Next UK fracer shrugs off shutdown risk seeing need for gas

By Jeremy Hodges on 10/10/2018

LONDON (Bloomberg) -- The head of the company set to drill Britain’s first fracing well in a decade shrugs off the risk that protesters and government’s main opposition will shut down his project before it can start.

Francis Egan, the CEO of Cuadrilla Resources, is poised to begin hydraulic fracturing within days at a well in northwest England. No matter what’s decided by courts or politicians weighing the issues, Egan said the UK’s growing needs for natural gas will remain a prominent factor in the debate.

While the ruling Conservative Party has backed fracing, the Labour opposition said it will ban it if it takes power. And Labour’s ascent is increasingly possible given the fragile majority the government is maintaining ahead of knife-edge votes planned on Britain’s plan to leave the European Union.

“Brexit or no Brexit, having reasonable homegrown production of your energy is a good thing,” Egan said. “Governments come, and governments go. But energy demand isn’t going anywhere and gas supply is continuing to decrease. Fundamentally it will be a political choice whether you want to source your gas from Lancashire or Russia.”

Earthquakes

The UK shale industry was stopped in its tracks in 2011 after fracing by Cuadrilla caused minor earthquakes at its northwest England site. The drilling is a magnet for angry protests amid claims that it will irreparably harm the environment and keep the nation wedded to polluting fossil fuels. Proponents say that Britain’s untapped shale gas reserves could make the country’s domestic energy supply secure for years to come.

“What’s often either forgotten or deliberately sidelined is that we will be using gas,” Egan said. “There is no scenario that any credible energy forecaster that says we won’t be using gas for many decades to come.”

Cuadrilla has permission to drill and frac four wells at its Lancashire site. It will begin fracing the first of two horizontal shale gas exploration wells by Friday at the earliest. The company will then take three months to extract the first flow of gas before testing its viability. It’s unlikely the site will be commercially productive until 2021, Egan said.

Fracing involves pumping fluid and sand-like particles into wells under high pressure that breaks apart underground rock formations freeing petroleum deposits trapped in difficult to reach reservoirs. There have been aspirations for the UK to emulate the U.S. shale boom, but the industry remains small and unproductive.

It’s one of the few technologies that could slow or even reverse the sharp declines in oil and gas production from the North Sea as conventional deposits are pumped dry. Britain prospered in the 1980s and 1990s with wealth tapped by the oil industry, but income has shrunk since production peaked.

Natural gas is also in demand. Britain has been working to limit fossil fuel emissions to rein in climate change, re-positioning its energy sources away from coal plants and toward cleaner sources such as gas, which currently makes up about 42% of the country’s energy mix.

"It is a fossil fuel, but it has the lowest emissions of fossil fuels and our view is it would be better to develop this here where you can regulate and control it than just close your eyes and pretend nothing is happening as you ship it across Europe from Russia," Egan said.

Protesters are still making themselves heard, permanently stationed outside the Lancashire site where three men were arrested and later jailed for as long as 16 months for public nuisance offenses.

Lawmakers aren’t backing off either - Labour energy spokeswoman Rebecca Long-Bailey has pledged to ban fracing should her party win an election. There’s disquiet about the practice in the Conservative ranks over plans to streamline the application process.

In a last gasp attempt to block Cuadrilla from fracing, a protester filed for an injunction at the UK High Court. Cuadrilla can’t do a thing until a judge decides on Thursday whether the legal challenge has any merit.

“The judicial system is clearly functioning well in the UK and there is no shortage of avenues for people to take their grievances to a court,” Egan said. “We haven’t quite got to the European court yet but who knows."

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