Fracking in Britain is once again on hold after the first exploratory testing for seven years, at Cuadrilla's single well at Little Plumpton in Lancashire, went badly and then the government compounded the firm's misery by turning down planning appeals on a second site with four more wells.
Under the terms of Cuadrilla's licence, it is required to stop work if earth tremors exceed 0.5 ML on the Richter scale a level imperceptible to humans. Alas, that limit was hit so often that the firm says it was only able to frack 5% of its well. The firm complains the rules are so overcautious that they risk "strangling" the UK's fracking industry "before birth": no one will ever be able to do enough tests to work out whether fracking is really economically viable, or what a "safe" seismic limit is given the particular geology of these precise sites.
Jim Ratcliffe of Ineos, which holds as yet unexploited fracking rights at other sites, has weighed in too, claiming the "unworkable" rules had no basis in science. But the government, so far, is holding firm. And if the standoff isn't resolved, fracking in Britain will indeed be a non-starter.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
What exactly is fracking?
Hydraulic fracturing ("fracking") is a way of extracting gas and oil from shale rock by breaking the rock up underground and releasing the oil and gas it contains. Shale refers to a group of fine-grained and notably fissile sedimentary rocks that consist of silt- and clay-sized particles, and are often found with layers of sandstone or limestone.
Thus they are in principle suited to fracking a modern technique that involves drilling down (about two to three kilometres) into the earth, and pumping vast quantities of water, sand and chemical additives (horizontally) into the rock at high pressure. This creates a dense network of tiny fractures in the rocks, releasing the oil or gas they contain, which then moves into the water stream and is pumped or carried to the surface.
The technique was first developed in the 1950s, and has been deployed on a commercial scale in the US for more than 15 years.
Why does it arouse such passions?
Because its proponents think it could revolutionise Britain's energy mix and make us self-sufficient for decades; whereas opponents think it is unsafe, could presage environmental catastrophe, and think it's nuts to extract more fossil fuels when we urgently need to stop burning carbon.
To fracking's supporters, the example of the US provides a clear economic case for getting on with it: fracking has boosted its oil production, transformed it into the world's biggest producer of natural gas, and boosted its energy security in the face of geopolitical uncertainty.
Britain is a net importer of gas with decades of North Sea experience in the industry it could put to good use onshore. "Fracking in the US has cut energy bills, created jobs and rejuvenated depressed regions," said a recent Times editorial. "It could do the same for Britain, as well as helping low-income families with fuel costs. Frack on!"
How much gas is under Britain?
No one knows for sure, though probably far more than will ever be extracted, given that Britain is far more densely populated than North America. Fylde in Lancashire has small towns, not the wide open spaces of North Dakota or Texas, and residents are naturally not keen on the disruption and traffic involved.
That said, the British Geological Survey estimates that the main shale gas reserve, the Bowland-Hodder basin that stretches across 11 counties of northern England from coast to coast, could contain about 1,330 trillion cubic feet (tcf). By comparison, the UK consumes about 3tcf a year. So even if we managed to extract only 10% of the estimated reserves, we could be self-sufficient in gas for almost half a century. That's a big prize.
The question, though, is whether it can be done safely and economically. Scotland's government, as well as those of France, Germany, and Ireland (among others), have banned fracking in the firm belief that it can't.
What are the environmental factors?
Campaigners hate fracking not just because the product is a fossil fuel, but also because of the huge volumes of water used; the risk of water contamination (though that risk is low, since fracking may only take place more than a kilometre below surface); and the use of potentially dangerous chemicals. But the issue that fracking is most stuck on is its propensity to cause small earthquakes if it takes place near a geological fault.
"It's a bit like how a hovercraft works by pumping air to produce a cushion so it can slip more easily over the land surface," explains Professor Richard Davies, a petroleum geologist, on The Conversation. "If frack fluid is pumped into a geological fault, it can also slip more easily. Fracking can also change the stress on the fault, causing it to release, and a big enough fault shift will be felt as an earthquake."
Felt by whom?
Not often by people: the quakes aren't big enough, and are smaller than those we put up with from coal mining. According to a Royal Society report for the UK government, the consensus among scientists is that the maximum magnitude of "seismicity" induced by fracking is around 3 ML (felt by few people and negligible, if any, surface impacts).
The seismicity that got fracking tests stopped back in 2012 was between 1.5 ML and 2.3 ML (unlikely to be felt by anyone). And the biggest recent tremor at the Cuadrilla site was 1.1 ML barely detectable. The fracking industry may well have a point about overly onerous limits. Ultimately, though, it won't just be the earth moving beneath the frackers' feet that's the issue: it will be the shifting sands upon which the economic rationale is built.
Since fracking tests were suspended seven years ago, global gas prices have plunged, there's a glut of supply, and gas's place in the mix is under threat from the plunging price of renewables. At some point, the fracking game may no longer be worth the candle.
Simon Wilson’s first career was in book publishing, as an economics editor at Routledge, and as a publisher of non-fiction at Random House, specialising in popular business and management books. While there, he published Customers.com, a bestselling classic of the early days of e-commerce, and The Money or Your Life: Reuniting Work and Joy, an inspirational book that helped inspire its publisher towards a post-corporate, portfolio life.
Since 2001, he has been a writer for MoneyWeek, a financial copywriter, and a long-time contributing editor at The Week. Simon also works as an actor and corporate trainer; current and past clients include investment banks, the Bank of England, the UK government, several Magic Circle law firms and all of the Big Four accountancy firms. He has a degree in languages (German and Spanish) and social and political sciences from the University of Cambridge.
The 30 house price hotspots
While we have seen house prices sliding, these sought-after locations have seen prices jump by at least 5% over the previous 12 months
By John Fitzsimons Published
Working parents will be entitled to 15 hours free childcare for two-year-olds from next year
The government has extended free childcare hours to working parents of two-year olds but it won’t be automatic so make sure you don’t miss out
By Marc Shoffman Published