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New Energy Secretary Rudd To Make Or Break UK Shale

Annemarie Botzki, Interfax

The appointment of Amber Rudd as Secretary of State for Energy and Climate Change under the new Conservative government marks a critical moment for UK shale developers.

Newly appointed Secretary of State for Energy and Climate Change Amber Rudd. (PA)

Newly appointed Secretary of State for Energy and Climate Change Amber Rudd. (PA)

Rudd’s appointment by Prime Minister David Cameron came as something of a surprise to many in the industry. Some have pointed to her green credentials as an unlikely fit for a cabinet member potentially tasked with cutting renewables subsidies and promoting fracking.

Lancashire County Council’s planning committee is due to decide on 30 June whether to give independent UK energy company Cuadrilla the go ahead for what would be the first drilled and fracked shale wells in the UK. The decision is being closely watched by legal experts and politicians, and is likely to have knock-on effects for other regions.

“The decision… will be the first test of Rudd’s commitment – or not – to UK shale,” Alastair Fraser, chair in Petroleum Geoscience at Imperial College London, told Interfax.

Cuadrilla has applied for planning permission to Lancashire County Council to develop two sites for shale gas in Preston New Road and Roseacre Wood in Lancashire. A decision was initially due in January, but has been delayed twice since then.

“Should the council turn down the application, we would expect an appeal and effectively some sort of government intervention either from the Department of Energy and Climate Change [DECC] or Department of Communities and Local Government. Either way the decision will, to a large extent, set the tone for the future of fracking in England,” Michael Herington, partner at Baker & McKenzie, told Interfax.

Although the British Geological Society estimated the Bowland shale has a potential 38 trillion cubic metres of gas-in-place, the permitting process and protests have stopped any progress in the area.

“There are three areas I would like to see fracked and tested. This will provide proof of concept or otherwise. [They are] Lancashire Bowland shale by Cuadrilla, Gainsborough Edale shale by Total and Weald Basin Kimmeridge shale,” Fraser said.

Besides political stumbling blocks, the drop in oil prices could have the largest impact on an industry which is still in an infant stage.

“We have seen the biggest cut backs on spending, particularly exploration, by small companies that make up most of the shale players in the UK,” Ian Thom, senior research manager for UK Upstream at Wood Mackenzie told Interfax.

Rudd, who was parliamentary under secretary of energy and climate change before her appointment, will also have to oversee the awarding of licences from the UK’s 14th onshore round, which has been due for several months. The round is the first for onshore licensing in the UK in six years.

“The 14th round of awards and bids will show who the shale players are and what parts of the UK they are targeting, as well as the overall level of interest and commitment,” Fraser added.

Rudd’s appointment was well received by both environmentalists and industry members, but it remains to be seen if her decisions will prioritise either side.

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