So….. why bother with fracking?

You will, no doubt, have seen many media reports around fracking and wondered what the fuss is all about. Fracking (or hydraulic fracturing) is the mechanism by which sand, water and chemicals are pumped into the ground in order to fracture rocks and thereby release the shale gas contained within.

So far so good… but why go to all that trouble?  Well, we live in an economic climate of rising fuel prices, and some people feel that this resulting shale gas could be the answer to the UK’s energy needs.  A recent report indicated over half of the UK could be viable for fracking – 1,300 trillion cubic feet of shale gas in the north of England alone.  Put simply, shale gas could be the new North Sea Gas, for the 21st Century.

Shale gas has revolutionised the energy market in the US.  The five major oil companies – Chevron, Exxon, Total, Shell and BP – waited five years while more modest companies did the legwork.  When the results seemed significant, they moved in.  Now the same process seems to be taking place here in the UK, thanks to these fresh shale gas discoveries, and the positive attitude of the coalition government.

First of the major players to move is French company Total, the planet’s fifth largest oil company, with nearly 100,000 employees working in over 130 countries.  The scale of Total means they have the backing and expert knowledge to make the most of UK shale reserves, and reports suggest they will invest approaching £13 million in shale gas extraction in the UK, starting with exploratory work in Lincolnshire.  The move immediately makes Total a major player in onshore gas drilling, and marks an important milestone in the fracking story.

And, of course, it is a controversial story.  On the one hand the government has announced that local authorities will keep the income raised from the business rates on such drilling, rather than handing it to George Osborne.  On the other, we have Greenpeace, who argue such payments amount to bribery.  They also point out the irony that the French government won’t allow fracking on that side of The Channel, leading to Total digging up the British countryside instead.  They also point to the negative effects of fracking, notably in the States, which range from water contamination to earth tremors.  Protest camps are now springing up around the countryside at almost the same rate as the exploratory drilling sites.

We are now playing for big stakes.  Here in the UK we currently use three trillion cubic feet of gas each year, and yet we might supply this country with its energy for the next 50 years with only 10% of the UK’s shale gas deposits.  Meanwhile over in the US, where shale gas extraction is widespread, the cost of energy is now a third of what we pay across Europe.  In business and domestic terms we are all feeling the effect of rising energy prices and consumers will be keen to consider anything that might bring those bills down.

Perhaps not surprisingly, the other four global oil majors may well follow where Total have lead.  It will be an interesting few years in the ever-controversial story of fracking.