Fracking Week in Westminster (31st March – 4th April)

7th April 2014

Transcripts of last week’s parliamentary questions and statements on:

  • Tax incentives for shale gas investment
  • Leaks from abandoned wells
  • Impact of shale gas on energy prices
  • Energy efficiency
  • Energy self-sufficiency
  • Permitting procedures for deep drilling

With thanks to

Debate on the Finance Bill
Statement by Danny Alexander, Financial Secretary to the Treasury
The Bill also includes a package of measures to support oil and gas exploration in the UK continental shelf; it introduces a new allowance to support early-stage investment in shale gas; and it reduces the tax on beer by a penny a pint and freezes the duty on spirits, rightly offering particular support to the Scotch whisky industry, as Scotch is one of this country’s most successful exports. Those measures will support not only our pubs, but brewers and so on. All those measures, taken together, cut the costs for business, support innovation, boost exports and show that this Bill will help British businesses to help the British economy grow.

House of Commons Questions on fossil fuels
Question by Greg Knight (East Yorkshire, Conservative)
To ask the Secretary of State for Energy and Climate Change what steps he plans to take to prevent leaks and improve monitoring at existing (a) in use and (b) extinct or abandoned onshore oil and gas sites.

Answer from Michael Fallon, Energy Minister
The construction and use of oil and gas wells in the UK is subject to stringent regulation by the HSE to ensure the integrity of the well in all phases of its life. Recognised industry design and construction processes must be followed, and the operator’s work and plans are subject to scrutiny by an independent well examiner as well as the HSE. Monitoring and inspections are be carried out by the Environment Agency, the HSE and the independent well examiner as appropriate. Oil and gas wells which have no further usefulness are plugged and capped to ensure the retention of any fluids in the well.

We seek to improve this robust regulatory system further wherever practicable. Further consideration is being given to control and monitoring of methane emissions in the light of the recommendations of the report by Prof David Mackay and Dr Tim Stone on potential greenhouse gas emissions associated with shale gas production and use, published in September 2013

House of Commons Opposition day debate on energy price freeze
Question by Paul Flynn (Newport West, Labour)
The right hon. Gentleman talked about shifts in the wholesale price. What effect does he think imported and home-produced shale gas will have on prices in the United Kingdom in the next five and 10 years?

Answer by Edward Davey, Energy Secretary
I think it will have hardly any effect, if any effect at all. The case for shale gas is to do with energy security, as I have made clear many times.

Comment by Paul Flynn (Newport West, Labour)
The elephant in the room in this debate is the future of shale gas. TheSecretary of Statetold me that it would make no difference. However, the likelihood is that we will repeat the experience of America when it starts exporting vast quantities of shale gas. We will not see a price freeze; we will see a price collapse. America has been jerked out of its economic crisis by abundant cheap energy becoming available for industry, which has brought prices down and made it far more competitive. That will happen here. There is no purpose in closing our minds and pretending that it will not, because it will affect the whole market.

[Mr Flynn goes on to say that Britain has agreed to buy energy from EDF’s new nuclear power station at Hinkley Point at £92/megawatt hour. He says Ineos, which plans to buy shale gas from the US, is currently buying electricity from EDF at £37/megawatt-hour.]

Comment by Phillip Lee (Bracknell, Conservative)
We should concentrate on energy efficiency because the reality is that that is all we can do. Our stocks of gas are declining—they may be mitigated somewhat by shale, but let us not hold our breath or think it will be a significant bounty. This country needs to be able to deliver economic growth in the future with less energy.

Comment by Christopher Pincher (Tamworth, Conservative)
She [shadow Energy Secretary, Caroline Flint, talked about the need for greater energy security, so why have we not invested in more nuclear stations or in home-grown shale gas so that we do not rely so much on international hydrocarbon prices and imported gas, which is increasing energy prices for so many of our customers? It is therefore no small surprise that we are greeting her current argument for an energy price freeze with a degree of scepticism.

House of Lords debate on Ukraine gas supplies
Question by Lord Ezra (Liberal Democrat)
Should we not, as a matter of long-term policy, aim to reduce our dependence on imported gas and to regain energy self-sufficiency, which stood us in good stead over so many years?

Answer from Baroness Verma (Conservative)
My Lords, my noble friend is absolutely right to raise this very important issue, and it is right that the Government are encouraging investment in domestic gas production to help to reduce our reliance on imports. We are also taking steps to support UK shale gas exploration by accepting the recommendations of Sir Ian Wood’s report following his recent review of how to maximise recovery of oil and gas in the UK continental shelf. However, the real answer must be to ensure diversity of supply so that we can ensure affordable and cleaner energy.

Question by Lord Lawson of Blaby (Conservative)
My Lords, I am delighted to hear my noble friend say that we need to get ahead with the exploitation of our shale gas resources—their exploration, appraisal and development —which, as the Geological Society pointed out, we have in abundance. However, is it not time to follow up words with deeds, to sort out our immensely cumbersome and unnecessarily complicated regulatory system and to stop the present Secretary of State for Energy dragging his feet, as, I regret to say, he is doing at present?

Answer from Baroness Verma (Conservative)
My Lords, I am, as always, grateful for my noble friend’s intervention, because it enables me to lay out exactly what the department is doing. We are trying to streamline the planning processes so that we do not have unnecessary hurdles in the way. The Government have established the Office of Unconventional Gas and Oil to help to develop the shale gas industry in the UK. My noble friend will be aware of the new tax allowance recently announced by the Treasury, which will reduce the tax on a portion of a company’s production income from 62% to 30% at current rates. However, as with all projects, including shale, it must be subject to rigorous scrutiny through the planning system and the regulators and there must be proper engagement with local communities.

Question by Baroness Worthington (Labour)
My Lords, I am glad to hear that the Minister now appears to accept that linking gas demand with Ukraine is not far-fetched but a very important issue. In reality, we are more reliant on coal from Russia than we are on gas: 70% of our coal is now imported, 40% of that from Russia. Will the Minister confirm that we must maintain every effort to support home-grown energy, including wind power, to reduce our dependency on both expensive gas and imported coal—which, I might add, would improve our air quality substantially?

Answer from Baroness Verma (Conservative)
As the noble Baroness is aware, the Government are encouraging a diversity of supply. I am sure that she will join me in congratulating Siemens on investing in offshore wind in Hull, generating 1,000 jobs.

Question by Lord Barnett (Labour)
My Lords, if there is disagreement within the coalition, that is perfectly understandable. However, shale is very important internationally and nationally. In those circumstances, would it not be sensible to bring it to Parliament to decide?

Answer from Baroness Verma (Conservative)
My Lords, there is no division on shale. There was a decision taken by the coalition Government to support a diverse range of energy supply, so I reassure the noble Lord that there is no dissent in government on this issue.

3rd April
Questions on Energy and Climate Change
Question from Anne McIntosh (Thirsk and Malton, Conservative)
What are the procedures for a fracking permit to be issued for deep-well shale gas drilling, and what opportunities will those living locally have to express their concerns about the process in the planning application?

Answer from Michael Fallon, Energy Minister
The process is that applicants must first have a licence and then receive planning permission from the local planning authority. They then need authorisation from the Health and Safety Executive for the method of fracking, permits from the Environment Agency concerning the protection of water and the environment, and, finally, a consent from the Department. The key to that process is that the major decision within it is local. It is a matter for the local planning authority to decide whether the application, on its merits, is appropriate for that particular site.

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