Business is booming.

Fracking groups fear Truss reforms fall short of industry’s revival

Fracking companies have warned that the lifting of a moratorium on Liz Truss’ controversial method of shale gas extraction will not revive industry in England without a swift reform of seismicity planning and regulations.

The new British Prime Minister on Thursday ended a fracking ban in England in effect since 2019, as part of wide-ranging reforms to strengthen Britain’s domestic energy supply and tackle rising bills for households and businesses.

Truss claimed the decision could “flow gas in six months”, although she acknowledged that the resumption of fracking in England would also depend on “what there is local support for”.

While fracking companies, including Australia’s Cuadrilla and Britain’s largest privately-owned company, Ineos, have welcomed the turnaround, industry insiders warned that other rules would also need to be addressed if the government is to ramp up production.

Ross Glover, director of development at Aim-listed fracking company IGas Energy, told the Financial Times that streamlining planning and permitting rules would be crucial.

“Developing any kind of infrastructure” in the UK represents a lengthy planning and permitting process, Glover argued. “We’re not saying we should remove all regulations, but we’re saying we should have a good discussion about how we can speed up the projects.”

IGas shares are up more than 650 percent this year, partly as a result of investors’ expectations of the fracking moratorium being rolled back.

Shale gas companies have also long pushed for a revision of seismic regulation, known as the “traffic light system”that require an immediate stop of work if fracking causes earth tremors with a force of 0.5 or more.

Charles McAllister, policy director at UKOOG, a trade organization that represents frackers, warned that if the industry “does not receive the comprehensive policy support it needs, some companies may not make progress” with their shale projects.

UKOOG calls for subjecting the fracking industry to the same surface vibration standards that apply to other industries.

“We ask to be treated fairly in terms of . . . earthquake regulations. We want to be treated in line with construction, geothermal, quarrying and [the] coal mining industry,” said McAllister. “Our view is that the industry has been demonized in the context of broader regulations on seismicity and surface vibration.”

Brian Mullin, head of planning consultancy Maroons Planning, suggested that community consent may also need to be removed from fracking consent processes “as this arguably amounts to a moratorium on delivery”.

Ineos, who has offered to drill a shale gas test well to prove to the government that “we can do” [fracking] safe and without harm to the environment”, has increased the prospect of payments to local communities to receive support.

“We have pledged to reinvest the first 6 percent of the gas’s value back into the local communities,” Ineos director Tom Crotty said on Thursday.

UK map showing the location of the Carboniferous Bowland-Hodder and Jurasic Weald Basin study area

Hydraulic fracturing, or fracking, involves pumping water, sand and chemicals under high pressure underground to release gas from rock formations. It has transformed the US energy sector, but some leading academics have long argued that British geology is not suited to the process, even if community consent could be achieved in such a densely populated country.

“[The] The UK’s geological history is complicated,” said Stuart Haszeldine, professor at the School of Geosciences at the University of Edinburgh.

Truss’ energy reforms are also aimed at unleashing a new wave of exploration among UK North Sea companies, although skeptics argue that any increase in production in the region is likely to have minimal impact on skyrocketing oil and gas prices.

Truss will give the green light to the first oil and gas licensing round since 2019-20 as the government seeks to halt declines in UK oil and gas production.

The UK’s annual oil and gas production in the North Sea fell by 17 percent last year. While gas production has improved 27 percent year over year in the first half of 2022, energy companies have warned that the turnaround will be “short-lived” unless another wave of investment comes.

The new permits are for mature areas of the UK’s North Sea, meaning companies that successfully drill new wells can take advantage of existing infrastructure rather than installing expensive new pipelines.

Britain’s oil and gas regulator, the North Sea Transition Authority, will prioritize an initial package of accelerated permits that include existing discoveries, which companies could potentially exploit in less than a year, although the remaining permits could take anywhere from five to ten years. produce any production.

Officials are also trying to speed up projects that are already in the development phase so that they can get to production faster.

In particular, the government wants Equinor to move its Rosebank oil and gas field 130 kilometers off the coast of the Shetland Islands, according to people familiar with officials’ thinking.

Rosebank is one of the largest in a pipeline of projects to be approved by the government and the company in 2022 and 2023. Another of the largest, Shell’s Jackdaw gas plan, was given the green light in June.

Equinor has so far said it will make a final investment decision on Rosebank in 2023.

Yvonne Telford, senior analyst for North West Europe at the consultancy Westwood Global Energy Group, said exploration and production companies had “the appetite” to keep up with developments.

But she warned that “production volumes from the larger developments such as Shell’s Jackdaw and Equinor’s Rosebank fields will not be seen until 2026 and 2027”.