UK Shale Gas

Debate between Dan Byles and Graham Stringer

Thursday 18th July 2013 Westminster Hall

[Dan Byles (North Warwickshire) (Con)]

I can confirm that I have no financial interests outside of this place whatsoever. I sit on the Energy and Climate Change Committee, I chair the all-party group on the environment and I also chair the all-party group on unconventional oil and gas. “Unconventional gas”—that is what we call shale gas, which is a bit of a misnomer, because it really is just gas. It is the same gas that we use to heat 83% of our homes and to generate 30% to 40% of our electricity.

Accessing gas from shale rock is not new. My right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) said that gas has been hydraulically fracked in the US since 1949, but he may not be aware that the first exploratory shale gas well drilled in the UK was in 1875, in Netherfield in the south of England. It was an academic activity at that time, but the first commercial shale gas wells in Europe were drilled in northern Spain in the 1950s. Hydraulic fracturing itself is not a new or an unknown process, as my right hon. Friend has already said.

I want there to be a calm debate about this subject, informed by the evidence. Sadly, there is too much rhetoric around the entire shale gas debate, often—it has to be said—on both sides of the debate. Whenever anybody uses the phrase “shale gas bonanza”, I cringe as well. My view is that the evidence to date shows that shale gas can be accessed safely, if operations are done to a high standard and with effective regulation. That is backed up by a growing library of research from reputable expert organisations, such as the Royal Society, the International Energy Agency, the Royal Academy of Engineering, and others. The weight of evidence so far shows that unconventional gas can be developed safely, with effective regulation.

Ultimately, this is not a debate about whether to use gas. It is important to state that, because sometimes this debate strays into a discussion about the gas strategy. This is a debate about where we get the gas we use from. Under the Department of Energy and Climate Change’s central forecast scenario, we will be using broadly the same amount of gas in 2030 that we do today. The trouble is that both the Institute of Mechanical Engineers and the Institute of Directors estimate that by 2030 we will be importing up to 80% of our gas, at a cost of some £15 billion a year. That gas will come from Norway and Qatar and in future, probably, from Russia. It will include liquefied natural gas that has to be liquefied, transported and re-gasified. I have no confidence that Russian gas is produced and transported to higher, or even the same, environmental standards as gas in the UK.

[Graham Stringer]

Will the hon. Gentleman accept that not only would that gas be expensive because it is being imported, but the price would be artificially forced up, because under the Government’s scenario it is being kept for back-up supplies and is therefore used inefficiently? Although the hon. Gentleman is right to say that that is the Government’s position, it would be better if gas were used as a main supply for energy.

[Dan Byles]

Although I said that we would be using broadly the same amount of gas, the hon. Gentleman is right; we will probably be using it in a different way, for back-up and peaking plant, which clearly would be less efficient—ceteris paribus—than using it for base load.

Shale Gas (Lancashire)

Debate between Dan Byles and Graham Stringer

Tuesday 16th July 2013 Westminster Hall

[Dan Byles (North Warwickshire) (Con)]

I congratulate my hon. Friend the Member for Fylde (Mark Menzies) on securing this debate on this important topic. I am not a Lancashire MP, but I stand here as a member of the Select Committee on Energy and Climate Change, which has looked at the issue in some detail, and as chair of the all-party group on unconventional oil and gas.

I have worked on this issue in some detail and discussed it at great length with a wide variety of stakeholders throughout industry and beyond. There is great consensus on the community benefit and we have reached the stage where no one is disputing or discussing whether we should have a community benefit scheme; we are simply discussing the detail. There are various reasons why an effective scheme is important and it may be best summed up in a phrase that many hon. Members have heard before: the industry requires a social licence to operate. A community that hosts shale gas resources and could see shale gas development take place is entitled to ask two legitimate questions: is it safe, and how will our community benefit from the process? It is incumbent on the Government and industry to answer both those questions

Today’s debate is not about safety, except that, echoing hon. Members who have spoken, we must take this forward with the highest environmental standards, in keeping with the gold standard that we already apply to oil and gas regulation in the UK. Today’s debate is about the benefit to people and communities in Lancashire. It is their gas; it is not Cuadrilla’s gas or Centrica’s gas, and it is certainly not the Government’s gas, although the law may imply that it is. I am not a socialist, but as far as I am concerned, it belongs to the people of Lancashire, and it is important and absolutely right when developing a domestic UK shale industry that the local communities who will host that industry and new development should benefit from their own natural resources.

Loosely speaking, two benefits can accrue from a large-scale infrastructure project. One is the natural or organic benefit: the jobs, supply chain and activity from the very process of the investment and flow from the activity without intervention from the Government. The other, which is what we are principally talking about today, is the artificial cash benefit that can be put in place by the industry through voluntary agreements or by the Government to ensure that some of the profit and revenue stream from the industry are shared locally.

I want both forms of benefit to accrue to the people of Lancashire. On the first point, it is essential that the maximum benefit in jobs and investment accrue as locally as possible to the operation of the shale gas pads. Employing local people and developing a local supply chain is fundamental to making the industry part of the community instead of it being an outside industry that comes in and does things to the community.

In Aberdeen and the surrounding region, for example, the offshore oil and gas industry supports 137,000 direct, indirect and induced jobs. We may not see quite the same number of jobs in Lancashire, much as we would all love to, but the highly detailed report by the Institute of Directors estimated that there is potential for up to 74,000 direct and indirect jobs nationwide from developing UK shale gas. Not all the jobs will be in Lancashire, but many will, and it is important that when the industry and particularly the supply chain go forward with their plans, they do their best to maximise the number of jobs that stay locally within the region.

On the artificial cash benefits, the proposals currently under discussion have been alluded to: £100,000 per exploratory well and eventually 1% of revenue from the development phase going to the local community. Over the lifetime of a shale gas pad, that could amount to a considerable sum, and I agree with those who have already noted that we should remain flexible about community benefits to ensure that, as the industry’s profitability becomes better known and we have more information, we can ensure that the benefits remain at a suitable level.

I share my hon. Friend’s concern about one fundamental and important question. How does one define the community? Most of our present discussions about community benefits boil down to the question, who is the community? The judgment call on exactly who should receive a direct benefit is often spoken of in terms of municipal level—parish, district or county—but it is important to note that people do not necessarily mean the parish council, the district council or the county council. They use those words as shorthand for the municipal level to which the community benefit should go.

If the community is defined too narrowly, it may create division rather than consensus, and I have seen that in my constituency. When campaigning in Curdworth as a young parliamentary candidate not that many years ago, I asked what the village’s main issue was and someone said, “Them on that side of the village got compensated for the Birmingham northern relief road and we over here, one road over, weren’t.” The compensation package had caused division in the village because the definition of who should benefit was too narrow.

However, if the definition is too wide, there are two concerns. One is simply that if the benefit is diluted too much, it may not provide a genuine benefit. Another danger is the message sent about the impact of the industry. If someone living 10, 15 or 20 miles from a shale gas pad is told that they will receive a community benefit to compensate them for having it in the area, are we not pandering to a myth, because someone 15 or 20 miles away may not notice that it is there? The evidence is that there will probably be no impact more than a few miles away from a shale gas pad.

[Graham Stringer (Blackley and Broughton) (Lab)]

There is an interesting historical point behind the name of this debate: what is Lancashire?

[Dan Byles]

Tell us.

[Graham Stringer]

For the purposes of this debate, I think Salford can be Lancashire and that there will be immediate benefits there.

Does the hon. Gentleman agree that apart from immediate local benefits, there will be general benefits for the whole country if the exploitation of shale gas is successful because the real impact will be a lowering of energy prices?