U.K. Plans to Allow Shale Gas Drilling to Resume This Year

The U.K. plans to allow companies including Cuadrilla Resources Ltd. to resume shale gas exploration this year to take advantage of “an exciting opportunity,” Energy Minister John Hayes said.

Drilling by Cuadrilla caused two earthquakes last year, leading to a suspension and an assessment by the Department of Energy and Climate Change of hydraulic fracturing, the process for extracting shale gas. Asked whether a resumption is likely this year, Hayes said “yes, I’d like it.”

“I am a great enthusiast for it, providing we have all the proper precautions in place,” Hayes said today in an interview. “Whether the companies proceed this year, is another matter. Certainly I want to get the matter settled from the government’s point of view sooner rather than later.”

The comments build on remarks Chancellor of the Exchequer George Osborne made on Oct. 8, when he announced possible tax breaks for shale gas “so that Britain is not left behind as gas prices tumble on the other side of the Atlantic,” a reference to a boom of fracking in the U.S. that’s driven gas prices down.

Cuadrilla says the shale rock it’s exploring in northwest England has more gas than all of Iraq. Lawmakers in Britain’s ruling Conservative Party are pushing development of the industry as a way to limit energy-prices and reduce reliance on fossil fuel imports.

Earthquake Risk

Opponents of shale drilling say it pollutes groundwater and point to the two earthquakes caused by Cuadrilla’s operations in April and May last year. Hayes said he’s meeting today with lawmakers who represent areas where shale drilling might take place and who have “understandably” voiced concerns.

“We want to get the regulatory framework in place,” Hayes said. “In terms of getting the regulations in place, you then want to put the permission in place as early as possible.”

Companies with licenses in areas possibly holding shale-gas resources in the U.K. include IGas Energy Plc (IGAS), Dart Energy Ltd. (DTE), BG Group Plc (BG/), Celtique Energie Ltd. and Reach Coal Seam Gas Ltd., according to Hayes’s department.

Cuadrilla has said there is 200 trillion cubic feet of shale gas in its license area, though not all of it is technically recoverable. Exploitation of the U.K.’s shale-gas reserves may meet 10 percent of U.K. demand for 103 years, the Institute of Directors said last month in a report.

“This is an exciting opportunity,” Hayes said. “We don’t want to over-egg the pudding, but we don’t want to not egg the pudding at all.”

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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