans to provide GBP1.3 billion worth of support for the industry before 2020 and a new investment allowance will be introduced alongside the reduction in the supplementary tax charge on oil and gas companies from 30% to 20%, which came into effect on January 1.
The rate of Petroleum Revenue Tax paid on older oil and gas fields also will be reduced from 50% to 35%.
These changes are expected to increase oil production by around 15% by 2019 and drive GBP4 billion of new investment over the next five years, the government claims.
Critics contrast these measures supporting UK oil production to recent government decisions on the renewable energy sector.
Since May, the government has announced plans to scrap the Renewable Obligation, which is the primary of three subsidies for onshore wind farms, claiming the country has enough onshore wind in the pipeline. That caused a flurry of companies involved in onshore wind to begin racing to get their projects sanctioned before the grace period ends in 2016.
It also said it would sell a stake in the Green Investment Bank over the coming years, three years after the unit was established in order to invest in long-term energy and infrastructure projects in Britain. That sale is expected to see the government cut its stake in the bank by at least half.
Most recently, in a decision that has had a large financial impact on the renewable industry, Chancellor George Osborne said the government will scrap the "out-dated" climate change levy, which was introduced in 2001 with the aim of improving energy efficiency and increase demand for renewable energy.
That caused renewable companies' shares to fall, most notably Drax Group PLC, which warned earnings would be GBP30 million lower in 2015 and GBP60 million lower in 2016 as a result. Wind operator Infinis Energy also was hit by the changes alongside a band of smaller companies.
The fracking argument affects a number of AIM listed companies, including IGas Energy PLC, which is currently working on a five-year plan to develop shale gas sites in the North West and East Midlands, just south of Cuadrilla's sites, alongside major international partners Total, GDF Suez and INEOS.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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