It seems that never a day goes by without shale making the headlines. At the macro level, all the talk in recent months has been about falling oil prices, with the price of Brent crude free crashing from $115 a barrel only last June to under $50 in January, and now seemingly settled at around $60.
There are some complicated factors at shale oil which has flooded the market, and the reaction of the Saudis which was to refuse to cut production in the hope (to some degree realised) that lower prices would slow the US shale (and Canadian oil sands) boom.
It appears the Saudi’s can put up with the pain of low oil prices for a while, but many other oil producing nations, notably Russia and Venezuela, have been suffering.
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Certainly, the logic here is simple enough. Shale oil drilling is expensive, and suffers from high depletion rates, which means that drilling locations can quickly become unproductive.
This requires more wells to be drilled just to keep production levels constant, which carries a high capital cost and a vulnerability to low (and volatile) oil prices.
But shale oil is inherently linked to shale gas, not only geologically (much US shale gas comes from shale oil wells) but in the world’s gas markets where gas is typically sold on long-term contracts linked to oil prices.
Low oil prices might be good news for drivers at the pump, but they’re not especially welcome if you’re looking at developing shale gas reserves in the 海角视频.
Which brings me to the micro level, , in the North West.
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Once again, the Lancashire County Council planners have been in the news. In a surprise decision towards the end of February, the Council’s Development Control Committee refused a planning application for one of Cuadrilla’s sites. Notably, this application wasn’t for fracking – this was an existing well, and Cuadrilla wanted to use the site for seismic testing and pressure monitoring, after which the well would be filled in with cement.
Cuadrilla was less than impressed: “We are perplexed and disappointed by the decision of Lancashire County Council’s Development Control Committee to refuse our planning application for Grange Hill. The refusal was contrary to the advice of Lancashire County Council planning officers, the HSE and the EA all of whom recommended it for approval. It is not clear what the technical basis of the Council’s decision was.
As a consequence, the Grange Hill well appears to be in planning limbo since permission to plug the well and restore the site has been refused. We are awaiting clarification from the Council before deciding on next steps.”
An odd decision, and the latest round in an ongoing tussle between the would-be shale gas developer and the local planners, which earlier in the month saw a key planning decision on Cuadrilla’s applications for shale gas exploration at two other sites between Preston and Blackpool deferred until April. That deferral, which was at Cuadrilla’s request, was to allow a further period of consultation on revised proposals from the developer to address noise and traffic concerns.
Cue outraged fracking protestors.
But perhaps the debate is moving on a little. The early headlines were all about earthquakes and water pollution, and frankly did not bear much scientific scrutiny. Done properly, with sensible regulation, and with due regard to the water resourcing and discharge issues, the process of fracking does not appear inherently dangerous.
Much has been made, with little scientific backing it has to be said, of the risks of earth tremors and pollution of underground water aquifers, and there have been some outlandish claims made.
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But public opinion does seem unconvinced about the safety issues, and in an election year politicians will be wary. Look no further than January’s announcement by the Scottish government of a moratorium on all planning consents for unconventional oil and gas extraction, including fracking.
Putting aside this latest bizarre Grange Hill decision, the issues in Lancashire now seem to have boiled down to simpler planning considerations around an increase in local traffic, and night-time noise - much more understandable and legitimate concerns for local residents.
Surely this should be focus of the debate from now on in our densely populated country, with its valuable rural landscapes. If we can do it properly, whilst recognising and protecting local interests, domestic gas production from shale reserves could have a useful role to play in our energy mix.
Then again, if low oil prices subsist, perhaps what has to date been a planning and one?
* Andrew Whitehead is the Senior Partner at Birmingham and London law firm SGH Martineau LLP and leads the firm’s energy and climate change practice.