Energy News – 27/06/2017
A deal with the DUP may be yet to materialise, but that hasn’t stopped the Queen’s speech going ahead, wit...Read More
The Government will have new powers to rule on shale gas permits. Plans for shale gas firm Cuadrilla Resources in the northwest may now move forward despite local planning decisions.
The business gas boom driven by shale gas (also known as fracking) – most notably in the US – has yet to take off in the UK despite indications of significant shale gas reserves in some areas.
Despite the Government’s preference for speedy exploitation of shale gas, local opposition has been fierce, likely a factor in local councils’ decision to deny planning permission for exploration, most recently in Lancashire.
Output from the ageing North Sea oil and gas is dwindling, leaving a potential shortfall in business energy that needs to be made up. Subsidies for renewable energy are steadily being removed – due in part to a Tory distaste for on-shore wind turbines – so the substitute of choice has become shale gas (see our guide to fracking).
Cuadrilla, the company looking to exploit shale gas in Lancashire, has appealed and will argue again for shale exploration at a three-week public inquiry beginning in February. But most significant is the announcement that the central Government, in the form of Local Government Minister Greg Clark, will determine Cuadrilla’s appeal.
The decision to essentially remove Lancashire County Council from the process could have wide ramifications. The perceptions of going against local opinion could work against the Government’s oft-stated goal of devolution of decisions, especially in a region. But the time needed to move to the business of gas extraction could be significantly shortened.
How would this impact business gas prices?
Widespread fracking could offer a decent supply of business gas. But the benefits would likely lie more in security of supply than in better business gas rates – fracking elsewhere in world (notably the US) is already well established and less bound by strict regulation. And ‘traditional’ gas suppliers, such as Qatar and Russia, can supply business gas at a price that is likely to be below the cost of UK sourced shale gas, especially since the recent ‘gas glut’.
Those expecting a noticeable reduction in price may be sorely disappointed, both by the long wait for the gas business to actually arrive and the modest scale of price falls.
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