Where once Britain considered itself to be the older, wiser parent of the United States, Britain’s new Prime Minister – Theresa May – looks to bring about UK’s version of the U.S.-led Shale Revolution to put Britain back on its feet.
In the days leading up to May’s rise to Prime Minister, the pundits predicted that May would finally bring about the “green energy economy,” and a renewed focus on combating climate change by departing from hydrocarbons. Nope. Instead, May proclaimed, “Let’s go fracking!!”
In a move called “stunning,” May announced a new plan to compensate families if they are living in areas where shale gas can be extracted using hydraulic fracturing techniques being perfected in America.
“The government I lead will be always be driven by the interests of the many, ordinary families for whom life is harder than many people in politics realize,” May said. “As I said on my first night as prime minister: when we take the big calls, we’ll think not of the powerful but of you.”
Theresa May’s proposal offers financial incentives for UK fracking site residents:
- Cash payments of up to £10 million per eligible community.
- Payments derived from the Shale Wealth Fund established in 2014 by ex-chancellor George Osborne.
- Fund money originally destined for local councils and community trusts goes directly to residents of shale gas extraction sites.
- Communities stand to receive 10% of all tax revenues derived from shale exploration.
Since the Brexit vote, the decreasing value of the British pound continues to drive up gas import costs. Britain’s dependency on imported electricity and fuel has risen to 38.6% from just 17% in 2000. In addition, ambiguities surrounding the Hinkley Point nuclear development along with dwindling North Sea reserves are driving Britain to seek out alternate fuel sources.
Implementation of hydraulic fracturing technology can reduce Britain’s growing reliance on natural gas imports. Fracking could mean a big boost for Britain’s dwindling post-Brexit economy, providing for reinforced manufacturing, job creation, less reliance on foreign supplies, lower electric bills and wealthier citizens.
In just over a decade, fracking transformed the U.S. from a dependent oil and gas importer to a net exporter, and Congress lifted a Crude Oil Export Ban that had been in place for over 40 years. The U.S. shale industry is valued at more than $200 billion dollars and growing. Resulting lower energy costs have led to job expansion, increased productivity, reshoring and decreased dependence on foreign supplies. Estimates predict the U.S. will hold 75% of the global shale gas market by 2035. With the cheapest gas and lowest electricity prices on the planet, America is reaping its fracking benefits daily.
Britain could easily do the same. The nation’s recoverable reserves are vast. British Geological Survey data on shale gas across the Bowland Shale under Yorkshire and Lancashire estimates reserves of 1,300 trillion cubic feet, enough for over 500 years of UK gas at current levels of consumption. North Sea UK oil and gas reserves are estimated to hold 22 billion barrels of oil equivalent and discovery is ongoing.
A number of issues have prevented the UK from jumping on the fracking bandwagon. Green lobbyists view fracking as a threat to the environment and renewable energy programs. Lancashire shale exploration licenses were granted in 2007, yet Lancashire County Council has consistently rejected planning applications. The Department of Energy and Climate Change (DECC) enforced a year-long veto on fracking in 2011.
In addition, UK mineral rights are property of the Crown, not of individual landowners as they are in the U.S. The financial incentive for private citizens to support exploration and development has largely been lacking. Until now.
Last December, the government granted licenses for 159 new gas and oil exploration zones across over 4,000 square miles. In May, Third Energy obtained planning authorization for shale gas fracking, the first since the 2011 ban. Where activity would normally be held up for years by green lobbyists and low incentives, May has shut down the DECC and proposes to compensate families living in shale gas extraction sites, incentivizing citizen support in boosting shale development.
“This announcement is an example of putting those principles into action. It’s about making sure people personally benefit from economic decisions that are taken, not just councils, and putting them back in control over their lives,” May said. “We’ll be looking at applying this approach to other government programs in the future too, as we press on with the work of building a country that works for everyone.”
The August 2016 Shale Wealth Fund consultation report stated, “We are now setting out to ensure that the right framework is in place for households, communities and regions that host shale gas to benefit directly from a share of the revenues and tax that come from shale production.”
I believe May is both astute and insightful. She knows that cheap energy supplies are the best way to lift Britain out of the economic doldrums and put the economy back on proper footing. In America, the Shale Revolution brought about dramatically lower fuel prices, eased fears of environmental damage and sowed the seeds of economic revolution, including the re-shoring of American jobs lost to overseas initiatives. Great Britain’s success in shale could be just the impetus for the Shale Revolution to go worldwide and lift billions out of poverty.