UK Shale Gas

Tessa Munt Excerpts

Thursday 18th July 2013 Westminster Hall

[Eric Ollerenshaw]

My hon. Friend makes an extremely valid point, but he must understand that we then get the argument that, because we have had exploratory wells, we obviously need to go ahead since we have spent all that money on exploration. My constituents need assurances that the wells are exploratory, that they are part of a pilot and that there is the possibility that we can close down the whole thing if something else goes wrong. Those are the kinds of assurance that they want.

The community fund that the Onshore Operators Group will apparently be in charge of will provide more money locally, but there are still questions about what the local community is. Will funds go to community groups, parish councils or even district councils in my area, such as Wyre borough council or Lancaster city council? They are all below county council level and there is a huge spread of locality between them. What will the money be spent on? Could it come in the form of cash payments, reduced energy bills, building community facilities, reduced council tax bills or affordable housing contributions? If that kind of money is spent in those ways, there are possible tax implications, which is how the problems with the Shetland Charitable Trust developed.

[Tessa Munt (Wells) (LD)]

The hon. Gentleman is probably already aware of the Sullom Voe agreement, under which community benefit is brought into the community at parish level. I believe that for every barrel of oil taken from Shetland Island waters, a number of pence—totalling something like £23 million or £24 million—goes to the Shetland Islands council for it to distribute. That is probably a good model for us all.

[Eric Ollerenshaw]

It is an interesting model, but there are serious problems with the definition of what the council can spend money on. If the council spends money on certain things and gives financial recompense to the residents, they will face tax anyway, and that is the issue.

I turn to the subject of certainty. We are talking about a voluntary community compensation scheme. I had hoped that we would be dealing with something more substantial, preferably underpinned by statute. We need to ensure that there is no wriggle room. Local residents and councils need to know that there will be no about-turn, that promises will be lived up to and that changes in company control will not lead to changes to the commitments made by companies now.

Additionality is important. Basically, I want a guarantee from Ministers that if local councils receive extra funds through the community compensation scheme, that will not be used against them when calculating normal standard local government grants. Put simply, I do not want to see a case of robbing Peter to pay Paul. There must be extra money to compensate local communities for the problems that they will have to deal with in hosting shale gas extraction, and that compensation must not be seen by the Government, of whatever hue, as an alternative to normal grant funding. That might be achieved by using a separate fund, as the hon. Member for Wells (Tessa Munt) has already suggested, rather than by paying money into the usual revenue streams—almost a Lancashire sovereign wealth fund. Such a fund would be managed by professionals according to a strict charter, for the benefit of the most closely situated residents on the one hand and the whole of the county on the other. Obviously, it would have to work closely with local authorities of all tiers, to deliver genuine and tangible benefits for local residents and the county.

I hope there might be room for negotiation on the amounts involved. One per cent of revenues of £366 billion is interesting and a good figure, but we hope that it is just a starting negotiating point. If we are to have a profusion of wells, which I remind hon. Members are not like oil wells and need to be located every few miles across the patch or move round the patch—that is my understanding, but those more expert than I am may correct me—we want a fund able to invest for the time when the gas goes, as surely it must, given its nature.

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[Tessa Munt (Wells) (LD)]

Thank you for your generosity in allowing me to contribute to this debate, Mr Amess. I apologise for having to be absent for a short while.

I thank the hon. Member for Brighton, Pavilion (Caroline Lucas) first for bringing this debate to the House and secondly for setting out some of the points that I was going to make myself.

As the Member for Wells in Somerset, my constituency includes the Mendip hills, the southern fringes of the Chew valley and the very edge of the Bristol and Bath basin. It adjoins north-east Somerset and Bath. Both Bath and Wells are naturally completely intertwined with water—the clue is in the name, really. I, too, am delighted to hear of Bath and North East Somerset council’s recent unanimous, cross-party resolution formally to register with the Department of Energy and Climate Change its serious concerns about the potential impact of unconventional gas exploration and extraction in that critical area.

The source of the thermal waters feeding the Bath hot springs in the world heritage site is widely believed by experts to be in the Mendip hills. The hills also feed the city of Wells and the well known Somerset levels, with their several sites of special scientific interest and network of rhynes, most of which were dug under the aegis of the abbot of Glastonbury to ensure that there was water throughout the area. That beautiful and large environmentally sensitive area, with regionally important water supplies, is one of the most complex geological districts of the UK, and the state of geological knowledge of the lower coal measures rocks and the carboniferous shales is extremely limited. We simply do not understand the mechanisms by which those vulnerable hot springs are controlled.

The estimated economic value of the hot springs for tourism and employment is close to £100 million annually and, in my opinion, this is not an area in which any dash for gas can be allowed. The global embarrassment of damaging the world heritage site does not bear consideration. More concerning would be the unknown health and environmental effects of a pollution incident. The earthquakes in Lancashire triggered by lubrication of undetected and apparently still untraceable geological faults are an example of why it is crudely short-sighted to encourage a “drill and see what happens” approach for short-term commercial or revenue gain. Whatever the unconventional gas industry worldwide says, with the present level of technical understanding it is unable to rule out long-term disastrous impacts. Widely reported pollution incidents in the US and Australia seem to reinforce that.

I have no interests to declare, other than those of my constituents, their children and their grandchildren, in particular those who live in Compton Martin, Ston Easton, Glastonbury and Wells, but also the many residents of the villages and towns in the area where I have attended meetings and heard their concerns expressed. I am deeply concerned that any hasty legislative or regulatory streamlining that fast-tracks exploration will inevitably set us up for future environmental and geological failures. The precautionary principle must take precedence.

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[Michael Fallon]

It is certainly the responsibility of the operator to disclose that; but obviously, it is for the Environment Agency or SEPA to ensure that what is disclosed is accurate. If the hon. Gentleman will allow me to write to him on that point to ensure that there is a procedure whereby that information is verified, I would be happy to do so.

[Tessa Munt]

I hope that the Minister will forgive me a brief intervention. In my experience, the Environment Agency always gives at least a week’s notice, sometimes more, of a visit to inspect when it is looking at procedures. I wonder whether the Minister, while he is writing about the subject, might consider ensuring that spot checks and investigations take place without a period of notice given to the body that is doing the drilling.

[Michael Fallon]

I will certainly consider that suggestion, and if I may, I will write to my hon. Friend about it.

The hon. Member for Brighton, Pavilion also asked me about the differences in well designs between operations here and in the United States and about the possibility that we might have methane leaks on the scale that we have seen in Pennsylvania. I visited the United States to talk to experts, and I am aware that the standard of environmental regulation has varied widely across the different states of America. They do not have the overall, national regulatory system that we have. Practices appear to have been tolerated in some states that would not be acceptable in others.

I understand that the repertoire of well design technology is essentially the same as in the United States, but the regulatory framework in the United Kingdom is quite different. Here, we have a national regulator—the Health and Safety Executive—which will require a full review of well design and construction by an independent competent person. I should point out to the hon. Lady that the Royal Academy of Engineering commented that that was a highly valuable feature of the United Kingdom’s system. We can certainly learn from the experience in the United States, but I want to emphasise to her that we start from a position of having what the United States did not have—a system of national regulation.