Liz Truss has vowed to lift a three-year ban on fracking in England, claiming that this “could get gas flowing in as soon as six months”, defying advice from her predecessor Boris Johnson that such a move would not solve the energy crisis.
The new prime minister’s decision to press ahead with fracking was part of a wider package of energy supply reforms announced on Thursday aimed at cutting Britain’s reliance on imported gas. It includes more drilling for oil and gas in the North Sea, the acceleration of Britain’s long-delayed nuclear programme and more renewables.
Truss also launched a review of the UK’s 2050 net zero emissions target to make sure the ambitious target was achieved without placing “undue burdens” on businesses or consumers. In a move that should reassure environmentalists, however, she has chosen Chris Skidmore, a prominent green Conservative MP, to lead the study.
But the prime minister’s claim that fracking could yield results in six months raised eyebrows among energy experts, who pointed out it contradicts what new chancellor Kwasi Kwarteng said just six months ago.
“Even if we lifted the fracking moratorium tomorrow, it would take up to a decade to extract sufficient volumes — and it would come at a high cost for communities and our precious countryside,” Kwarteng wrote at the time in the Daily Mail.
Truss’s decision to lift the moratorium is also a big political gamble that risks clashes with members of her own party and upsetting voters in many Tory constituencies.
The effective ban was imposed in 2019 after the Australian-owned company Cuadrilla, the only business to have fracked for shale gas in Britain, caused an earth tremor measuring 2.9 on the Richter scale while drilling a test well near Blackpool in Lancashire.
The new prime minister hedged her bets on lifting the moratorium by insisting shale gas companies could seek planning permissions “where there is local support”. The move will rile some of her own supporters, such as Alexander Stafford, MP for Rother Valley in northern England, who are known opponents, and risks alienating voters.
UKOOG, a trade body that represents frackers, cites a study by the British Geological Survey carried in the middle of the last decade that identifies Britain’s largest shale gas deposit under an area that covers substantial parts of the Midlands and the north of England. Known as the Bowland-Hodder formation, it includes numerous Tory constituencies, many of them seized from Labour in the 2019 election.
Another smaller formation assessed by the BGS — the Weald Basin in the south-east of England — also encompasses many Tory seats.
Truss’s announcement was welcomed by the shale industry. Francis Egan, Cuadrilla’s chief executive, insisted the prime minister had “made the right call”. He “looked forward to working with [the government] to ensure this industry can start generating results as soon as possible”.
But the question of whether Britain could have a viable shale gas industry is still subject to much uncertainty. Andy Samuel, chief executive of the North Sea Transition Authority, the UK’s oil and gas regulator, which also has responsibility for fracking, told a parliamentary hearing this week that “no one knows” until more wells have been drilled and reserves have been “properly appraised” how much shale gas may or may not be economically recovered.
The BGS survey of Bowland-Hodder suggests it could contain 37,600bn cubic metres of shale gas, equivalent to about half of Britain’s annual gas demand of 77 bcm. Truss said on Thursday she would release an updated BGS report that suggests “more drilling is required to establish data and on shale resources and seismic impacts”.
Johnson, in one of his final speeches as prime minister, also questioned whether fracking could be carried out “effectively and cheaply” in Britain. “I’m just, I have to say, slightly dubious that it will prove to be a panacea,” he said last week.
Scott Flavell, energy partner at the consultancy Sia Partners — who has extensive experience of fracking as a former director-general of energy in the Australian state of Queensland — said that unlike offshore drilling the process to tap shale formations was much less time consuming. But he added getting gas flowing in just six months would require “the government to override a whole range of local planning permissions”.
There are other hurdles. Cuadrilla in 2019 had to stop drilling even before the moratorium was imposed every time it caused earth tremors exceeding 0.5 on the Richter scale. Fracking companies have long warned those rules — known as the traffic light system — would render commercial fracking for shale gas in Britain impossible.
“This is not like conventional gas, you have to drill thousands of wells to get a decent amount of gas,” said Flavell. “Given the size of Britain, it’s a small county with a large population, they are never ever going to be able to drill the number of wells they need to have a significant impact on supply or price.”
Many of the other ways Truss laid out to improve Britain’s domestic energy resilience were already government policy under Johnson’s administration.
The prime minister confirmed the government will launch a new oil and gas licensing round — the first since 2019-20 — as early as next week, which is expected to lead to more than 100 new licences.
UK energy package key takeaways
An “energy price guarantee” will limit the price suppliers can charge customers for a unit of gas, meaning a typical household will pay no more than £2,500 a year on energy bills.
A six-month scheme for businesses, charities and public sector employers, such as schools, will be launched. Under this, the state will pay energy suppliers the difference between the new cap and what energy retailers would otherwise charge their customers.
After six months, the government will switch from the business scheme to a more focused plan for vulnerable industries.
A go ahead to fracking and more North Sea licences will be given to accelerate production of domestic energy.
The package is estimated at £150bn but its final cost will depend on movements in the gas market. Ministers insist the scheme will bring down inflation and save billions on gilt debt payments.
The UK’s North Sea oil and gas production peaked in 1999-2000 and has since been in long-term decline — falling 17 per cent last year to about 28 bcm of gas and 45mn tonnes of oil, according to OEUK, a trade organisation.
The North Sea Transition Authority has promised to prioritise licences in the next round that contain existing discoveries and could reach production in as little as less than a year. However, on average it takes five years from a licence being awarded to production, the NSTA says.
Earlier this week, the Climate Change Committee, which advises the government, and the National Infrastructure Commission jointly wrote to Truss to stress any government action to tackle the energy crisis should include promoting efficiency measures to cut bills. “The UK cannot address this crisis solely by increasing its production of natural gas,” the letter warned.
Additional reporting by Shotaro Tani and Gill Plimmer in London