22nd June 2014
Transcripts of the last week of parliamentary debates and questions on fracking and shale gas and oil
- Michael Fallon denies any cases of water contamination from fracking
- Value of shale gas to the economy
- Investment in the shale gas industry
- The Lords debate the Infrastructure Bill proposals to allow drilling without landowers’ consent
- Learning from the American experience
With thanks to theyworkforyou.com
Debate on shale gas in the House of Commons
Priti Patel (Witham, Conservative)
What recent estimate has he [the Energy Minister] made of the value to the UK economy of the shale gas sector.
Michael Fallon (The Minister of State, Department of Energy and Climate Change; Sevenoaks, Conservative)
The Government are promoting responsible shale development for greater energy security, to deliver jobs and growth and to support investment. The recent EY report estimates that there could be £33 billion-worth of spend on shale gas exploration creating about 64,000 jobs, including over £20 billion on hydraulic fracturing and £8 billion on drilling and completion of the wells. That is why we are supporting exploration to understand just how much of this potential can be realised.
I thank the Minister for his response. Given the enormous projected value of the shale gas sector and the opportunity shale provides for energy independence, do the Government have plans to support more investment in shale gas infrastructure?
Yes, we have set out the new fiscal regime that will apply to shale exploration. We have a system of robust regulation in place. There are some dozen companies now exploring, and I shall shortly be inviting applications for new onshore licences under the 14th licensing round, which will afford more opportunities for new companies to enter this market, and I know colleagues across the House will want to champion applications for licences in their area.
Tom Greatrex (Shadow Energy Minister; Rutherglen and Hamilton West, Labour)
The Minister in his reply referred to robust regulation, and he is right that robust regulation is important, as is comprehensive monitoring of those regulations to meet the higher public acceptability test for this technology. Given that groundwater can contain methane naturally, will the Minister explain why it is that, more than two and half years after the issue being raised with his predecessors, it is still the case that the regulations do not include the baseline monitoring of methane in groundwater, especially as there are concerns about such contamination in the US and elsewhere? Surely it is important that we have that as part of the regulation to ensure confidence in the regulatory regime for shale gas.
There are no examples from the United States of hydraulic fracturing contaminating groundwater because, as the hon. Gentleman will appreciate, the fracturing takes place very much deeper than any groundwater levels. I am happy to look at the specific point that he mentions about baseline monitoring.
[This point is disputed by environmental organisations]
Second Reading of the Infrastructure Bill, House of Lords
We still do not have the clauses related to fracking, and consultations on that issue and important issues relating to the Land Registry and community electricity are still incomplete—some have not even commenced.
The noble Baroness said, if I noted it down correctly, that this legislation is “still being developed”. If I may say so, that is one of the most remarkable statements I have heard from a Minister while introducing a Bill, which the House would expect to be fully developed at the point of introduction. Instead, we have a major heading, “Fracking”, and a long spiel from the noble Baroness about how this will be vital for the future energy needs of the country, but the following pages are blank. With respect, that is no way to treat Parliament or your Lordships. In the vernacular, the Government are legislating on the hoof—or perhaps I should say on the future hoof, as we do not even know what hoof they are going to be legislating on hereafter.
If the intention is to put shale gas production in line with the coal industry, water and sewerage, all of which have access to underground land, then we welcome this in principle. I endorse the potential gains that the noble Baroness mentioned as being well worth securing if it is possible to develop shale gas in this way. But communities need to be reassured about impacts on the environment, including methane levels, contamination of the water table and seismic shifts.
However, the big and immediate issue on energy, whatever the potential long-term gains from fracking, is the need for new power stations. According to a recent survey by the CBI and KPMG, two-thirds of British companies fear that UK infrastructure will deteriorate over the next five years and their most critical concern is about energy. Britain’s supply of electricity is dangerously close to demand. The safety margin of capacity has been shrinking and now stands well below the 20% necessary to ensure against shocks. Thanks to its antiquity and the demands of environmental legislation, roughly one-fifth of existing generating capacity will drop out of the system over the next decade.
Lord Teverson (Liberal Democrat)
We need to change the trespass legislation to bring it in line with many other areas. I am tantalised by the fact that there is such a positive reaction to geothermal energy, which is also affected by this change in legislation. In the Queen’s Speech debate, I started to ask what else the Government can do to help us kick-start the technology for geothermal energy and ensure there is that legal change. The Minister quite rightly pointed out that it has great potential for us as a country. I agree that fracking is important for our energy security in the medium term in terms of gas provision. However, in moving towards decarbonisation, gas can be only a transition energy source but it can be an important part of that formula, given the major decline in North Sea oil production.
Lord Cameron of Dillington (Cross-bench)
On the fracking clauses, I was not alone in believing that we would see those clauses in this Bill. Noble Lords will remember that I mentioned this in my speech on the second day of the Queen’s Speech debate. In a somewhat jocular account of the Government’s legislative programme, the House Magazine said that this was going to be called the “drill, baby, drill” Bill. Well, it will be. I am grateful to my noble friend for the letter that she sent me yesterday which said that the House will have an opportunity to consider those clauses once the consultation was complete and the Government could be sure that they would have sufficient support for them. That is one way of doing it. We want to get ahead with this—that is why the Bill has been introduced—and it is perfectly possible, with the notice that has been given, to have the clauses dealt with as they were.
Lord Hodgson of Astley Abbots (Conservative)
fracking has not so far appeared in the Bill. However, my noble friend on the Front Bench has trailed it extensively so I take this opportunity to urge the Government, as they consider the whole issue of fracking, to consider at the same time the possibility of establishing a sovereign wealth fund for the UK. Noble Lords will be familiar with the concept of such a fund, whereby a country, instead of spending all the proceeds from the exploitation of a precious and finite resource on immediate consumption, puts some proportion aside to benefit future generations. One could argue that this is akin to an everlasting pension fund for UK plc. The noble Lords, Lord Oxburgh and Lord Cameron of Dillington, were fringing on this when they talked about local participation in individual schemes.
The Earl of Lytton (Crossbencher)
On fracking, I will only say this as a Sussex resident: the typical yield decline in the output from a fracking well is phenomenally steep. For all the theoretical reserves that exist, typically about 10% or less may be recoverable—maybe that will improve. I do not believe that aquifers are an issue; they operate much nearer the surface than the shale gas and shale oil reserves. However, at the surface one gets roads, tanks, pipes, vehicle tracks and the vehicles themselves that are all associated with this, even after the initial well drillers have all packed up and gone home. These may be acceptable, but I think we need a better understanding of cost-benefit, and some of that goes for much of the rest of the Bill.
Lord Hunt of Chesterton (Labour)
Will this [indigenous oil and gas] be a possible source of energy for the UK via fracking? It is important to consider all the environmental costs. It is unknown by many in Britain, as we have been told here by visiting American politicians, that in the energy Bill proposed by President Bush he explicitly said that the costs of water and water clean-up would not be ascribed to the energy. It is therefore really important that all the environmental costs should be ascribed to the energy benefits or costs of fracking. It would be useful to have that point clearly made. The assumption in all the discussions is that you put a pipe down in the ground and oil or gas will come up out of the pipe. But the point about the experience of America is that, once you start really forcing the structure of the ground well below, you can get a release of gas coming up through other cracks, and some of these—as you can see when you look at the photographs from North Dakota—are very serious indeed. You can see flames popping up in between the nodding donkey gas extractors. There are still significant features of the chemistry of shale that need to be understood, when the shale is there in the presence of water. I visited a chemistry lab at the University of Leicester where they are studying this, and they pointed out that there were still important research questions to be assessed.
it is very important that if communities are to be involved in fracking, as has been suggested—I think that the Minister suggested that—they must also contribute to the costs. As others have emphasised, these costs include roadways and destruction of the local bio-environment, as well as the costs of the water supply and clean-up and recycling. So it is not just a free lunch. There will be quite considerable investment in all of that—but I believe that if the community is involved the right answer might be obtained.
Lord Davies of Oldham (Labour)
We appreciate that the consultation that the Government are carrying out on this does not conclude until August and we are quite content to wait to see the government proposals as a consequence of that consultation. However, it indicates what a rag bag of a Bill this is that government proposals about one of its more important features are scarcely before the House today.
Baroness Kramer (Liberal Democrat)
We recognise that the oil and gas industry in the UK is of national importance and will be a vital part of the energy mix. While investment levels in the UK continental shelf are rising and near-term prospects are strong, there are new challenges for exploration and production. The environment is, frankly, very different from the circumstances when production peaked approximately 15 years ago. We will be responding very shortly to the Wood review.
Written questions to the Secretary of State for Energy and Climate Change
Gregory Campbell (East Londonderry, DUP)
To ask the Secretary of State for Energy and Climate Change whether he has had any discussions with his counterpart in the United States Department of Energy as to any change in the estimated levels of recoverable shale gas reserves which has occurred in the US since fracking began; what effect, if any, this might have on potential fracking in the UK; and how the emerging lessons of shale gas extraction in the US and elsewhere are applied in calculating and updating estimates of recoverable reserves in the UK.
Ministers in the Department meet their ministerial counterparts from the Department of Energy in the United States of America on a number of occasions and have wide-ranging discussions.
All meetings between external organisations and Ministers in the Department of Energy and Climate Change are published on a quarterly basis on the Department’s website and are available for download at this link: http://www.decc.gov.uk/en/content/cms/accesstoinform/registers/registers.aspx
As has been the case with successive Administrations, it is not the Government’s practice to provide details of all such meetings