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Onshore Gas

Volume 551: debated on Wednesday 24 October 2012

Motion made, and Question proposed, That this House do now adjourn.—(Nicky Morgan.)

I am delighted to have secured this evening’s Adjournment debate on an extremely important issue. Many of the issues related to onshore gas exploration and extraction are, rightly, of concern to residents in my constituency and throughout the country. I am pleased to see a number of my hon. and right hon. Friends present and taking a keen interest in the debate. I pay particular tribute to my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw), who recently secured a Westminster Hall debate on wider energy interests in Lancashire. I know that he, like me, is concerned for the well-being of not only the environment in the county but the well-being of all our constituents. The issue is not just prevalent in Lancashire. Shale gas reserves have been found in the constituencies of a number of other right hon. and hon. Members, so it is right that we have this debate. It is timely, because any decision on the future of the industry is still to be made.

I pay tribute to the previous Minister, my hon. Friend the Member for Wealden (Charles Hendry), for his work on the matter. It was my privilege to work as his Parliamentary Private Secretary for two years, and I know how hard he worked on this issue and many others. I wish him well in what he does next.

I have subsequently had the opportunity to meet the new Minister of State, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes), on several occasions to talk about regulations on shale gas and more widely. I know that he takes the issue as seriously as I do, and I am grateful for all that he has done to date. I am pleased that he will be responding to this evening’s debate.

The issue that we have come here to discuss is extremely important, particularly in Fylde, where, as my hon. Friend the Minister knows, two earth tremors were triggered by the actions of Cuadrilla Resources last year when the Preese Hall gas well was fracked. As a resident of St Anne’s myself, I know at first hand the concern that that has generated. It left many constituents worried about the way in which the process is regulated.

It must be said that we have come some distance since then in understanding what is required and in making improvements to the regulations surrounding the emerging industry. Notably, there is the traffic light system to ensure that tremors are unlikely to occur again, which is most welcome. I am further pleased that I have received assurances from the Minister that his Department is taking on board recommendations from the reports of both the Royal Society and the Royal Academy of Engineering on shale gas.

I was also most grateful that my calls for a shale gas strategy group to be established, encompassing the Department of Energy and Climate Change, the Department for Environment, Food and Rural Affairs, the Health and Safety Executive and the Environment Agency, were swiftly acted upon. Ensuring that there are no gaps in regulation and that there is cross-departmental understanding on shale gas is extremely important. I know that representatives of each organisation are working extremely hard.

The debate is therefore not about bringing into question the expertise or integrity of the people involved in those regulatory bodies. I was extremely pleased that representatives of the HSE, the EA, DECC and Lancashire county council were present at a public meeting that I held in Fylde. I know that they were left fully aware of my constituents’ concerns and saw at first hand the level of research and knowledge that Fylde residents have accumulated over the past year. Rather, then, the debate is about supplementing their work to ensure that we achieve a gold standard of regulation.

We still have some way to go before we have a regulatory system in place for any potential stage of development. We need a system that addresses all concerns, that can be properly enforced and that sets an example to industry across the world. That is particularly important for the UK, where population density will always be a factor.

As it stands, what is supposed to happen is that DECC assesses and licences drilling, development and production activity; the environmental regulator with jurisdiction for the geographical area in question monitors and regulates the environmental aspects of shale gas fracking; the HSE monitors shale gas operations from a safety perspective; and the relevant planning authorities have a key role in considering the acceptability of the activities in question from the viewpoint of traffic movements, visual intrusion, consistency with local plans and so on.

Does my hon. Friend share my concern that the plans for gas storage in salt caverns in the Wyre estuary and the possibility of fracking are a dangerous combination, given what he said earlier about the risk of earthquakes and earth tremors occurring again?

My hon. Friend makes a valid point, which was touched upon in the debate that my hon. Friend the Member for Lancaster and Fleetwood secured in Westminster Hall. I know that the Minister heard that point and is well aware of it.

Many of the people who have been involved in the process are experts in their field, but despite that, I do not believe that the regulatory system is robust or transparent enough to instil public confidence should permission be granted to the industry. That is why I am calling for an independent panel of experts to be set up without delay. Many questions and concerns still surround the shale gas process, and it is vital that we have a panel for three purposes: to look at each issue in detail; to fully appraise the risk; and to ensure that specific regulations are in place to deal with that. If part of the process cannot be dealt with safely through regulation, an alternative method should be found. If, however, an alternative way of carrying out that process is not possible, it must not be done.

I congratulate my hon. Friend the Member for Fylde (Mark Menzies) on securing this important debate. Does he agree that one key issue of regulation and safety, particularly in my constituency, is the impact on the water table? It is not yet clearly understood by all that many of my constituents draw water from their own boreholes directly from the water table, and do not receive mains water.

My hon. Friend’s point is exactly the type of concern that I would want the panel to consider. It is a case of, “Bring everything out; let’s examine it independently, robustly and with integrity, and then let’s answer the questions”. I believe that the establishment of a panel is of the utmost importance and must be achieved forthwith. Should the Secretary of State give the go-ahead for the resumption of fracking, I will demand on behalf of my constituents intense scrutiny of all operations on the Fylde. Fracking rightly demands careful monitoring and full transparency, and I believe that work by the current regulatory bodies will be aided and enhanced by the presence of an independent panel of experts.

The panel is designed not to create more bureaucracy but to allow questions to be independently answered and solutions developed. It is crucial that the panel is open and accessible so that all interested parties—including Fylde borough council, which is about to establish a scrutiny group to look at this issue—have a means of getting their questions answered, and a body through which submissions can be made.

I have been assured that the technical competence of the regulators is not in doubt among those working in the industry, but the perceived lack of transparency, engagement and on-the-ground presence is prompting fears among many in the local communities that the industry does not receive sufficient oversight. We must therefore ensure that the UK continues its proud record of having world-leading energy regulators. Due to the developmental nature of the process in the UK, it is vital that we support the work of current regulatory bodies. In no uncertain terms can we allow the environment or the well-being of our constituents to be compromised.

Cuadrilla Resources is still unaware of how much shale gas it will be able to recover. Although the reserves may be considerable, it is unclear what level of gas can be recovered, or even if that is commercially viable. I urge the Minister to ensure that once that information is available, the panel will look at its impact on all key aspects of the local economy.

As I have told the Minister on previous occasions, constituents have raised with me a number of concerns that I would, in future, expect to be addressed by the panel. Those concerns are wide ranging and often technical in nature, but given the time allowed for this debate, it is not possible to go into each one in detail. Some concerns, however, are particularly worthy of mention.

First, many of my constituents are concerned that there are no specific onshore exploration regulations. The offshore regulations, developed in the 1990s following the Piper Alpha disaster, are perhaps not sufficient to address all the issues that arise from moving a process onshore, especially in a relatively populated area such as Fylde.

Secondly, although I welcome the environmental assessment being undertaken by the Environment Agency, I call for environmental impact studies to be undertaken on any proposed site, regardless of size. Furthermore, does the Minister have any plans to encourage a health impact assessment in a similar vein? A number of constituents have raised that issue with me, many of whom live within a couple of miles of potential fracking sites.

Importantly, the number of shale gas pads that would be developed in Fylde has been under speculation. We must take into account the population density and beautiful countryside of Fylde, and it would be completely unacceptable for that to be compromised by the proliferation of those sites. I speculate that similar situations will arise where shale gas reserves are discovered in other areas of the country. I therefore urge the Minister to ensure that any shale gas operator is fully transparent on the location and number of production pads that they seek to develop, and that the planning process is sufficiently rigorous.

Knowing the countryside of Fylde as I do, I know it would be completely unacceptable to take many sites to extraction phase. For example, I would consider the current site at Anna’s road, where exploratory drilling is taking place, to be an unacceptable location for extraction to occur. I would vehemently oppose its development as such.

If you will forgive me, Madam Deputy Speaker, I shall list other issues worthy of mention: the storage and disposal of fracking flow-back water; cement quality and the inspection of cement bond logs; the potential for subsidence; the examination of formation integrity tests as they are executed; surface methane detection; the publication of fracking chemicals used at each well; visual impact; impacts on local animals and welfare; potential flaring; and what happens to a site when it is no longer in use. It is important to note that that is not an exhaustive list, but it goes some way to highlighting the issues that I would expect the panel to look into—and it should explain its conclusions to the public. I appreciate that such a regime would require further funding, but for the panel to work, it is important that it is adequately resourced. We should not be putting a price on environmental considerations in my constituency or wider afield.

In a letter from June this year, the Secretary of State for Energy and Climate Change assured me that, if the decision is to permit further fracking, he will respond in detail to the points directly linked to the exploration activities and on what further steps might be necessary to ensure the effectiveness of a regulatory regime throughout any future production phase. Will the Minister reiterate this pledge to the Secretary of State if such a decision is taken?

I have called for the establishment of a committee of independent experts to look at all aspects of the process. Will the Minister take personal responsibility to ensure that that is done, and will he personally oversee the work of the committee, because it must be robust and of a Rolls-Royce standard? In the event of the Secretary of State giving permission for the shale gas industry to move from the exploration phase to the extraction phase, the panel should not only continue, but ramp up its work and take on the responsibility for scrutinising the onshore gas sector. Drawing on perceptions that have been formed from this point onwards, I would expect regular and thorough on-the-ground inspections from each regulator body; regulations that are rigorously enforced; and considerable sanctions brought to bear should any breach of such regulations take place.

I have not addressed other aspects of the industry, such as how the gas, once extracted, would get to the grid, how the potentially large revenues could be shared with the local community, or how shale gas could play a part in our energy mix in future. I expect the Minister and his fellow Ministers will take those issues on board and address them in due course should we ever get to that point. Shale gas might well have a role to play in our energy future, but that can happen only if it is backed up by a robust, open and exhaustive regulatory regime.

I will continue to pay close attention to the matter and will have no fear in raising my concerns or those of my constituents should we feel that progress is not being made. I am sure the Minister would expect no less of me. I have said in the House on many occasions that Fylde is a beautiful place to represent. I will continue to do everything within my ability to ensure that neither the environment nor the economy of this precious corner of our green and pleasant land are ever compromised.

My hon. Friend the Member for Fylde (Mark Menzies) has secured this debate and, in doing so, has illustrated once again that he personifies both rigour and vigour in the defence of his constituents, and I congratulate him on doing so.

The arrival of shale gas exploration in the UK in 2010, with operations almost wholly concentrated in my hon. Friend’s constituency, has quite understandably raised concerns among local residents and others about its impact. It is a new industry to Britain, and it is potentially intrusive. We need to be mindful of the amenity locally and the safety of the community.

My hon. Friend is clearly well acquainted with both the mechanics and potential impacts of the operations in both the current exploration phase and what might be expected if exploration is successful and the company involved develops a larger-scale operation to extract the resource.

The House will know that shale gas production has had a huge impact in the United States of America. It has had a major impact on supply and driven the price of gas below what could reasonably have been predicted only a few years ago. It has happened very quickly—over perhaps just 20 years—with a truly remarkable increase over the last five. When it started, this rapid expansion was mainly located in relatively sparsely populated areas. It is important to understand that the difference between the United Kingdom and the United States, in these terms, concerns both geology and geography. More recently, however, there has been an expansion into more populated areas and the pace and scale of activity has given rise to concerns within communities over both the short and longer-term impact on their health, their local communities and their way of life.

It is worth describing a couple of the features of shale gas activity that differentiate it from more conventional oil or gas production: the use of boreholes that run horizontally through the shale formation, and the creation of permanent fractures in the solid rock along that borehole. Together, these enable the gas to flow more freely into the well, acting in a manner similar to tributaries draining the catchment of a river. The increased concern about these techniques, particularly the creation of fractures—fracking—in north America coincided with the commencement of activities here in the UK in Fylde. Not unreasonably, our communities looked across the Atlantic and were genuinely worried by the reports, although often shown to be exaggerated, of what the impact might be here.

Not least in that was the portrayal of a US industry without effective regulation riding roughshod over local communities. This coincided with the emergence of a clear story of the failure of regulatory and operational control that led the Macondo disaster. Those worries were compounded when early activities in Fylde initiated small earth tremors, to which my hon. Friend has drawn attention previously and of which the House will be aware. This effect had not previously been reported in connection with shale gas fracturing, although they were associated with the drilling for hydrothermal energy and with large-scale waste water disposal.

It is quite right, therefore, that my hon. Friend should seek reassurance over the strength and coverage of the UK’s regulatory regime, and that he should seek further scientific and engineering reassurance that shale gas activities can safely move to an extraction phase. As I said, I will come to his specific points shortly, but first I will address some of the most prevalent concerns.

The first concern is aquifer pollution. There have been many reports in the US that shale gas operations have caused contamination of aquifers, and consequently of drinking water drawn from the aquifers, with fracking fluids or methane, and there have been reports of explosions and dramatic footage of householders setting light to their kitchen taps.

On investigation, some of those incidents, including that of the flaming tap, have proved to be unconnected to oil or gas operations—they were caused by contamination of water supplies by methane of recent biological origin—but there were cases in which the methane did originate from gas production. This has been attributed to unsatisfactory well construction or cementing. As the Energy and Climate Change Committee and the Royal Society have both commented, this demonstrates the importance of ensuring the integrity of the well. My hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) drew attention to the concerns in his locality about the contamination of water, which might well extend beyond the immediate area, given how water travels. As for fracking fluids, one reported instance of aquifer contamination remains under investigation, but the present state of the evidence is that there are no confirmed examples of such contamination.

Concern in the US about the use of fracking chemicals in extraction is based largely on the fact that the chemicals and other substances used were not disclosed, apparently because of commercial secrecy. In that respect, the situation in the US is very different from the situation here, which is quite straightforward. Before commencing, anyone carrying out drilling operations must consult the Environment Agency, which will consider the possible impacts on the environment, including on groundwater. The agency has made it clear that it will require the disclosure of all chemicals and other substances that may be injected into the subsurface, so that it can assess whether there is any risk of harm through contamination of groundwater. It will also publish those details on its website and beyond. Operations by any operator will be assessed case by case by the relevant environment agency. The agencies have powers to prevent any activities that they consider to pose a threat to the environment, but the circumstances here are very different from those that prevail in the United States.

Concern has also been expressed about water use and it is true that fracking for shale gas uses substantial quantities of water. Cuadrilla, the organisation involved in the exploration in the north-west, used about 10,000 tonnes for the well mentioned by my hon. Friend, but as that is a one-off use rather than a continuing demand it is unlikely to be of concern in most areas. By way of a comparison, 10,000 tonnes is only about 1% of the water that United Utilities Water supplies to the north-west every day. In any case, any abstraction of water for industrial purposes requires the permission of the relevant environment agency, which will not be forthcoming if the proposed abstraction is not sustainable in that area once account has been taken of existing and foreseeable demands.

The fourth area about which concern has been expressed is subsidence. It is important to understand that that concern is partly informed by experience in the North sea, where there has been significant subsidence under a drilling platform sufficient to require a major re-engineering of the platform to raise operating decks substantially. The producing rock in that case is chalk, however, which is more compressible than shale. The structure of shale is quite different and no significant compression of shale is expected as a result of gas extraction. The empirical evidence from the US supports that analysis, as despite the drilling of tens of thousands of wells and production experience over a decade or more there has been no report of subsidence attributable to shale gas production.

Let me turn now to my hon. Friend’s specific suggestions, which he has been assiduous in drawing to my attention today and previously. I have made it very clear that we will have a dialogue with those hon. Members who are affected and will allow them to express their concerns, which will be dealt with thoroughly, courteously and effectively—at least they will while I am around, because that is how I operate. I have taken the opportunity previously—I do so again today—to provide reassurances on a number of my hon. Friend’s most prominent concerns. In doing so, I am not attempting to fill the formal role he has proposed of providing independent scientific advice on the impacts of shale gas activity, although I have been able to draw on a considerable and growing body of scientific opinion.

The Select Committee on Energy and Climate Change carried out an inquiry into shale gas in 2011. It concluded that, provided good industry practice is followed and careful regulation applied, hydraulic fracturing or fracking is unlikely to pose a risk to ground water or aquifers. In addition, and on the more specific question of the implications and mitigation of fracture-induced seismic activity, my Department commissioned and is studying the findings of a report from an independent panel of scientific and engineering experts, which has been subject to public scrutiny, and deciding whether to permit the recommencement of fracking in Lancashire.

As my hon. Friend mentioned, this summer the Royal Society and the Royal Academy of Engineering provided an authoritative and comprehensive study of the potential risks of shale gas extraction and how they can be managed. It is fair to say that their conclusion was that the risks could be managed if best practice and firm regulation were applied. A number of recommendations were made for improving the scientific understanding of key aspects of the process—for instance, on induced seismicity.

I believe that the work has provided a sound basis for a decision on whether to resume exploration activity, but, as my hon. Friend has said, the scale of an eventual extraction phase would be different and, although many of the techniques are similar, the scale and introduction of production activities would give rise to additional scientific and engineering questions. I can as a consequence see considerable merit in building on that work, particularly on the excellent work of the Royal Society and the Royal Academy of Engineering, to provide a continuing means by which public concerns over the potential impacts of shale gas extraction can be examined. I am aware that there is a strong regulatory framework in place, not least through the Health and Safety Executive and the Environment Agency, whose purpose is protect against harmful activity. In addition, there is a stringent planning process to which any extraction phase must be subjected. I emphasise—my hon. Friend raised the point in his speech—that the scale of any application for continuing development would be subject to that planning process, and would, of course, be likely to be subject to a public inquiry if it was called in, which would allow the fullest possible examination by local people and local representatives of the implications of any applications.

Great care will need to be taken not to duplicate or weaken the existing statutory safeguards, but I will undertake to explore with my Department’s chief scientific adviser, Professor David MacKay, whether it would be possible to provide a mechanism or channel by which to provide authoritative responses to specific areas of scientific or engineering concern.

Furthermore, I hear what my hon. Friend says about oversight and coherence, and the need to involve Ministers directly in that oversight. Again, I shall give that full consideration and I hope to be able to return to this matter, with my hon. Friend and other hon. Members, and make some proposals on how lines of accountability and responsibility can be confirmed in new arrangements.

My hon. Friend is aware that we have already established a strategy group at official level to ensure full co-ordination of the work of the existing regulators. This is chaired by my Department and includes all those agencies. It has met regularly and is looking at the challenges; it will obviously ramp up its work as developments take place in the north-west. In parallel, the Environment Agency is currently undertaking a detailed review to ensure that it has the right powers and resources to protect the environment during the extraction phase. Other regulators, including the Department and the Health and Safety Executive, are involved in that review.

While shale gas is new to the UK, oil and gas activities are not. Drilling and production has been conducted onshore since the 1930s, and even fracking is an established technology. Few people know that the UK hosts Europe’s largest onshore oil field in Dorset, which has been producing oil for over two decades without harm to the environment or the community.

The regulators of these activities, particularly the HSE and the EA, are long experienced and are acknowledged as world class in their field. That is not to say, however—I assure my hon. Friend again—that I would rule out any improvements to the arrangements. If my hon. Friend will permit me, I will take the observations he has made into consideration and investigate what further steps can be taken, building on what we have, in order to give my hon. Friend and his constituents some further tangible assurance that the regulation of any extraction will be comprehensive, co-ordinated and well resourced.

Shale gas provides an exciting opportunity for this country. It should not be exaggerated, but neither should it be underestimated. It is critical, as my hon. Friend has rightly said, that it is conducted safely and with appropriate regulation. Where the regulation we have in place needs to be amended, added to or altered, it is important for Ministers to deal with it quickly and effectively. I assure him that that discussion will continue to take place, and I am more than happy to take a personal active interest in this matter so that he can assure his constituents and others that the Government are doing all that is necessary to make shale gas a great success. I thank my hon. Friend once again for giving me the opportunity to be able to say that this evening.

Question put and agreed to.

House adjourned.