Frackers in U.K. Pick Cold as Time to Make Point on Gas Supply
(Bloomberg) -- Britain’s natural gas fracking industry is using a cold snap that’s gripped large swathes of Europe this week and laid bare weaknesses in the U.K.’s energy supply to make its pitch.
Britain’s natural gas market has been stretched to its limits as the coldest spell since 2010 tests the nation’s energy and transport network. U.K. pipeline manager National Grid Plc even urged industry to curb its gas usage while the cold weather persisted.
As gas prices surged to record levels, industry bodies and Ineos Group Ltd. called for Britain to improve energy security by producing more gas at home rather than rely on imports.
“The U.K. is worryingly dependent on gas imports and this is forecast to increase to 80 percent by 2035,” said Ken Cronin, chief executive officer of industry body U.K. Onshore Oil and Gas. “The need to ensure we have our own homegrown source of gas rather than pursuing this continued over-reliance on imports has today become very evident.”
Britain is Europe’s biggest gas consumer after Germany. Once a major producer, the U.K. increasingly relies on imports during winter months as output from the North Sea falls. It’s a risky dependency when it’s cold across Europe, such as this week when a mass of Siberian air pushed in from Italy to Scandinavia.
On top of that, LNG shipments to Europe this season have been scarce as a surge in demand in China pushed up the cost of the super-chilled fuel.
Ineos, which is seeking to develop its own shale resources, agreed to reduce its consumption by 20 percent at its Runcorn plant in the U.K. and said there is an “urgent need for increased domestic supplies of gas.”
“These supplies can be provided by shale and yet multiple projects are being held up at the planning and surveying stage," the company said by email. “The resources beneath our feet can be used to create jobs, heat our homes and go a long way toward self-sufficiency.”
Companies have pushed the U.K. for years to replicate the gas output boom in the U.S., which turned the country from a net importer of the fuel to the world’s largest producer. While the U.S. Energy Department says there may be significant resources in the European Union, there has been little progress because of bans on hydraulic fracturing or poor initial results.
Cuadrilla Resources Ltd. drilled and fracked the first shale well near Blackpool, England, in 2011 and caused two tremors. The practice was then banned for a year across the country before a government study said it could be done safely.
Companies including Cuadrilla, Ineos and Third Energy have pursued planning permission to drill more wells. Cuadrilla has permission to drill and frack four wells in northern England while Third Energy has permission to frack an existing tight gas well.
Plans put forth by the companies have all been subject to long legal delays, including a ban in Scotland that Ineos recently won the right to challenge. The Bowland Shale Basin, where Cuadrilla seeks to drill, could yield as much as 133 billion cubic meters of natural gas, about double the U.K.’s annual consumption.
©2018 Bloomberg L.P.