Shale Gas (Lancashire)

Mark Menzies Excerpts

Tuesday 16th July 2013 Westminster Hall

[Mark Menzies (Fylde) (Con)]

It is a great pleasure to be given the opportunity to introduce this Adjournment debate on community interests in shale gas in Lancashire, and it is a great pleasure to do so under your chairmanship, Mr Benton.

It is important for Parliament to hold regular debates on shale gas, because there is considerable potential for it to impact on the constituencies of many right hon. and hon. Members. The title of my debate in the Order Paper suggests that I would like to focus exclusively on the financial benefits that shale gas could bring to communities in Lancashire following the recent announcement of a community benefits package by the Treasury and the Department of Energy and Climate Change. As we are still in the early stages of shale gas development, however, I firmly believe that further work is still to be done on a range of other related issues, most notably on regulation, community engagement, the development of a UK supply chain and the suitability of potential sites.

I have consistently campaigned on the regulation of the shale gas industry. In my Adjournment debate in October 2012, I addressed the need for a body to be formed to oversee the workings of the regulatory bodies on matters relating to onshore oil and gas development, because it is imperative that shale gas development takes place only if we have robust regulations in place. I pay tribute to the previous Minister with responsibility for energy, my right hon. Friend the Member for South Holland and The Deepings (Mr Hayes), for responding to those and other issues that I raised in my Adjournment debate and for establishing the Office of Unconventional Gas and Oil.

The Office of Unconventional Gas and Oil must take on responsibility for ensuring that the existing regulatory bodies, namely the Health and Safety Executive, the Environment Agency, DECC and Lancashire county council as the planning and mineral rights authority in Lancashire, work together to deliver a world-leading, gold-standard regulatory framework. It is the responsibility of the office not to become a regulator but to ensure that those that are empowered to be regulators are doing so to an exemplary standard.

I also urge the Minister to ensure that regulations are robust and are developed to ensure the highest environmental safeguards, as opposed to what is simply convenient for the industry. The focus should be on robust regulations and we should try to get away from using words such as “streamlining.” When people hear about streamlining, they interpret it as the watering down of regulations, which I am sure is not the case. Were it the case, it would not be acceptable to me.

I welcome the decision to make environmental impact studies compulsory for shale gas development sites, regardless of size, which is an evolution from where we were two years ago. Regulation is not what is written on a piece of paper; it is about what is enforced. I therefore urge the Government to ensure that we have regular, on-the-ground visits by regulators and inspectors, some of which must be unannounced so that shale gas development sites have the authority of operating to the highest environmental standards and no one is beyond reproach. In order to achieve that, it is important that regulators are provided with sufficient resources to fulfil their role.

We must be able to anticipate future developments as the industry progresses, if shale gas development does take place. We must be fleet of foot to ensure technical changes as the industry evolves and that the regulators and regulations are fit for purpose. For example, it would be inconceivable for regulations on shale gas developments in Lancashire to be entirely enforced by the HSE from Aberdeen. The HSE is based in Aberdeen for various obvious reasons, and therefore if and when the shale gas industry develops in the north of England, it is important that it responds accordingly, with regulators based in a much more localised area. Consideration must therefore be given to the creation of a regulatory hub to monitor the development of shale gas at a local level so that anyone who puts in a freedom of information request or writes to the Minister to discover what he is doing can have confidence that this is being taken seriously and things are being done diligently.

In my first Adjournment debate, I stated my strong opposition to the suitability of the Anna’s road site for potential shale gas extraction. My position remains unchanged, and I welcome the announcement from Cuadrilla that it has put on hold any potential development of the site. Decisions will be taken not by Members of Parliament but by elected county councillors, and therefore I do not plan to say any more on that in this debate.

Finally, I urge the Minister to ensure that there is rigorous monitoring of the traffic light system that was put in place following the seismic tremors in Lancashire in 2011, because it is important that public confidence is absolutely maintained in the system. Much work was done to ensure that the traffic light system was put in place prior to the resumption of fracking, that it is indeed fit for purpose and that we constantly monitor and review it to ensure that it does the job for which it is intended so that we see no repetition of the seismic tremors that we experienced in Blackpool.

Public engagement in any controversial sector is critical, but in something as new and controversial as shale gas it is absolutely paramount. I therefore want to see engagement with the local community at the forefront of what is done by the Office of Unconventional Gas and Oil, the regulators and the industry itself. Although the industry has done some work to address that, it is an area that needs substantially more work as the industry evolves and potentially develops.

When the Office of Unconventional Gas and Oil was established earlier this year, one of its main roles was to support public engagement and to help people to understand the facts about unconventional gas and oil production and what that could mean if it takes place in their area. With such a central role to play in the future of shale gas development, it is important that the office has the necessary resources to help drive public engagement.

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

I am sorry that I cannot be here for the whole debate, but I have to go to a meeting on the Keogh review rather urgently. Does my hon. Friend agree that the community engagement fund that is being created for the benefit of local communities has to be transparent in its governance and cannot just be dominated by local government interests? Has he considered what types of community organisations could be brought in to ensure that the fund is truly reflective of the local communities that are meant to be benefiting?

[Mark Menzies]

My hon. Friend is a champion of transparency like no other, and he pursues transparency in other areas of his work. I know that he has now turned his attention to ensuring that shale gas is also transparent. I will touch on some of those issues later in my speech, and I know that other hon. Friends will do so, too.

It is inconceivable that the Office of Unconventional Gas and Oil has a single page on the Government energy and climate change website. I might be wrong, and I stand to be corrected, but this is an opportunity for the Minister and the Department to create an interactive online portal where my constituents and my hon. Friend’s constituents can go to seek information, a myth buster that is scientific, evidence-based and impartial.

I get many questions from constituents, which are often highly technical and which I simply cannot answer. I am a Member of Parliament not a geologist, and I have no background in the oil industry, so I need somewhere I can go to get those questions answered. I pay tribute to the people at DECC who for three years have been studiously answering letters, often through Ministers including the current Minister, but a community interactive portal where people can post questions and in the fullness of time—they will not get instant responses; it may be days, weeks or potentially longer—get impartial, independent and science-based replies would help to take away some of the fear, the unknown and the uncertainty that shale gas currently has for many people. Information and transparency are key.

I thank Duarte Figueira, the recently appointed head of the Office of Unconventional Gas and Oil, for taking the time to discuss with me in more detail many issues relating to shale gas development. He has always found the time and always been courteous. I encourage that sort of attitude and ethos within the office, so that no one can be in any doubt about its willingness to engage and answer questions.

Community involvement is not just a role for the Office of Unconventional Gas and Oil; ultimately, companies must take responsibility for it. I urge them to ensure that they are sufficiently resourced and have the right people in place to deliver quality, effective and impartial community engagement, to tell people what they are doing and when and to take people with them. Ultimately, that is a challenge not for Government but for developers, but I want the Government to oversee it and ensure that they do so effectively.

[George Eustice (Camborne and Redruth) (Con)]

My hon. Friend is absolutely right that we must carry communities with us on projects such as this. It cannot be done to communities; it must be done with them. The experience with wind energy, for instance, has not been good when we have left it to the industry to carry communities with them. All too often, the industry expects Government to pass unpopular laws that second-guess the planning system. Does he agree that we need to consider ways to share the economic benefits directly with local communities, for instance through reductions in their electricity bills or rebates in their council tax?

[Mark Menzies]

My hon. Friend is absolutely correct that what is important is not that the local council, the Treasury or the companies benefit; they would all benefit from the development of shale gas. Ultimately, it is vital that ordinary people in areas hosting sites see meaningful, tangible, long-lasting and substantial benefits. I will touch on that, and I know that the Government have made an announcement on the subject.

Moving on to the development of the UK supply chain in shale gas, some people criticise the Minister for wearing two hats: energy and business. That criticism is short-sighted. Having experience in both makes him absolutely the right person to ensure that we take the right decisions in developing the infrastructure and supply chain across the whole energy sector, and particularly within shale gas.

There has been much speculation in the press about the number of jobs that could be created by shale gas. If shale gas is developed in Lancashire, it is imperative that local people get maximum employment opportunities. From speaking to those in the industry, I understand that a significant number of jobs in shale gas come not from drilling for gas but from developing the manufacturing supply chain and supporting industries.

I urge the Minister to seek close Government working with the industry to ensure the development of a UK—indeed, a Lancashire—supply chain. It would not be acceptable for the equipment to be manufactured overseas when we have UK businesses with a strong engineering heritage and a highly skilled work force in Lancashire. This is a great opportunity to use those skills to develop a manufacturing base in the region to supply equipment for the shale gas industry. In the long term, an offshore shale gas industry could ultimately develop, and that could drive a considerable amount of highly skilled, well-paid, leading technical jobs. It is important that the north of England does not miss the opportunity or shirk the challenge.

I also urge the Minister to ensure that local enterprise partnerships, the Department for Business, Innovation and Skills and the gas companies undertake a scheme to co-ordinate with local colleges and schools to ensure that apprenticeships are offered to those keen to enter the industry and retrain where applicable. People are key, and it is vital that local people get the benefits and do not miss out.

My hon. Friends who have intervened have mentioned community benefits. On the financial community benefits from shale gas, I broadly welcome the overall shape of the proposed package. It is absolutely right that communities that host shale gas pads should also be the primary beneficiaries. I know that the Government and the Minister have put in a lot of work on that issue. I thank the Minister for his work. It is not an easy task.

I also want to make it perfectly clear that the £100,000 paid must be per well fracked and not per shale gas pad. I have read some ambiguity from commentators in the press, although I never believe everything that I read in the press. It is therefore important for the Minister to give some clarity that it is £100,000 per well and not per well pad site. As he is aware, a pad can contain up to 20 wells, so it is therefore imperative that we have clarity in order to avoid confusion in future.

I welcome the principle that communities benefit from a percentage of revenue generated. At the moment, 1% is proposed; I know that some of my hon. Friends wish to speak about that. If it remains at 1%, the money must be highly localised. If, however, a desire to spread the money over a wider area becomes the prevailing mood, we have no option but to seek a higher percentage level, as I am not prepared for the benefit to my communities hosting shale gas pads to be diluted. That is the decision that we must take.

It is right that a significant proportion of revenues—I believe the figure proposed is one third—should go to the county council, as the mineral rights authority. However, I would like the rest of the money to be placed into a community endowment fund to ensure that the communities that host shale gas sites benefit for generations to come. I know that the Minister is driving much work on the issue, and I look forward to seeing the final results. I like the thought of a National Trust-style model, where the money is awarded to causes that benefit the community in the long term. Those could even include major infrastructure projects. However, it is also important that individual people benefit. Options including direct cash payments or money in the form of energy bills must also be explored. My constituents who host such sites, and my hon. Friends’ constituents who will host them in time, must be their prime beneficiaries.

[John Pugh (Southport) (LD)]

Does the hon. Gentleman share my view that it is a slight problem that we do not actually know how profitable the shale gas industry will become? If we set the deal too early, we may lose some of the benefits that could accrue to us.

[Mark Menzies]

If my hon. Friend were sitting closer to me, I would think that he had read my notes, but as he is an honourable gentleman and far enough away, I know that he has not. He is absolutely right. We are in the early days—indeed, the infancy—of the industry. If it goes ahead, we still have questions and uncertainties to get through. It would be wrong to set too firm a percentage level at this stage, but we also need clarity that when a company says that it will pay 1%, or whatever percentage it turns out to be, it cannot renege or change its mind when the ink is barely dry. With the best will in the world, companies change chief executive. They can be taken over. Governments also change. The intentions being set out honourably at this moment in time could change in future.

We also do not yet know how profitable it will be or how much money it will cost to extract the gas, or what future gas prices may be. It is therefore important that the level set is sustainable for local communities and everyone else who has a stake, including the Government and the operators. It is in no one’s interest for the benefits to yo-yo and fluctuate to such an extent that no one knows what they are getting.

Some colleagues have called for a statutory underpinning for the agreement, so that the industry and Government cannot renege. I will put my trust in the work that the Minister is doing at this stage, but I seek assurance that were a company to renege on its commitment, the Government would not shy from being direct with it to ensure that the community benefit package was not lost to the people whom I represent.

Shale gas is controversial, but the Government are engaging with the issue and taking some tough decisions. I will be a critical friend of the Government. If they are not getting the regulations right or not engaging with the community, I will highlight that to the Minister. Similarly, the industry should not expect an easy ride; my colleagues and I will be emphasising anything that we regard as shortcomings. Any attempts by the industry not to adhere to regulations, not to engage with communities or not to ensure that communities are financial beneficiaries, and we will hold its feet to the fire.

We will return to this subject in many debates to come, Mr Benton, but I thank you for your chairmanship today.

[Mr Joe Benton (in the Chair)]

Before we proceed, I assure Members that the air conditioning is working as effectively as possible. It is very close, but it will not get any better, I am afraid, so please feel free to remove your jackets, if you so wish.