Sunday, 28 April 2013

Shale gas and Cash-for-Locals?

This week the Parliamentary Select Committee for Energy and Climate Change released its assessment of 'The Impact of Shale Gas on Energy Markets'.

I particularly enjoyed conclusion 5:
One key to community acceptance will be a robust factual response by government to scare stories
I wonder who/what they could be referring to there....

More interesting, in my view at least, is conclusion 6:
Communities who are affected by shale gas development should expect to receive, and share in, some of the benefits of the development
or, as the Guardian would put it: Fracking firms should offer sweeteners to locals. It's an interesting idea, but I'm still torn between whether it is a good one or not.

In the US, mineral rights are generally owned by the person that owns the land. This means that if your farm sits on top of some shale gas, you stand to benefit directly from royalties from the gas development (try sticking the default numbers into this calculation engine). As a result, shale gas is generally wildly popular among rural American communities.

However, in the UK, in most cases the mineral rights being to the Crown Estate (i.e. 'er maj, gawd bless 'er), meaning that royalties from gas production goes straight to central government, rather than via local people.

Of course, that's not to say that shale gas development will not benefit a local community. While many of the jobs involved are high tech, and as such cannot be easily accessed by local people, there are plenty of roles for relatively unskilled workers, particularly in construction and haulage. Moreover, however the influx of skilled workers need places to stay, to eat and to drink, to do their laundry. They need to buy petrol, buy stuff from convenience stores, the list goes on. In Pennsylvania you hear of companies block-booking whole hotels for 6 month stretches to house the workers, restaurants full to bursting every lunchtime and bars full in the evenings.

However, UK public opinion continues to waver in regards to shale gas development. So, is it right to consider setting up community benefit schemes, whereby some of the profits from gas development are injected directly back into the local community? Or is this all a bribe to get people to accept something that they'd otherwise not be comfortable with?

In all honesty, I'm not sure I know the answer to this. On the one hand, shale gas development will involve some local disruption. Not the scare stories of exploding taps, blighted aquifers and general geological disruption - the so-called 'geological dread factor' - but increases in traffic, construction sites, laying new pipeline etc. Therefore it does seem reasonable that a community should receive some recompense for that. On the other hand, offering what could easily look like little more than a bung could make it look like shale gas has something to hide, when so long as the government ensures that there is 'a robust factual response by government to scare stories' it shouldn't have to.

It is worth noting at this juncture that such schemes seem to be common for wind farms (see here and here for two randomly selected examples) and nuclear power stations. I have enjoyed seeing how the language changes depending on your preferred form of energy, particularly wind farm proponents who have touted these community wind farm benefits as a great example of how wind can benefit a community, while if shale gas companies suggest the same thing then it is little more than a bribe.

So I'm still not sure whether this is a good idea or not. Regardless, in the meantime, IGas have drilled two exploration wells in Lancashire.


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