UK Conservative Government Vows To Support Shale Gas, Fracking

LONDON (Alliance News) - The Conservative party has vowed to support the shale gas and fracking industry in the UK, especially in the north of England in the wake of the party's election victory last Friday, despite public and political opposition as the party tries to improve the UK energy industry.

The Conservatives managed to secure an unexpected overall majority in the general election last week which will allow the party to fully implement its manifesto, which has pledged support to the shale industry to try and boost falling UK production and lower foreign energy dependency.

"We will continue to support the safe development of shale gas, and ensure that local communities share the proceeds through generous community benefit packages," said the Conservatives in their 2015 manifesto. "We will create a Sovereign Wealth Fund for the North of England, so that the shale gas resources of the North are used to invest in the future of the North."

The overall majority won by the Conservatives is significant to the shale gas industry. The party has pledged support in the past but in the former coalition government, members of the Liberal Democrats such as the then UK Secretary of State for Energy and Climate Change Ed Davey were cautious about fracking.

In March, Davey said there was no evidence that fracking in the UK would reduce prices or transform the economy and described himself as a "cautious guy" when it came to fracking, placing himself as neither for or against the idea but recognising the huge importance of gas for energy in the future.

Since the break up of the coalition, Davey has been replaced by Conservative politician Amber Rudd as the new Energy and Climate Change Secretary.

Energy was not a big topic discussed in the general election, but the Conservatives outlined plans to lower the UK's dependency on foreign energy and to save production from the North Sea. Alongside this, the Conservatives look to build their "northern powerhouse" through the shale potential in the region.

Labour did not mention shale gas or fracking in its 2015 manifesto.

"Our tax cuts (between 2010 to 2015) have encouraged record levels of investment in existing North Sea gas, and the birth of a new industry, shale gas, which could create many thousands of jobs," said the party in its 2015 manifesto.

The Conservatives said it would make a "significant expansion" in new nuclear and gas whilst backing "good-value" green energy and pushing for more new investment in UK energy sources, claiming it had a "long term plan to keep the lights on".

In January, British MPs rejected a bid to suspend shale gas fracking in the UK, but agreed that companies need to meet 13 new conditions proposed by an anti-fracking report released by the Environmental Audit Committee before extraction can begin.

The report by the Environmental Audit Committee in January said large scale fracking in the UK is not likely to happen for the next 10 to 15 years and should not be encouraged by the UK government as it is inconsistent with the country's climate change obligations and will struggle to compete with the growing renewable energy sector. The committee, which was appointed by the House of Commons, was made up of a mixture of MPs from the Conservatives, Labour, Liberal Democrats and the Green party.

That report attacked Conservative Chancellor George Osborne's Autumn Statement in 2014 which stated: "The government is taking steps to ensure that the UK leads the way with shale gas regulation."

The report also criticised the government's plans to financially support fracking in the Autumn Statement, including setting up a long term investment fund from tax revenues of shale gas, spending GBP5 million on providing independent evidence to the public about fracking and spending GBP31 million to create sub-surface research test centres.

The report came to the conclusion that a moratorium, or a delay and suspension of law, on the extraction of unconventional gas through fracking was needed to avoid inconsistencies with the UK's climate change obligations and to allow further research to be conducted to understand the environmental risks of fracking.

But it seems, according to the Conservative manifesto, that this advice has not been taken into account.

IGas PLC is currently working on a five-year plan to develop shale gas sites in the North West and East Midlands, alongside major international partners Total, GDF Suez and INEOS. Following the election results on Friday, IGas shares rose by around 16.8%.

The companies involved in the Horse Hill project in Surrey, England, which was subject to a flurry of media attention in April after incorrect claims that there was over 100.0 billion barrels of oil in place, was also thought to need fracking to get the most oil out of the site.

UK Oil and gas Investments PLC, which originally announced the oil in place of 158.0 million barrels per square mile of oil in place over a 653 feet aggregate net pay section, has repeatedly denied the 100.0 billion figure and said more work is needed to define the amount of oil at the site, but has also denied that fracking would be necessary.

The other companies involved in the Horse Hill project are Doreimus PLC, Stellar Resources PLC, Solo Oil PLC, Alba Mineral Resources PLC and Evocutis PLC.

Non-listed Cuadrilla is a company that has spearheaded fracking in the UK over the last couple of years, pushing to get regulatory approval for fracking in Lancashire. The Lancashire County Council has rejected the company's plans to conduct seismic work in the area but is still debating whether or not to give permission to Cuadrilla to frack two sites in the county.

In 2014, UK petroleum production fell 2.3% year on year to 43.5 million tonnes of oil equivalent from 44.5 million tonnes in 2013. UK petroleum production has continuously fallen for years, falling from 69.0 million tonnes in 2010 as the North Sea sees investments dwindle.

The Conservative and Liberal Democrat coalition had attempted to quell reduced investment and issues in the North Sea by pledging four measures that would offer GBP1.3 billion of support to the UK oil and gas industry, primarily in the UK North Sea which would lead to production being boosted by 15% before the end of 2020.

Earlier in May prior to the election, the UK Department of Energy and Climate Change claimed the fall in UK energy production in 2014 was the smallest in 12 years, but also said UK net import dependency from other countries fell by around 8%, whilst the UK's dependency on fossil fuels had reached a "record low".

By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance

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