Page 5 - Euroil Week 42 2019

EurOil COMMENTARY EurOil
associated with the government’s failed attempt to kick-start a domestic shale gas industry.
“Fracking has already placed nancial pres- sures on local bodies, including local authori- ties and police forces, and other costs have been borne by a range of government departments and regulators,” the report said. “ e full costs of supporting fracking to date are not known by the Department [for Business, Energy and Industrial Strategy], but the NAO estimates that at least GBP32.7 million has been spent by public bodies since 2011.”
Local authorities and police forces have borne costs having to manage anti-fracking protests, tra c disruption and general public safety at sites. The Lancashire Constabulary has reported that it alone had 25-100 o cers “directly involved” in policing fracking sites every day between January 2017 and June 2019, at a cost of GBP11.8mn ($15.2mn).
Future costs
While these costs are relatively small compared to the potential bene ts that a shale gas indus- try could o er, the report also raised the issue of decommissioning. e UK onshore oil and gas sector is not subject to the same level of reg- ulation as o shore. It could fall on landowners to decommission fracking sites if operators are unable to cover the cost, but the procedure is “unclear and untested.”
“ e Department [of Energy] recognises its responsibility for decommissioning o shore oil and gas infrastructure, but not for onshore wells, including shale gas wells,” the report stated.
Some landowners may take out insurance as part of their lease agreements with operators, but they may not fully appreciate the liabilities they are assuming.
“The Department was unable to explain who would meet decommissioning costs if the landowners were unable to do so,” the report
continued. “This contrasts with the offshore oil and gas sector, where former operators have a statutory liability to decommission assets and government is the decommissioner of last resort.”
It went on to say that the government was “considering options to mitigate the risks to landowners becoming liable for decommission- ing costs should an operator become insolvent.” is could include co-operation with trade body UK Onshore Oil & Gas (UKOOG).
“Other options would create a contingent liability for government, which the Department has so far resisted. ese include government signing insurance policies as a counter-party or introducing a new statutory onshore decommis- sioning regime to mirror the o shore regime,” it said.
Political will
While fracking enjoys broad support from the current government, opposition parties have threatened to impose far more restrictions on the industry.
“ e Tory-Lib Dem coalition and now the Tory government have wasted millions pushing an industry that is unpopular across the UK and ercely opposed locally,” shadow business and energy secretary Rebecca Long-Bailey said a er the report was published.
“Fracking threatens air and water quality, and it contributes to the climate crisis. And as this report reveals, the government’s plan for mak- ing fracking sites safe a er they’ve been used is unclear and untested,” she continued. “Well let me be crystal clear: Labour will ban fracking immediately.”
Given public antipathy towards fracking, even the Conservatives may want to avoid changing policy as Prime Minister Boris John- son looks to shore up support among the public ahead of a possible snap election. ™
Cuadrilla Resources’ Preston New Road site in Lancashire.
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