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Financial Times: Backing Fracking

Editorial, Financial Times

UK’s decision to allow shale drilling gives hope for future

Shale gas may or may not be the miracle cure for the UK’s pressing energy needs. There is too little certainty about how much of the gas that lies trapped between layers of rock deep underground can be extracted for commercial use. But the government’s decision to lift the moratorium on shale exploration is a welcome first step to finding the answer.

The world has looked on in envy as America’s shale gas revolution delivers a once in a generation competitive boost to US industry. The cost of natural gas has fallen by almost two-thirds in four years. Britons now pay nearly three times as much for gas as Americans. This disadvantages UK consumers and businesses alike.

But concern over the environmental impact of the controversial practice of fracking runs high in the UK. Critics point out that Britain is more densely populated, making it difficult to extract gas without upsetting those who live close to drilling operations. The 18-month moratorium was imposed after the process of injecting water, sand and chemicals underground to break up shale rock sparked minor tremors on the outskirts of Blackpool.

The government has wisely sought to address public concerns by introducing more stringent safety measures and drilling procedures. The industry, in its infancy outside the US, still suffers from a lack of vital seismic and geological information. Debate also rages over evidence of water contamination. The regulations aim to address these gaps by requiring extensive assessments and monitoring. The threshold for tremors is even lower than for industries such as coal mining or construction, for example.

There will be critics who claim that this risks killing any incentive to drill. Such complaints are misguided. The rules have been designed to be adapted as more information is gathered and the consequences of drilling and production are better understood. This should encourage operators to prospect more sites, rather than put them off.

It will be many years before Britain can hope for a shale-gas revolution of its own. Unlike the US, the UK lacks the onshore infrastructure that a fully operating industry needs. And, at the moment, there is only one company drilling exploration wells. Production is still some time away. Nonetheless, in giving a green light to fracking, the UK has opened a door rather than closed one. The hope is that it will lead to a brighter future.

Financial Times, 14 December 2012