Shale Gas

Andrea Leadsom Excerpts

Tuesday 30th June 2015 Westminster Hall

[The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)]

It is a great pleasure to be here today, Mr Howarth. This has been an incredibly valuable and timely debate on the potential of shale gas. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) was exactly correct to say that to take advantage of the huge potential offered by shale, we need to get it right, and as the new Minister for energy, I can assure him that making sure we get it right is a key focus for me.

My hon. Friend the Member for South Ribble (Seema Kennedy) mentioned that often, the people who object to shale are called nimbys or luddites, and she is also exactly right. I would never call those with local, very well founded concerns nimbys or luddites. Plenty of people in my constituency have concerns about all manner of things, ranging from HS2 to wind farms, to anaerobic digestion plants. They are not nimbys or luddites, but local communities who need to understand better. My priority will be to reassure them and, yes, to use an element of persuasion. As my hon. Friend the Member for Tiverton and Honiton (Neil Parish) pointed out, we need to take local people with us, so that will be my absolute focus.

[Julian Sturdy (York Outer) (Con)]

The Minister is absolutely right about taking local people with us. The whole debate about fracking is ultimately about trust, as has come out loud and clear in this morning’s debate, but sadly, findings of the Government’s “Shale Gas: Rural Economy Impacts” report were redacted. That does not fill people with trust, so will she encourage the relevant Minister in the Department for Environment, Food and Rural Affairs to publish that report as soon as possible?

[Andrea Leadsom]

The report is going to be published. The timing is up to DEFRA, but I share my hon. Friend’s concern that it should be made available to the public, so that they can draw their own conclusions.

I want to mention that my hon. Friend the Member for Fylde (Mark Menzies) was keen to speak up for his constituents, but sadly, there was not the time. My hon. Friend the Member for Warrington South (David Mowat) rightly pointed out that keeping the lights on is a key and critical role of Government, and that shale has the potential to contribute to that. We need home-grown energy more than ever before, so we in this Government remain committed to renewables, which now provide 15% of our electricity. We are also committed to energy efficiency and, vitally, to affordability. Shale gas could be a pragmatic, home-grown solution to help meet those needs.

Gas is the cleanest fossil fuel. It still provides a third of our energy demand and we will need it for many years to come. Around 70% of the gas Britain uses is for heating, and many people in businesses will need to keep using gas for heating while we develop and deploy renewable heat sources. We are likely to continue relying on gas to provide much of our heat, as well as to generate electricity into the 2030s, but even with our projected doubling of renewable capacity by 2022 and the planned creation of additional nuclear-fuelled generation in the 2020s, increases in gas-fuelled generation will be needed, as we phase out unabated coal. Flexible electricity generation, such as that fuelled by gas, is also needed to help balance the electricity grid as our policies bring forward relatively inflexible and intermittent low-carbon generation.

We used to be net gas exporters, but that is no longer the case as North sea gas declines. By 2025 we expect to be importing over half the gas we consume. Meanwhile, events around the world show us how volatile energy supplies can be. Developing shale gas could make us less reliant on imports from abroad while providing more jobs and creating a whole new British industry. It is therefore vital that we seize the opportunity to at least explore the UK’s shale gas potential while maintaining the very highest safety and environmental standards, which we have established as world leaders in extracting oil and gas over decades.

I fully appreciate, of course, that many people are worried by the stories they have heard about fracking, so I want to address, as a key point in my remarks, the most important and overriding concern of shale gas exploration, which is safety. Reports by the Royal Society, the Royal Academy of Engineering and Public Health England have considered a wide range of evidence on hydraulic fracturing in a UK context, concluding that risks can be well managed if the industry follows best practice, enforced through regulation. We have one of the world’s most developed oil and gas industries in the North sea basin and some of the world’s most experienced and highly regarded regulators. We have been successfully regulating the gas and oil industry in the UK for over 50 years. Our regulatory system is robust and we are proven world leaders in well regulated, safe and environmentally sound oil and gas developments. We have strict requirements for on-site safety to prevent water contamination and air pollution and to mitigate seismic activity.

The health and safety and environmental regulators are independent, highly specialised and well trained and will enable the development of shale gas in a safe and environmentally sound manner. Regulators simply will not allow unsafe or environmentally unsound operations. They are able to suspend and revoke permits immediately, and if necessary, impose criminal sanctions, including prosecution.

[Mark Menzies]

As the Member of Parliament for Fylde, I am very reassured to hear what the Minister is saying. However, will she assure me that as well as the planned inspections, some will be unannounced?

[Andrea Leadsom]

I can give my hon. Friend that reassurance. It is certainly intended that there will be regular visits from health and safety and Environment Agency staff, and that there will be unannounced visits.

[John Mc Nally]

Will the Minister give way?

[Andrea Leadsom]

No, I am sorry. We are really short of time—I apologise.

The Environment Agency assesses the hazards presented by fracking fluid chemicals on a case-by-case basis. They will not permit the use of hazardous chemicals where they may enter groundwater and cause pollution. The Health and Safety Executive scrutinises well design and requires week-by-week written updates on drilling progress. DECC has implemented a thorough system of rigorous checks before any drilling or fracking, as well as a live traffic-light system during the actual operations to ensure that earthquakes will not occur.

To reinforce the regulations further, the Infrastructure Act 2015 introduced a range of further requirements if an operator is to carry out hydraulic fracturing. They include a mandatory environmental impact assessment, which is absolutely vital. There was a misunderstanding that fracking would not require an environmental impact assessment, but that is not the case and DECC has tried to remedy that misunderstanding. Any hydraulic fracturing will require separate independent environmental impact assessments. Additionally, unlike in the United States, in this country disclosure of all chemicals used in the fracking process and 12 months of baseline groundwater monitoring will be required. There will be specific community benefits to be paid and the complete exclusion of protected areas. We already require everything that has been recommended by the European Commission.

To summarise on safety, we have among the best and most experienced regulators in the world and a 50-year track record on safe oil and gas exploration. Our regulatory environment for shale is the toughest in the world, but it is also important to discuss the enormous potential benefits of a successful shale gas industry, not just in energy security, as I have said, but in direct benefits to jobs, growth and community investment.

Ernst and Young has estimated that a thriving shale industry could mean 64,500 jobs nationally or over 100 jobs per year at a typical site. The value of the supply chain for the industry has been estimated at £33 billion between 2016 and 2032. This is an incredible opportunity. We are at a pre-beginning phase, but there is a huge amount to play for. British engineering is at the forefront of the world and we have the opportunity to showcase that further by developing for ourselves a safe and environmentally sound shale gas industry. In November, we announced a new national network of colleges for onshore oil and gas to train the next generation of specialists to help the UK seize those opportunities.

The final, very important, point I want to address is the position of local communities. We believe that every community hosting shale should share in the benefits, so we have committed to setting up a sovereign wealth fund to ensure that revenues are shared fairly. We welcome industry’s commitment to putting £100,000 per fractured exploration well to local communities and then a minimum of 1% of any subsequent production revenues. That could be worth as much as £5 million to £10 million over the life cycle of the well. Wider communities will also benefit, as local councils will retain 100% of the business rates that they collect from productive shale gas developments.

I sincerely thank all Members for participating in this debate. It is important that we have the opportunity to discuss such a key issue for our future energy mix. As the UK’s Committee on Climate Change said of shale gas in 2013

“the UK will continue to use considerable, albeit declining, amounts of gas well into the 2030s”,

and

“if anything using well-regulated UK shale gas…could lead to lower overall…greenhouse gas emissions than continuing to import”

gas.

Question put and agreed to.

Resolved,

That this House has considered shale gas.