Fracking industry warns “great economic, environmental and geopolitical cost” from renewed moratorium

The shale gas lobbying organisation has accused the government of dealing in “ideology and fiction” by reinstating the moratorium on fracking.

IGas site at Misson, Nottinghamshire. Photo: Eric Walton

In a response two days after the news, UK Onshore Oil and Gas (UKOOG) said neither the Conservatives nor Labour had what it described as a “credible gas supply plan” for the years to 2050.

A statement from UKOOG said the shale gas industry was “deeply frustrated and disappointed” at the U-turn on Liz Truss’s lifting of the moratorium last month. It said:

“[This] signifies that the UK is closed for business and that ideology, fiction and political weather outcompetes reason, fact and reality.”

The statemented added:

“The re-introduction of this moratorium shows that the Government favours an illogical ‘fingers crossed’ approach to meet our gas needs, an approach that has led us into the ongoing energy crisis.

“… this perverse decision will come at great economic, environmental and geopolitical cost.”

Investment and jobs

UKOOG said shale gas had created a thriving industry in jurisdictions with similar geology to the UK, creating “billions of pounds in investment and tax revenues”:

“The Government has now taken a conscious decision to throw away the chance to see £33 billion of investment into the North of England, creating tens of thousands of well-paid and skilled jobs, tax, community benefits and energy security. Instead, it has decided to hold itself to ransom in the international gas markets.”

The £33 billion figure in UKOOG’s statement is based on a 2014 report it commissioned from Ernst & Young. This said £33bn investment would be needed from 2016-2032 to establish 4,000 shale gas wells. This would generate 6,100 direct roles and 58,400 indirect jobs at the peak, assuming production of more than 28 billion cubic meters per year by the 2020s.

Energy independence

UKOOG’s statement said the reinstatement of the moratorium meant the “country is further away than ever from achieving any form of energy independence”.

The government would have to explain why it had decided to “abandon a world class resource under our feet” and why communities in northern England are “losing out on hundreds of millions in community benefits”, the statement said.

Updated estimates by UKOOG in 2019 suggested that annual shale gas production could peak at almost 1,400 billion cubic feet in the early 2030s, equivalent to the gas use of 35 million homes, which is more than the UK total. This level of production would eliminate the need for gas imports, the organisation said.

A review by Warwick Business School in 2020 concluded that a UK shale gas industry was unlikely to do more than partially compensate for the decline of domestic offshore production. It said exact resource estimates remained uncertain.

Analysis by Carbon Brief’s policy editor for the Guardian suggested fracking would not produce enough gas to meet even 1% of the UK demand for more than three years. After an immediate start, we would have to wait until the late 2020s for more than 5% of UK demand to be met by domestically produced shale gas, the analysis said.

Earlier this year, the former chancellor and business secretary, Kwasi Kwarteng, told the Mail on Sunday it would “take up to a decade to extract sufficient volumes – and it would come at a high cost for communities and our precious countryside. “No amount of shale gas from hundreds of wells dotted across rural England would be enough to lower the European price any time soon”, he said.

There is currently no statutory benefit scheme for people living in shale gas production areas.

Climate change

UKOOG said jurisdictions with successful shale gas industries had “significantly reduced their carbon emissions”. It said the government now favoured “more carbon intensive and less secure imports”.

Last month, more than 100 businesses, including Legal and General, PwC, Ikea, Johnson Matthew, Scottish Power, Sky, Amazon and BNP Paribas, wrote to the then prime minister, Liz Truss, urging her to prioritise energy efficiency, decarbonisation and renewables to speed up the shift from fossil fuels.

The Guardian suggested UK households could cut carbon emissions by up to 6m tonnes, the equivalent of taking nearly 3m cars off UK roads, if they adjusted their boiler settings.


The UKOOG statement did not mention fracking-induced earthquakes, the reason why the moratorium was introduced in November 2019.

A scientific review, commissioned by the government and published last month, concluded that forecasting of both large earthquakes and their magnitude remained a scientific challenge.

A 2.9ML earthquake caused by Cuadrilla’s fracks at Preston New Road in 2019 was felt across the region and prompted nearly 200 reports of damage to property to the British Geological Survey.

Legal action

This morning, a UKOOG member, IGas, said in a statement that it was reserving the right to take legal action to recover losses it had incurred through investments in shale gas developments.

DrillOrDrop asked UKOOG whether it thought the industry had a good case. At the time of writing, the organisation has not responded.

32 replies »

  1. Back in 2015, B.P. p.l.c. signed a £6.5 Billion contract with the Chinese company Huading, which guarantees them up to 1 million tonnes of liquid natural gas per year.
    And as the payments for that gas will be spread over 20 years we have to assume that the gas will be going offshore for 20 years.
    Equally, this statement is laden with hyperbole aimed at us frackitivists, and the government will use this against us
    Here is a link to the relevant article, please read it through and act accordingly.

    • Kenneth

      What is your point? BP can supply china with LNG for 20 years is no surprise as they export it from a number of countries globally. They have constructed LNG trains in a number of countries which enables them to export gas as required. hat they are not doing is exporting gas from UK fields to china.

      Are you thinking that the UK is exporting UK gas to china?

      • They haven’t extracted the gas in the U.K yet, but when they do it belongs to Huading and they are under no obligation to sell it to us.
        In fact I suspect they will sell it all to The E.U. hence the geopolitical aspect of U.K.O.O.G. s ridiculous claim.

        • Kenneth

          They not will be extracting UK gas, liquefying it and selling it to a Chinese power company for power generation in china, and the certainly have not pre sold any particular UK reservoirs gas to do that. As noted at the time

          A full commercial contract is expected to be agreed in mid-2014. BP says it would expect to supply LNG from its global portfolio, using its own LNG tanker fleet and chartered ships delivering gas to a number of terminals in China.
          The deal is to supply LNG from BPs Portfolio of LNG producing assets or elsewhere. It is not from its UK assets it is from other countries as BP does not have LNG facilities in the UK (and why should it, all the gas it produces here goes into the grid). BP is not a big gas producer in the UK.

          Huading run a set of gas fired power plants in China and need the gas for generation. There is no gas anywhere in the world which specifically belongs to Hauding as it is to BP to supply them with it and they will do so from wherever or whoever they can get it from.

          This as BP trades gas as well as producing it.

          I am not sure why you assumed that this gas was from the UK as the Guardian Report (and back up reporting) does not state that is the case. There is also no facility which liquefies UK produced gas for export. The UK is a hub for LNG imports and gasification enabling the gas to be used in the UK and or exported to the EU via the two interconnectors.

            • Kenneth

              Thank you for your reply which was

              B.P. was responsible for polluting the Gulf of Mexico in 2010
              And your obsession with Communist China worries me

              The issue relates to a comment on DOD that a Chinese company would own gas in UK reservoirs that would be exported to china in an agreement with BP. As it turn out, BP will supply the Chinese company from sources other than the UK which does not have the capacity to export UK reservoir LNG.

              [Edited by moderator]

              While the leak in the gulf of Mexico was not welcome, the USA authorities have tightened up their regulatory regime to prevent such an incident happening again, and BP (I am sure) has utilised its global expertise, to help, especially in terms of expertise from the UK. In terms of China, I just note that the deal mention is with a Chinese company. This was not raised by me so any obsession with Communist China needs to be addressed to Kenneth Lloyd. Had it been with a company from a different country which requires LNG (such as the UK, Germany, the Netherlands etc) then I do not see that explaining the fact of the matter would be considered an obsession.

              • I said China is a communist country, which persecutes minorities and uses slave labour in sweatshops for profit. You made it about race why is that?
                Next is the fact that Thatcher sold B.P. to her husband and The Shah of Iran in the early 1980’s, so why do they need to involve the U.K. government in this saga, unless it involves fracking this island?
                Deepwater Horizon caused carnage in The Gulf of Mexico, yet you seem to think this isn’t any concern of mine, why?
                Equally, U.K.O.G. p.l.c. has already been given permission to frack for gas in Surrey, and that site is only 41.1 miles from central London, so what happens if they experience quakes there?
                Sink holes will appear, explosions on unregulated pipelines will occur just as they have in America, so putting the lives of 8 million people at risk is a really good idea isn’t it.
                Cuadrilla is Australian, and when they came to Balcombe in Sussex they came for oil not gas, I don’t see why you think I would happily accept this industrialisation of this island from anyone other than Huading
                And seeing as they will be using myriad gallons of water in the fracking process, where will the population get it’s water supplies from?

                • Kenneth
                  Thanks for the repy. The point I was making was that BP will not be exporting UK reservoir sourced LNG to a power company in china. You raise a number of issues which have no relevance to that point.

                • Kenneth

                  China can indeed sell its gas to whoever they like, as they can re their coal, rare earth minerals and so forth plus whatever they decide to manufacture.

                  The Chinese National Oil Corporation is a major player in North Sea oil and gas and globally, and as such they can sell whatever they produce and to their % ownerhip to whoever they like. It is a Chinese State Owned Asset.

                  Here is a link to their web page.


      • If the gas that BP is going to sell to Hualing isn’t going to be supplied from Britain, in what way is it part of a British trade deal?

        • Alex The Guardian headline was that the trumpeted 40 Billion in deals was under scrutiny. The report does not say the gas is UK gas and the announcement by BP and various energy reports just note is as a deal between bp and the Chinese company to provide LNG from its LNG sites (or elsewhere) and using its ships (but others if required). So why anyone would think its a UK deal I am not sure as its not. As noted its just an international company selling foreign gas to another foreign company.

          • And that just underlines that no matter where it is produced or by whom, the price we pay is determined by the global market. So, we’d be much better off switching to renewables.

          • Take the gas out of the equation and add oil.
            Back in 2013, the government announced it’s 30 year ( with the option of an extension period of up to 10 years should they need it) plan. That 10 years option expires in 2023, yet you still think this is for the benefit of the U.K. population.
            Equally, hydraulic fracturing consumes masses of water, so where will they source that water?
            America plus oil = disaster

            • Kenneth Thank you for your reply.

              Which was …..

              Take the gas out of the equation and add oil.
              Back in 2013, the government announced it’s 30 year ( with the option of an extension period of up to 10 years should they need it) plan. That 10 years option expires in 2023, yet you still think this is for the benefit of the U.K. population.
              Equally, hydraulic fracturing consumes masses of water, so where will they source that water?
              America plus oil = disaster

              My reply

              My point was that BP would source LNG globally to supply a Chinese power company, a this would not be from the UK.
              I am not sure what your point it about oil or hydraulic fracturing. BP has not entered into an agreement with any Chinese power company to supply them with UK oil, nor are they fracking in the UK.
              That fracking in the UK will require large amounts of water is neither here nor there to the points I have raised.

              It would be helpful if you are more specific as to your concerns in relation to oil, fracking and water and if they link to teh deal by bp to supply LNG. I am unaware of any deal between bp and china to supply oil to China in a 30 year deal so details of that would be good.

                • Kenneth
                  Thank you for your question – why am I obsessed with china
                  You said …….
                  Back in 2015, B.P. p.l.c. signed a £6.5 Billion contract with the Chinese company Huading, which guarantees them up to 1 million tonnes of liquid natural gas per year.

                  The discussion has been about where the gas comes from and goes to. Hence no obsession, tho had Huading been a Vietnamese company, say, would I be accused of obsessing about vietnam?

      • Paul
        Indeed. There are certainly a lot of people who have little understanding of how the UK energy market runs and what is produced where. I am sure the press do not help as there has been a lot of reporting of gas price spikes, but not of the recent less than zero price for gas recently as the market responded to the high prices available for LNG and sent ships of it to Europe and the UK to benefit from that, leaving others to share the pain globally. Now that they have all arrived, there is a glut. But there is a silver lining, Rough can replace its buffer gas and then fill up on cheap gas ready to sell it at a higher price later. To think that UK energy storage is a collection of LNG tankers waiting to unload is an interesting thought.

  2. UK government, ready to be taken to court for misleading onshore oil and gas firms by offering production licenses, I hope the local councils are ready with their compensation to these firms, hopefully the locals will dig deep in to their pockets too… as the potential to offset the importation of gas from Australia and America can be achieved by stimulating gas from England!
    But enjoying the socialist Champagne, without having (the back breaking labour), of picking the required grapes comes to mind!
    Oh the irony of driving 3 litre diesel BMW’s! Rulebritannia the neighbours will take the brunt!

  3. They always threaten when things don’t go their way. Green energy is the future and billions of investment, new infrastructure and thousands of jobs will be created but the big difference is, green energy is the future and will help preserve the planet.

  4. The UK licence holders, who pay a fee to the UK Government & commit to drilling & testing wells, definitely have a good case to sue the government. If the government then bans the exploration & testing that was agreed, the the government has defaulted. It reasonable that companies are compensated- they have a case.

    • The licence fee payments were suspended or refunded during the moratorium. And given they are exploration licences there were never any guarantees. In Poland and Denmark fracking failed. And both moratoriums were put in place due to safety issues. The first because an earthquake damaged the well and the second we are all familiar with the details.

    • As detailed in the moratorium, the onus is on the industry to come up with categorical scientific evidence to prove that seismicity can be predicted and controlled. It can’t. There is simply a presumption against Ministerial consent for full scale fracking, i.e. at volumes which have yet to be achieved in the UK. There is nothing in that to prevent them from drilling exploratory wells or applying to carry out smaller scale test fracks. If the industry’s managerial ability matched its braggadocio, they would have no qualms about going ahead with such programs. Ineos had planning permissions for drilling at Marsh Lane and Harthill; IGas for a second, horizontal well at Misson yet the rig was removed from site 5 months prior to the moratorium being implemented. Now teddy has been thrown out of the cot, and an industry that has been mollycoddled for a decade is conversely blaming the government for not granting opportunities already squandered.

    • I expect that de iure you are correct, Nick. Sad, though, and poses an interesting ethical question. Is A entitled to proceed with harmful actions because government has permitted it on reception of a fee? Think Zyklon B. Think development of atomic bomb. Where does individual responsibility start and finish?

  5. Hi Nick,
    In North-West England, with a handful of honourable exceptions, most of the PEDL Licenses were never fulfilled by the PEDL License Holders who failed to do more than a token amount of seismic lines if any at all, and failed to fulfill any commitment to drill an exploration well. A considerable number of PEDL license holders backpeddled on their PEDL obligations. Those need to compensate the government or tying up PEDLS and not getting on with exploration in a timely manner. cheers, Robin. Grayson MSc FGS adviser to Greater Manchester Liberal Democrats

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