Shale Gas Profits

Mark Menzies Excerpts

Wednesday 19th December 2012 Westminster Hall

[Eric Ollerenshaw (Lancaster and Fleetwood) (Con)]

It is a pleasure to serve under your chairmanship again, Mr Bayley. Before I go into the argument for community compensation, I will set the background for the impact of fracking in terms of the present energy demands on the county of Lancashire. At the moment, we face energy projects across the country. My own constituency has a third planning application for onshore wind farms in the Lune valley. We have offshore wind farms, the Walney field off Barrow and proposals for new offshore wind farms run by Centrica off the Isle of Man. Now, the need to transport power from those wind farms will mean extra pylons on land through the middle of my constituency and the middle of Lancashire.

At the south end of my constituency, there is a fourth planning application by a company called Halite for the excavation of salt mines and the storage of liquefied gas, a proposal that I oppose, as do my constituency neighbours and hon. Friends the Members for Blackpool North and Cleveleys (Paul Maynard) and for Wyre and Preston North (Mr Wallace). There are also a number of proposals for smaller hydroelectric schemes in the hills. It is already a massive issue for Lancashire, and there is even the possibility of an extra nuclear power station at Heysham, in the north of the county. All those proposals are the background. Into that mix comes the issue of fracking.

I want to put on the record my position on the wider shale gas issue. I have never been against using shale gas in our energy mix in principle. However, I want my constituents’ genuinely held concerns to be addressed before I support an expansion of fracking. I have raised those concerns with Ministers before, including three times in previous debates in Westminster Hall, but they are worth recapping.

First, my rural constituents have understandable concerns because many of them draw their water directly from boreholes rather than the mains. They are worried about contamination of their water supply, and equally worried about the impact on their water supply of the vast amounts of water that will be drawn from the water table to carry on full industrial fracking. Secondly, the small earth tremors that happened last year were proved subsequently to have been caused by the fracking process. Thirdly, my constituents have serious concerns that the regulatory regime, even if more stringent than in the US, will not be extensive enough to keep track of all the activity that could take place if the fracking moved to an industrial scale. I underline the point that, in a sense, we are in a hypothetical position. All that the Minister has reallowed is one testing at Preesall in the constituency of my hon. Friend the Member for Fylde (Mark Menzies), and we may be some way along in the process.

I welcomed the pause in fracking operations to allow an investigation into the earth tremors. I was pleased that the Royal Academy of Engineering and the Royal Society produced reports into the processes and equipment involved, and that they were studied further by an independent panel. Such investigation and review was much needed.

As a result of those investigations, the Energy Secretary announced last week that fracking and the tests at Preesall by Quadrilla could resume, but, as his recent statement made clear, with new safeguards in place. I welcome some of the measures in the Energy Secretary’s statement, including monitoring of seismic activity and enhanced wellhead integrity, which are fundamental to ensuring safety of the water table and water supply. I also welcome his commitment to continuing to record and analyse data on the effect on the environment of exploratory fracking. It is an important step, along with the appointment of an independent inspector who will be on site at all times. However, I still want greater efforts to boost the safety of the water supply and put in place a proper and effective regulatory system.

Although exploratory fracking has been resumed, we are still some way from industrial-scale operations, although anyone who reads the national press would think that the bonanza was going to happen next week. We in Lancashire are realistic in seeing that it will be a long-term process, but this debate is meant to get in at the beginning and ask what the impact might be if it happens.

[Mark Menzies (Fylde) (Con)]

I thank my hon. Friend for securing this debate on a subject that is hugely important and of great concern to my constituents. I urge the Minister to take on board the point that my constituents, like those of my hon. Friend, are incredibly worried that fracking could be done on an industrial scale. It is important that the company be clear from the outset that until safety measures and regulations are in place, it will be done on an incredibly limited scale, with detailed on-the-ground monitoring at every stage.

[Eric Ollerenshaw]

I thank my hon. Friend and neighbouring MP. To underline the point to the Minister, there has been speculation in the papers that if industrial fracking happens, there could be some 800 wellheads across Lancashire, against the background of onshore and offshore wind farms and the possibility of new nuclear. One can see why it is generating concern.

I stress that we are talking about a hypothetical situation involving industrial fracking some time in the future. The point that I am here to make is that if shale gas operations commence on that scale and scores of wells are drilled, Lancashire should share in the rewards. At the moment, that is not likely to happen, at least not beyond any small-scale voluntary schemes that energy companies might decide to pursue themselves. To be fair to Quadrilla, I understand that it has given a number of grants to various local parishes. The only other way is through section 106 agreements, which do not derive a vast amount of money for the local infrastructure.

The clear point is that the United Kingdom, and Lancashire in particular, is not Texas, where local landowners can strike it rich if oil or minerals are discovered on their land. The mineral rights in our area belong to the Crown, but mainly to the Duchy of Lancaster. Any farmer for whom fracking is proposed on their land will gain precious little, except perhaps a small amount of rent, and the local authorities will get a small amount of business rate. The company will get its profits, the Duchy will get its share from the mineral rights, and of course and as ever—unless Starbucks starts drilling operations—the Treasury will get its share of the proceeds from taxation. Local residents, who will have to deal with increased industrial activity, traffic movements, the movement of chemicals and so on, will not see a direct reward.