Gas extracted by fracking in Britain could fuel British homes within three years

Energy chief believes controversial method will safeguard supply

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The Independent Online

Shale gas extracted by fracking could be supplying homes in Britain within three years, the chief executive of energy firm Cuadrilla says.

Fuel produced by the controversial technique, which has been blamed for causing two minor earthquakes around Blackpool, could be feeding domestic central heating systems by 2016, it was claimed, despite suggestions from senior industry figures it would be a decade at least before it came on-stream in significant quantities.

In an interview with The Independent, Cuadrilla’s Francis Egan urged policymakers to seize the potential economic and energy security benefits afforded by fracking and called for opponents to “get a sense of proportion” and stop peddling “horror stories” over the environmental impact.

Asked when British consumers could expect to see the first gas from Lancashire flowing through their pipes, Mr Egan said: “Maybe 2016 at a low rate. That is as early as I would say it. The thing about shale is the development – if it goes to that stage – will be incremental.

“I think that’s beneficial. I think people get worried that there is going to be 800 rigs appearing overnight on the Lancashire horizon. That is never going to happen.”

Hydraulic fracturing, known as fracking, in which water, sand and chemicals are used to blast natural gas from rocks, received a boost from George Osborne in the budget. The Chancellor, who has significant shale gas reserves beneath his Cheshire constituency, is keen to explore the game-changing possibilities of the technology which are helping transform the energy industry in the US. The cold snap has put Britain’s gas reserves under unprecedented pressure with warnings last month that the country had just two days of supplies left.

Mr Osborne and the increasingly pro-business Department of Energy and Climate Change has promised potential tax breaks to the industry alongside streamlined planning rules.

Enthusiasts claim this could lead to a North Sea oil-style bonanza for North West England and the lure of millions of pounds in community payouts. Mr Egan said the budget was positive for the industry and welcomed the Treasury’s support.

“(They are) keen to see the potential appraised and, if it can be developed, to be developed. They are keen to see economic benefit for the country which they should be,” he said.

But progress in exploiting the estimated 200 trillion cubic feet of reserves – the equivalent of 70 years of UK domestic use – trapped in rocks in the Bowland Shale around Blackpool has been slow and Cuadrilla admitted it was behind schedule.

Two seismic events in 2011 just days after the first gas began to flow led to an 18-month moratorium on drilling. Cuadrilla must now submit a further environmental report to Lancashire County Council as well as undergo consultation and planning processes before it can complete the exploration phase.

No further drilling or fracking is expected to take place this year, according to Mr Egan. “Our objective is to complete the exploration phase in as responsible a way as quickly as we can,” he said.

Yet no one knows how much gas is ultimately recoverable. “I can guestimate that… Is it 10 per cent, is it 20 is it 40, is it zero? You need some data. You need to drill half a dozen wells or so and flow-test them and then you begin to answer,” Mr Egan said.

“What we have found in the UK could – I’m not saying will – supply up to a quarter of UK demand. It could take a decade or longer to get to that level. But Lancashire is not the only place with shale in the UK,” he added.

Green groups have sought to discredit the fracking industry claiming it is economically unviable in the UK whilst posing unacceptable environmental risks. But analysts say consumers will continue to be dependent on gas for up to two-thirds of their energy needs for decades to come whatever progress is made on renewable energy whilst facing increasing imports as North Sea reserves dry up.

Mr Egan conceded that private-equity backed Cuadrilla was taking much of the flak for the industry. “We are the first and we hope we will continue to be the first and with that comes a certain amount of pressure,” he said.

And whilst the Government appears increasingly committed to exploiting shale gas reserves, persuading the public and “managing people’s legitimate concerns” remains a challenge although the majority had yet to make up their minds on the issue, he said.

“We are sitting on this gas. We are perfectly happy to keep importing it, including shale gas apparently from the US, pipelined gas from wherever... we are saying we know there is gas in the ground let’s find out how much we can get out and if we are going to develop it in the UK that will mean a very regulated, transparent environment. There is nowhere to hide in the UK.”

But environmentalists remained unconvinced by Mr Egan’s claims. Greenpeace energy campaigner Lawrence Carter said: “Betting the farm on fracking the English countryside for shale gas is a completely unnecessary gamble for bill-payers and the environment. 

“Everybody from Deutsche Bank to regulator Ofgem and even the energy minister Ed Davey admits it won’t cut energy bills for hard pressed households. And despite Cuadrilla’s disingenuous claims, any gas that is fracked from under people’s homes in Lancashire could take a decade to come on stream, and then end up being consumed on the other side of the world if that’s where the highest bidder happens to be.”

The US story economic boom, environmental hazards

British interest in fracking is the result of the extraordinary growth of the industry in the United States. Although the technique had been around since the 19th century it became economically viable shortly before the last millennium.

By 2011 US natural-gas production had risen to 28.5 trillion cubic feet with gas from shale deposits accounting for a third of total output. Shale gas wells in the US sprang up at a prodigious rate with 35,000 wells drilled in 2006 alone.

The boom reportedly created 600,000 jobs.

Supporters argue that the success of the industry makes the US less reliant on unstable regions such as the Middle East although there is growing doubt that other countries will enjoy benefits on quite the same scale.

The International Energy Agency concluded shale would be up to 50 per cent more expensive to extract in Europe than the US and not bring down prices. There has also been a fierce environmental and local backlash against fracking in the US.

The 2010 film Gasland voiced the complaints of citizens who claimed their water was polluted and that they had suffered health problems as a result of drilling.