Recent Hydraulic Fracturing Trends in the United Kingdom

Aug 15, 2013

Reading Time : 2 min

Shale extraction is less advanced in the United Kingdom than in the United States. As the British are now discovering, development of shale requires hydraulic fracturing of source rock (or “fracking”). On a densely-populated island that is largely unused to either conventional or unconventional production, government recognises the need to address concerns arising from this process. This task is made more difficult by a system of petroleum regulation which does not reward landowners. Government (not private citizens) controls - and benefits from - the right to extract oil and gas under both public and private land. Recent government policy, however, now offers financial rewards for local communities where fracking takes place.

Let’s start with the blunder. In a parliamentary debate, Lord Howell (a former Conservative energy minister) suggested that there are “large, uninhabited and desolate areas, certainly in parts of the North-East, where there is plenty of room for fracking.”

An outcry followed. An apology was quickly issued. The political damage was compounded by an acknowledgement that his lordship, in fact, intended to refer to the Northwest (not Northeast) of England. This correction served only to redirect the remark to a different part of the country.

Ten days later, the government media machine went into action in an attempt to reverse the damage. David Cameron, the British prime minister, set out to sell fracking to the public. It was a debate, the prime minister said, that he was determined to win. Many environmental myths had sprung up. However, the United Kingdom’s supplies of shale gas had the potential to create jobs, drive down both gas and electricity prices and supply the country’s energy needs for more than 50 years. Furthermore, according to the british prime minister, international evidence did not show that the process (if properly regulated) contaminated water supplies or caused environmental damage.

Those arguments have already been well rehearsed, but the prime minister did not stop there. More eye-catching was the government’s promise to pay £100,000 (about $155,000) to communities situated near exploratory wells, along with 1 percent of production revenues. Communities can use this money to reduce local property taxes or invest in neighbourhood projects such as schools.

This intervention by the prime minister significantly raises the stakes on the fracking debate in the United Kingdom. A recent survey by the British Geological Society reports 1300 trillion cubic feet of natural gas in northern England alone. This doubles the amount previously estimated. Notwithstanding injudicious remarks by its own side, the government now seems determined to influence public opinion on this issue.

Share This Insight

© 2024 Akin Gump Strauss Hauer & Feld LLP. All rights reserved. Attorney advertising. This document is distributed for informational use only; it does not constitute legal advice and should not be used as such. Prior results do not guarantee a similar outcome. Akin is the practicing name of Akin Gump LLP, a New York limited liability partnership authorized and regulated by the Solicitors Regulation Authority under number 267321. A list of the partners is available for inspection at Eighth Floor, Ten Bishops Square, London E1 6EG. For more information about Akin Gump LLP, Akin Gump Strauss Hauer & Feld LLP and other associated entities under which the Akin Gump network operates worldwide, please see our Legal Notices page.