Onshore Oil and Gas

David Simpson Excerpts

Tuesday 26th January 2016 Westminster Hall

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I beg to move,

That this House has considered the potential role of UK manufacturing in development of onshore oil and gas.

It is a pleasure to serve under your chairmanship, Mr Howarth. Shale gas exploration is a key issue in my constituency. Exploration licences have been granted to five operators in Thirsk and Malton, covering the vast majority of my patch. I receive dozens of letters and emails about fracking every week and I care passionately that, if it goes ahead, it is to the great advantage, not disadvantage, of my constituents.

As a local man, I understand why so many local residents worry that the peace and tranquillity of North Yorkshire, including the stunning North York moors, will be disturbed, and why they feel that their lives may never be the same again. I do not believe that that will be the case. As long as fracking is conducted in a balanced and measured way, the advantages for our local and national economies far outweigh the disadvantages.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on obtaining this important debate. On his point about constituents who have concerns, how do we bring people along and convince them that there is no issue? What job of work needs to be done?

[Kevin Hollinrake]

I thank the hon. Gentleman for his intervention. That is a key issue, which I will come to later on in my speech.

The environmental reasons for moving from coal to gas are compelling. Global carbon dioxide emissions will be found to have declined in 2015, principally owing to reduced coal use in China and the US, and the Intergovernmental Panel on Climate Change and the US Environmental Protection Agency both credit the majority of the US reduction directly to the move from coal to shale. The World Health Organisation recently declared a state of emergency on air quality in many countries. It estimates that the cost of air pollution to the EU alone is a staggering £1 trillion and the human cost is even more dramatic: in 2010, about 600,000 premature deaths in the European region were caused by air pollution.

According to a report by the Health and Environment Alliance, coal-fired power stations are responsible for the following effects on UK citizens: 1,600 premature deaths; 68,000 additional days of medication; and 363,000 working days lost. Diesel cars and coal-fired power stations must become things of the past.

Geopolitically, domestically produced shale can help us develop a more effective foreign policy. Despite growing turmoil in the middle east, UK energy prices are falling in the markets, at the fuel stations and for our domestic energy. Traders can clearly see that the west is developing independent sources of energy and the British Geological Survey estimated that 10% of the predicted UK reserves could meet our gas energy needs for 40 years.

As with North sea oil and gas, fracking could lead to a new industrial supply chain. In 2014, 375,000 people benefited from employment and tax revenues of £2.1 billion resulted from the North sea oil and gas industry. Reports by the Institute of Directors and Ernst and Young indicate that shale gas could provide 64,000 jobs and £33 billion of domestic investment. Domestic is the most important word. This opportunity could spawn tens of thousands of jobs, and good jobs, too.

In my constituency, we have many world-class engineering businesses and a first-class training organisation called Derwent Training Association, which specialises in training top-quality light and heavy electronic and electrical engineers. Such businesses can be the innovators of the future, taking the industry forward and making it cleaner and more efficient. For example, it is possible to convert methane to hydrogen—a CO₂-free fossil fuel—and the University of Strathclyde has established the UK centre for hydraulic fracturing to develop quieter, more energy-efficient equipment.

Shale would offer significant opportunities for many UK industries. It is estimated that it would require 12,000 km of steel, worth £2.3 billion. Recycling of waste water by domestic businesses would also be required and that would be a £4.1 billion opportunity. Other opportunities include rig building and environmental monitoring. Our chemicals industry could also be a big winner by capitalising on cheaper natural gas liquids often found alongside shale deposits.

If the UK could demonstrate the success and environmental credentials of shale gas, we could export our knowledge, skills and technologies to other countries in Europe and further afield, just as we did with conventional exploration. We must not repeat the mistakes of offshore wind, where we are the market leader in generation but lack any significant supply chain.

In the future, power generation will be centralised, cars and home heating—probably using air source heat pumps—will be electric and battery storage will be commonplace. Some people will argue that a new fossil fuel is a backward step that will prevent the energy industry from innovating. I disagree. Yes, renewables should be part of the future, but subsidies will only hold back their efficacy. I think that we should have reduced subsidies more progressively, as has happened in the US, but the Government had little choice given the wild and unmanaged overspend overseen—or probably not seen at all—by the previous Secretary of State.

Let us think of the technology sector. Deep Blue is the computer best known for defeating world chess champion Garry Kasparov on 11 May 1997, but a modern smartphone is 30 times more powerful than Deep Blue and made without Government intervention or subsidy. Should not the Government simply set the parameters for CO₂ emissions and air quality and then let industry deliver the solutions? Is that not a better solution than paying homeowners unsustainable amounts of money to put solar panels on their roofs?

Of course, we can contemplate welcoming a new industry only if it is compatible with daily life in North Yorkshire. Last autumn, I paid a visit at my own expense to Pennsylvania to speak to local people, the US regulators, academics, protestors and operators about the impacts of the shale gas industry on the economy, the community and the environment. I did not see significant and widespread industrialisation of rural areas, but we do need to learn from early regulatory failures and carefully plan for the industry’s cumulative impacts.

We need a single regulator to make sure that there is a clear line of accountability. We need independent regulation and monitoring at every stage and, crucially, a rolling five-year local plan to co-ordinate activities. We need a local plan for fracking, covering a five-year roll-out and detailed solutions for key concerns. We also need traffic plans for the movement of heavy industrial equipment. Heavy industrial plant connected with shale gas, such as compressor stations and refineries, needs to be located in areas used to hosting industrial chemical sites.

We need minimum distances to settlements and schools and minimum distances between sites to prevent the industrialisation that many people are concerned about. We also need to consider the impact on other important parts of our local economies and, of course, the visual impact on our countryside, so we need buffer zones around our national parks and areas of outstanding natural beauty.

In an age of computer-generated imagery and simulated time-lapse photography, we can and must paint the picture for the public on how we can carry out fracking safely and discreetly, or risk years of delays owing to public concern. The effects on the economy and on job creation locally in Pennsylvania were positive, and I met various supply-chain businesses that were clearly thriving.

We must look at the whole picture. We cannot afford to ignore this opportunity. Under this Government, the economy is doing well and unemployment has come down, but we would benefit from having a clean, low-cost, low-carbon, home-grown energy source that supports domestic businesses, creates local, well-paid jobs and makes our economy and our nation strong by generating energy for generations to come.