Peter Jones: Fracking good plan for oil and gas

Pumping water, chemicals and sand into shale rocks to get oil and gas out is controversial. Picture: Getty
Pumping water, chemicals and sand into shale rocks to get oil and gas out is controversial. Picture: Getty
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Greens hate it, so Alex Salmond is saying nothing, but unconventional drilling could suit Scotland, writes Peter Jones

Earlier this year at a conference in Aberdeen, a speaker excitedly declared that “Scotland has the potential to be the Pennsylvania of Europe”. Eh? California or Florida perhaps, but Pennsylvania? The US state has its attractions, but doesn’t immediately come to mind as the kind of role model we ought to be trying to emulate.

The speaker was not being ironic, however. He was referring to the fact that after several decades in the doldrums following declines in the traditional manufacturing industries on which Pennsylvania used to thrive, it is now experiencing a renaissance. Where its big cities – Pittsburgh and Philadelphia – were once a byword for decline, now they are experiencing growth and big companies are investing.

So perhaps there are lessons to be learned. The catch, however, is that the turnaround is based on the highly controversial business of fracking – pumping water, chemicals and sand into shale rocks deep underground and getting oil and gas out.

Controversial yes, but could this, rather than the North Sea or renewables, actually be the future for Scotland’s economic prosperity? And if it is, why isn’t Alex Salmond busy promoting it? Could the SNP be missing a trick here as it tries to persuade Scots they could be better off with independence?

There is little doubt that Scotland has the shale rocks that contain oil and gas. They lie underneath central Scotland, or what geologists call the Midland Valley, and are thought to stretch out underneath the North Sea in a vast layer of the stuff which also branches out under most of northern England. Northern Ireland also sits on a lot of oily shale.

As indeed does Pennsylvania, the secret of why in the eyes of the Aberdeen conference speaker, it should be Scotland’s role model. The Marcellus shale is one of the bigger deposits in the US that oil and gas firms have been drilling into and fracking, and with spectacular results.

Readers will know from my previous columns that US fracking has caused the price of natural gas to fall to a quarter of what it was ten years ago, and also a quarter of what it currently costs here.

We have already felt the reverberations of this dramatic price change at Grangemouth. European petrochemical plants which “crack” gas into all sorts of industrial products, mainly the raw material for most plastic products, are now faced with a wave of competing products from the US. And as American petrochemical firms are using much cheaper US gas, they threaten to push their European rivals out of business.

That was basically why Ineos needed to make big cost cuts at Grangemouth and which, if Unite had not pulled back from the brink of disaster and accepted them, could have caused the plant’s closure and the loss of maybe 5,000 jobs. Now, fortunately, Ineos plans to import cheaper US gas and the future of the petrochemical works looks more secure.

All of this was discussed at the conference on fracking organised by The Scotsman last week. One of the things that struck me about the proceedings was the dog that was not barking – the Scottish Government.

Given that ministers will turn up at the opening of an envelope, it seemed odd that they sent along a civil servant who droned his way through the minutiae of the thicket of regulation that will surround any attempt at commercial fracking.

Well, you could argue that, while there are a couple of companies with licences to explore the potential for unconventional oil and gas – one looking at producing gas from coal seams and the other at shales – there isn’t much activity going on for anyone in government to talk about.

Well, that was also true when Alex Salmond started talking up the potential that wave and tidal energy could have for Scotland, promoting the country as the “Saudi Arabia” of renewables. Then nobody knew much about what devices would work on a commercial scale or what their costs would be, except that any electricity that did get produced would be expensive.

The big difference, of course, is that wave and tidal energy is thoroughly approved of by the Greens, his pro-independence allies, and by environmentalists, both of whom thoroughly disapprove of fracking. If Mr Salmond was to suddenly start speaking of fracking as likely to make Scotland “the Pennsylvania of Europe” (he would surely have a rather better soundbite), he would find himself at war with all sorts of green groups. Not ideal, when you want them to vote Yes next September.

Actually, I think environmentalists have got their thinking wrong here. A couple of facts at last week’s conference were really striking. One was that carbon dioxide emissions in America, the world’s leader in fracking, are going down, not up, because of fracking. That’s because the gas being produced is being used to replace coal in electricity generation, which cuts emissions. More cuts are occurring because bus and trucking fleets are shifting from diesel to gas as their fuel. Cars are making the same switch, but more slowly.

The second striking fact was that in Germany, carbon emissions are increasing, despite Germany being very strong in renewable energy, both from wind and solar power. That’s because the decision to shut down nuclear power stations has led to an increase in coal-fired generation.

Now, I would have thought that cutting carbon emissions because of the climate change threat they pose ought to be an over-riding priority for most environmentalists. And as we know that gas supplies from the North Sea are in steep decline, should we not be looking at unconventional gas?

If fracking in central Scotland, or under the North Sea, turns out to be viable, it might turn out to be ideal for burning in Longannet power station which, as long as it carries on burning coal, is Scotland’s biggest single carbon emitter, would do more to cut emissions than installing 1,000 wind turbines.

What’s not to like about that? If all the other environmental fears about fracking – earthquakes and water pollution – turn out to be exaggerated (and the evidence is that they are), unconventional oil and gas could be a real winner for Scotland. And regardless of how much renewable capacity is installed, we will still need back-up generation for when the wind doesn’t blow. Better it be unconventional gas than almost anything else.