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UK resumes fracking after seven-year hiatus

Fracking is underway again in northern England, but don’t expect a US-style shale boom any time soon

After a seven-year pause, hydraulic fracturing for shale gas restarted in the UK in mid-October. But, even if test fracking by driller Cuadrilla in north-west England goes well, it's unlikely that the industry can be scaled up as fast as the industry might like.

Cuadrilla has already drilled two horizontal exploration wells at depths below 2,000m in the Bowland Shale formation at its Preston New Road site in Lancashire in anticipation of receiving a green light. Now it has the go-ahead to frack them - a process which it says will take around three months. The gas flow rate will be tested over six months with initial results expected in the first quarter 2019, according to the company.

Cuadrilla was forced to halt fracking the UK's first shale gas well at another site in the region in 2011, when its operations triggered minor earthquakes. Since then political wrangles over fracking regulation, legal challenges and on-site environmental protests have prevented further shale gas drilling.

The UK government finally gave its approval for Cuadrilla's test fracking in July, saying it regarded safely produced shale gas as a potentially important contributor to future energy security, at a time when domestically produced offshore gas supply is waning. But before it could drill, Cuadrilla had to see off legal challenges-the last of which was dismissed in October-as well as ending site occupations by protestors.

Fingers crossed at Cuadrilla

The company will now be hoping nothing goes wrong, either above or below ground, during test drilling. Given mistrust of the industry in some quarters, even a small setback could lead to negative headlines and protestors are unlikely to give up.

"Assessing the results doesn't just mean results in terms of gas volumes, quality and flow rates. There's going to be an assessment of how the whole process has gone," says Bob Ruddiman, head of oil & gas at law firm Pinsent Masons.

The British Geological Survey's central estimate for shale gas resources in northern England is 1,329 trillion cubic feet, only 5% of which could supply the UK for more than 20 years at current consumption rates. But there seems little chance of the UK industry emulating the US shale boom, whose take off was achieved with lighter regulation and in areas of much lower population density than encountered in shale gas-prone areas of the UK.

A number of firms are already queuing up to carry out fracking at various locations in the UK, and could be joined by bigger guns, if commercial quantities of gas start to flow. However, even the candidates with the most advanced projects are failing to make headway.

Slow going in Yorkshire

Third Energy, which is 95% owned by Barclays, plans to frack at its site near Kirby Misperton in Yorkshire, northern England. But, with protests continuing at the site-which is close to the edge of a National Park-and final approvals still awaited, the company's chairman Keith Cochrane, along with a senior independent director, quit the company in September due to the "low levels of activity".

With caution likely to dominate decision making on fracking until the industry becomes better established, expansion is likely to proceed at a snail's pace initially, even if things go well for Cuadrilla at Preston New Road.

"It's unlikely that we will see rapid upscaling of the industry in the short term, because of the obstacles in the way at the moment, not just for unconventionals, but for all drilling onshore. It's just taking an extraordinarily long time to get the permissions," says Alyson Harding a consultant at UK-based analytical firm Westwood Energy.

But, the industry could still have a buoyant longer-term future, if companies work closely with the regulator on compliance and they are able to win over public opinion, says Ruddiman..

"We should not lose sight of the fact that currently government policy and regulation does allow fracking, if certain consents have been achieved," he says.

Regulatory relaxation?

The government, for its part, continues to make positive noises, promising in May 2018 to move towards a more industry-friendly regulatory environment. Since then, Clare Perry, the UK energy minister, has floated the idea of relaxing the rigorous rules governing earth tremors triggered by fracking.

At present, any seismic activity at all requires a slow-down in fracking operations and anything over 0.5 on the Richter scale-a level often undetectable at the surface-requires operations to stop while an investigation is carried out. In a letter to a fellow member of parliament in July, she said the current alerts system was "set at an explicitly cautious level" and suggested that "as we gain experience in applying these measures, the trigger levels can be adjusted upwards without compromising the effectiveness of the controls".

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