UK Shale Gas After Cameron’s Reappointment: Uncertain Certainties

With all the spotlights turned on the results of the surprising British elections that gave an outright majority to David Cameron’s Conservative Party, some doubts raised in the last hours. What will be the future of shale gas in the UK? Will the commitment expressed by Cameron translate into action?

Natural Gas Europe tried to contact several shale gas companies in England for a comment on how the British elections will impact on shale gas operations in the country, but a fair degree of skepticism emerged strong. The lack of answers hinted at some caution from the industry in a sensitive political moment. In other words, companies seem to prefer refraining from exposing their take on the situation. They are waiting to see evolutions that might positively affect their future.

On Thursday, Prime Minister Cameron said he wanted to reassure communities on the Fylde coast there will be "no dash into technology without the safeguards in place”. Question marks remain, as declarations during political campaigns often make little difference. The important message from Cameron came more than two years ago, when he clearly stated that the UK should be at the hearth of a "shale gas revolution".

Despite the political victory and the reappointment of the same Prime Minister, (thin) uncertainties on the future of shale gas stem from the new cabinet, as Cameron did not yet appointed a new Energy Secretary. He has to find the right person to replace Ed Davey, MP of the Liberal Democrats. The party previously headed by Nick Clegg is the main loser of the elections - it lost 49 of the 57 seats conquered in 2010, marking a burning  defeat for the Lib Dem. According to some experts, the Conservatives are now expected to be more prone to take risks. Time will tell. 

The outright majority given by the electorate to the Conservatives creates a sense of uncertainty also for a second reason: there will be more pressure on the party. From today, Cameron cannot share eventual responsibilities with other political forces. He has now to give clear signs of leadership. And leadership is always a very difficult political exercise. 

MEANWHILE BRITISH COMPANIES SEEM CONFIDENT

Also on Friday, some British companies published trading updates. 

‘We have also had to make the difficult, but necessary, decision to reduce the size of our workforce and number of consultants employed. Overall, there will be headcount reductions of more than 25% including the closure of the former Dart office in Stirling, Scotland’ IGas wrote in a note.

IGas said that, after the completion of the transaction with INEOS, it is now ready to optimise a five year development plan for field in North West and East Midlands.  

‘This will include seismic acquisition, multi-well drilling, hydraulic fracturing; and early commercialisation. In the North West, we continue to progress site identification and seismic acquisition. Planning is ongoing for the 3D seismic survey in the North Dee area with work expected to commence in the next few month.’ 

All in all, it seems that the oil and gas industry has not reason to be too scared. In the UK, it will probably have an easy life to tap in shale gas resources. 

“Oil & Gas UK has had good cooperative relationships with both the UK and Scottish Governments and we look forward to continuing this constructive way of working with the new UK Government” Deirdre Michie, Oil & Gas UK's chief executive, commented on Friday.

Despite the declarations from the offshore oil and gas industry association, though, IGas' decision to close the office in Scotland might suggest that things are quite different in Scotland.

UPDATE FROM BRUSSELS: IS POLITICAL SUPPORT WANING?

According to a note released by Food & Water Europe, earlier this week, the European Parliament's Industry Committee was close to endorsing immediate moratorium on fracking, showing that political support for shale gas is waning. 

‘Food & Water Europe is thrilled that the European Parliament's Industry, Research & Energy Committee just about endorsed an immediate moratorium on fracking in the EU in a close vote – 30 in favour and 30 against – on one of the amendments to the report of MEP Saudargas about an 'European Energy Security Strategy’ Geert De Cock wrote in an email note on Thursday.  

SO WHAT?

It is clear that shale gas will happen in the UK. Unless of extremely strong local opposition, the Conservatives will gladden shale enthusiasts and wind local communities up. If it is clear that the British government will support fracking,  the timing and the political strategy will much depend on the next hours.

The appointment of a new Energy Secretary will be key. It will not only define the person in charge of making Conservatives' energy hopes come true, but it will also give some more insight into Cameron's ability to set a clear agenda. It will say whether he will be able to walk straight to the aim, not bending to one or the other stream of his own party, but showing that his political success was not a flash in the pan.