Onshore Gas

John Hayes Excerpts

Wednesday 24th October 2012 Commons Chamber

[The Minister of State, Department of Energy and Climate Change (Mr John Hayes)]

My hon. Friend the Member for Fylde (Mark Menzies) has secured this debate and, in doing so, has illustrated once again that he personifies both rigour and vigour in the defence of his constituents, and I congratulate him on doing so.

The arrival of shale gas exploration in the UK in 2010, with operations almost wholly concentrated in my hon. Friend’s constituency, has quite understandably raised concerns among local residents and others about its impact. It is a new industry to Britain, and it is potentially intrusive. We need to be mindful of the amenity locally and the safety of the community.

My hon. Friend is clearly well acquainted with both the mechanics and potential impacts of the operations in both the current exploration phase and what might be expected if exploration is successful and the company involved develops a larger-scale operation to extract the resource.

The House will know that shale gas production has had a huge impact in the United States of America. It has had a major impact on supply and driven the price of gas below what could reasonably have been predicted only a few years ago. It has happened very quickly—over perhaps just 20 years—with a truly remarkable increase over the last five. When it started, this rapid expansion was mainly located in relatively sparsely populated areas. It is important to understand that the difference between the United Kingdom and the United States, in these terms, concerns both geology and geography. More recently, however, there has been an expansion into more populated areas and the pace and scale of activity has given rise to concerns within communities over both the short and longer-term impact on their health, their local communities and their way of life.

It is worth describing a couple of the features of shale gas activity that differentiate it from more conventional oil or gas production: the use of boreholes that run horizontally through the shale formation, and the creation of permanent fractures in the solid rock along that borehole. Together, these enable the gas to flow more freely into the well, acting in a manner similar to tributaries draining the catchment of a river. The increased concern about these techniques, particularly the creation of fractures—fracking—in north America coincided with the commencement of activities here in the UK in Fylde. Not unreasonably, our communities looked across the Atlantic and were genuinely worried by the reports, although often shown to be exaggerated, of what the impact might be here.

Not least in that was the portrayal of a US industry without effective regulation riding roughshod over local communities. This coincided with the emergence of a clear story of the failure of regulatory and operational control that led the Macondo disaster. Those worries were compounded when early activities in Fylde initiated small earth tremors, to which my hon. Friend has drawn attention previously and of which the House will be aware. This effect had not previously been reported in connection with shale gas fracturing, although they were associated with the drilling for hydrothermal energy and with large-scale waste water disposal.

It is quite right, therefore, that my hon. Friend should seek reassurance over the strength and coverage of the UK’s regulatory regime, and that he should seek further scientific and engineering reassurance that shale gas activities can safely move to an extraction phase. As I said, I will come to his specific points shortly, but first I will address some of the most prevalent concerns.

The first concern is aquifer pollution. There have been many reports in the US that shale gas operations have caused contamination of aquifers, and consequently of drinking water drawn from the aquifers, with fracking fluids or methane, and there have been reports of explosions and dramatic footage of householders setting light to their kitchen taps.

On investigation, some of those incidents, including that of the flaming tap, have proved to be unconnected to oil or gas operations—they were caused by contamination of water supplies by methane of recent biological origin—but there were cases in which the methane did originate from gas production. This has been attributed to unsatisfactory well construction or cementing. As the Energy and Climate Change Committee and the Royal Society have both commented, this demonstrates the importance of ensuring the integrity of the well. My hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) drew attention to the concerns in his locality about the contamination of water, which might well extend beyond the immediate area, given how water travels. As for fracking fluids, one reported instance of aquifer contamination remains under investigation, but the present state of the evidence is that there are no confirmed examples of such contamination.

Concern in the US about the use of fracking chemicals in extraction is based largely on the fact that the chemicals and other substances used were not disclosed, apparently because of commercial secrecy. In that respect, the situation in the US is very different from the situation here, which is quite straightforward. Before commencing, anyone carrying out drilling operations must consult the Environment Agency, which will consider the possible impacts on the environment, including on groundwater. The agency has made it clear that it will require the disclosure of all chemicals and other substances that may be injected into the subsurface, so that it can assess whether there is any risk of harm through contamination of groundwater. It will also publish those details on its website and beyond. Operations by any operator will be assessed case by case by the relevant environment agency. The agencies have powers to prevent any activities that they consider to pose a threat to the environment, but the circumstances here are very different from those that prevail in the United States.

Concern has also been expressed about water use and it is true that fracking for shale gas uses substantial quantities of water. Cuadrilla, the organisation involved in the exploration in the north-west, used about 10,000 tonnes for the well mentioned by my hon. Friend, but as that is a one-off use rather than a continuing demand it is unlikely to be of concern in most areas. By way of a comparison, 10,000 tonnes is only about 1% of the water that United Utilities Water supplies to the north-west every day. In any case, any abstraction of water for industrial purposes requires the permission of the relevant environment agency, which will not be forthcoming if the proposed abstraction is not sustainable in that area once account has been taken of existing and foreseeable demands.

The fourth area about which concern has been expressed is subsidence. It is important to understand that that concern is partly informed by experience in the North sea, where there has been significant subsidence under a drilling platform sufficient to require a major re-engineering of the platform to raise operating decks substantially. The producing rock in that case is chalk, however, which is more compressible than shale. The structure of shale is quite different and no significant compression of shale is expected as a result of gas extraction. The empirical evidence from the US supports that analysis, as despite the drilling of tens of thousands of wells and production experience over a decade or more there has been no report of subsidence attributable to shale gas production.

Let me turn now to my hon. Friend’s specific suggestions, which he has been assiduous in drawing to my attention today and previously. I have made it very clear that we will have a dialogue with those hon. Members who are affected and will allow them to express their concerns, which will be dealt with thoroughly, courteously and effectively—at least they will while I am around, because that is how I operate. I have taken the opportunity previously—I do so again today—to provide reassurances on a number of my hon. Friend’s most prominent concerns. In doing so, I am not attempting to fill the formal role he has proposed of providing independent scientific advice on the impacts of shale gas activity, although I have been able to draw on a considerable and growing body of scientific opinion.

The Select Committee on Energy and Climate Change carried out an inquiry into shale gas in 2011. It concluded that, provided good industry practice is followed and careful regulation applied, hydraulic fracturing or fracking is unlikely to pose a risk to ground water or aquifers. In addition, and on the more specific question of the implications and mitigation of fracture-induced seismic activity, my Department commissioned and is studying the findings of a report from an independent panel of scientific and engineering experts, which has been subject to public scrutiny, and deciding whether to permit the recommencement of fracking in Lancashire.

As my hon. Friend mentioned, this summer the Royal Society and the Royal Academy of Engineering provided an authoritative and comprehensive study of the potential risks of shale gas extraction and how they can be managed. It is fair to say that their conclusion was that the risks could be managed if best practice and firm regulation were applied. A number of recommendations were made for improving the scientific understanding of key aspects of the process—for instance, on induced seismicity.

I believe that the work has provided a sound basis for a decision on whether to resume exploration activity, but, as my hon. Friend has said, the scale of an eventual extraction phase would be different and, although many of the techniques are similar, the scale and introduction of production activities would give rise to additional scientific and engineering questions. I can as a consequence see considerable merit in building on that work, particularly on the excellent work of the Royal Society and the Royal Academy of Engineering, to provide a continuing means by which public concerns over the potential impacts of shale gas extraction can be examined. I am aware that there is a strong regulatory framework in place, not least through the Health and Safety Executive and the Environment Agency, whose purpose is protect against harmful activity. In addition, there is a stringent planning process to which any extraction phase must be subjected. I emphasise—my hon. Friend raised the point in his speech—that the scale of any application for continuing development would be subject to that planning process, and would, of course, be likely to be subject to a public inquiry if it was called in, which would allow the fullest possible examination by local people and local representatives of the implications of any applications.

Great care will need to be taken not to duplicate or weaken the existing statutory safeguards, but I will undertake to explore with my Department’s chief scientific adviser, Professor David MacKay, whether it would be possible to provide a mechanism or channel by which to provide authoritative responses to specific areas of scientific or engineering concern.

Furthermore, I hear what my hon. Friend says about oversight and coherence, and the need to involve Ministers directly in that oversight. Again, I shall give that full consideration and I hope to be able to return to this matter, with my hon. Friend and other hon. Members, and make some proposals on how lines of accountability and responsibility can be confirmed in new arrangements.

My hon. Friend is aware that we have already established a strategy group at official level to ensure full co-ordination of the work of the existing regulators. This is chaired by my Department and includes all those agencies. It has met regularly and is looking at the challenges; it will obviously ramp up its work as developments take place in the north-west. In parallel, the Environment Agency is currently undertaking a detailed review to ensure that it has the right powers and resources to protect the environment during the extraction phase. Other regulators, including the Department and the Health and Safety Executive, are involved in that review.

While shale gas is new to the UK, oil and gas activities are not. Drilling and production has been conducted onshore since the 1930s, and even fracking is an established technology. Few people know that the UK hosts Europe’s largest onshore oil field in Dorset, which has been producing oil for over two decades without harm to the environment or the community.

The regulators of these activities, particularly the HSE and the EA, are long experienced and are acknowledged as world class in their field. That is not to say, however—I assure my hon. Friend again—that I would rule out any improvements to the arrangements. If my hon. Friend will permit me, I will take the observations he has made into consideration and investigate what further steps can be taken, building on what we have, in order to give my hon. Friend and his constituents some further tangible assurance that the regulation of any extraction will be comprehensive, co-ordinated and well resourced.

Shale gas provides an exciting opportunity for this country. It should not be exaggerated, but neither should it be underestimated. It is critical, as my hon. Friend has rightly said, that it is conducted safely and with appropriate regulation. Where the regulation we have in place needs to be amended, added to or altered, it is important for Ministers to deal with it quickly and effectively. I assure him that that discussion will continue to take place, and I am more than happy to take a personal active interest in this matter so that he can assure his constituents and others that the Government are doing all that is necessary to make shale gas a great success. I thank my hon. Friend once again for giving me the opportunity to be able to say that this evening.

Question put and agreed to.