Rule Britannia: Government overrules fracking ban in interests of energy security

October 14th, 2016

A small headline told a big story this week about the true level of risk involved in hydraulic fracturing – and the importance of national energy security.

As a column in the Australian Financial Review this week was headed   ‘Not everyone fears fracking’.

It told how the British Government had overturned a local Government ban to allow hydraulic fracturing to be used in an onshore gas play part-owned by Australian company AJ Lucas.

And it described the “remarkable coincidence” that the decision coincided with the first imports of LNG to the UK in decades.

Three States and a Territory in Australia have now implemented some form of restriction on use of HF – all without any scientific foundation.  Despite decades of safe use of the technique in South Australia and Western Australia, Governments have capitulated to pressure from politico-environmental organisations including the Greens, Lock The Gate and many others.

Ignoring advice from industry, scientists and its own Environment Department, the Victorian Government has gone the farthest, banning HF outright.  NSW, WA and the NT have been more circumspect, implementing impediments by geography or specific type of activity, and leaving some room for review at a later stage.

In the UK, it seems the ‘later stage’ arrived for the Government recently when it saw the first gas-laden ship steaming into British waters, ready to deliver its cargo of LNG.

Governments of all persuasions would prefer to be exporters of energy rather than importers, and the UK has had decades of enjoying the economic benefits of oil and gas exports from the North Sea.

But in the North Sea, as everywhere, when resources dwindle, exports will fall and imports will rise unless there is a new source of indigenous supply.  This phenomenon has unpleasant consequences for economies.  Lower living standards loom.

Faced with this reality, the British Government looked a little harder at the risks of onshore development using HF and came to the conclusion they were acceptable.

When necessity pushed harder, convenient politics was shoved aside and a decision was made in the interests of the nation.  The Lancashire Council HF ban had to go.

Confirmation of the British government’s decision has seen AJ Lucas shares jump.  This is a message that the market believes the company’s partners have a good prospect of proceeding to test the resource – that the Government decision will hold against the likely enviro-activist backlash.

That market confidence is probably based in the fact that, if the resource is proved, it is estimated it could contain enough gas to meet all of Britain’s needs for 20 years or more.

In short, the British Government has taken a decision which values national energy security as the priority.  It has assessed the risk and found it acceptable – which is not surprising given the wealth of scientific study and opinion in the northern and southern hemispheres reinforcing that firm belief.

As the AFR reported, the chairman of AJ Lucas, Phil Arnall, summed up the situation nicely.

 “All credit to the UK government,” he said.

“It has left behind political expediency because it agrees it is worthwhile to look thoroughly at the opportunity to secure a sovereign energy opportunity for the nation. That is terrific. That is leadership.”

For the sake of Britain, and those elsewhere around the globe, we hope this leadership is  rewarded with a resource which proves to be every bit as good as anticipated.

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