January 28, 2015 / 6:24 PM / 5 years ago

Scottish moratorium, planning delay dent Cameron's shale gas ambitions

LONDON (Reuters) - Scotland on Wednesday blocked the granting of permits for fracking and a local English council delayed a decision on two projects, casting doubt on British Prime Minister David Cameron’s shale gas ambitions.

Demonstrators gather outside the County Hall during an anti-fracking protest in Preston, northern England January 28, 2015. REUTERS/Darren Staples

Cameron has said he will go “all out for shale” to help stem a decline in North Sea oil and gas output, but environmental concerns about the use of the fracking technology used to unleash gas trapped in rocks have turned sentiment more negative.

Scotland, estimated to have around 80 trillion cubic metres of shale gas resources - enough to cover all of Britain’s gas needs for more than 30 years - imposed a moratorium on planning permits until it examines the health impact and other consequences of extraction.

“I am announcing today a moratorium on the granting of planning consents for all unconventional oil and gas developments, including fracking,” Scottish Energy Minister Fergus Ewing told the Scottish Parliament.

Hours earlier a local government council delayed a decision on whether to allow shale gas firm Cuadrilla to progress with two fracking projects after a hotly contested debate.

Officials at Lancashire County Council in northwest England said last week Cuadrilla’s applications should be rejected when the council voted, because the work would be too noisy and create too much traffic.

In response Cuadrilla, chaired by ex-BP boss John Browne, laid out changes it could make, which councillors opened for public consultation for at least eight weeks, hence deferring their decision.

“The additional information we have provided on further mitigation measures will, we believe, fully address the noise and traffic concerns raised,” Cuadrilla said in a statement. “We remain committed to the exploration of shale gas in Lancashire.”

Fracking, in which chemicals and water are blasted at underground rock formations to release trapped gas, has come under fire from environmentalists who are concerned about groundwater contamination and earth tremors.

“The councillors should look again at the mounting evidence of fracking’s environmental, health and climate impacts, and put the wellbeing of their communities before the interests of the shale lobby,” said Simon Clydesdale, UK energy and climate campaigner at Greenpeace.

‘NOT FOR SHALE’

Anti-fracking campaigners protested outside the council building on Wednesday, holding posters displaying slogans such as “Lancashire’s not for shale”.

Opposition to fracking has been mounting in Britain and earlier this week, the government in London fended off proposals from lawmakers to ban shale gas fracking outright, agreeing instead to curb fracking in national parks.

There has also been popular opposition in mainland Europe, notably in densely-populated Germany, whose government has said it plans to allow fracking only below a depth of 3,000 metres with current technology.

“All these things seem to be indicating that people aren’t convinced that shale gas can be done safely,” said John Williams, senior principal at energy consultancy Poyry.

The wavering sentiment has knocked confidence in the sector, with shares in shale gas explorer IGas Energy sliding in the run-up to Wednesday’s decisions. They rose sharply through the day however as the local English council did not reject Cuadrilla’s application outright.

A man holding a sign stands outside the County Hall during an anti-fracking protest in Preston, northern England January 28, 2015. REUTERS/Darren Staples

Swiss chemicals group Ineos, part-owner of Scotland’s Grangemouth refinery, owns and has applied for shale gas licences in Scotland as part of a $1 billion (659 million pounds) investment plan.

In the United States, booming shale gas production has put the country on the path to energy independence and lowered energy costs for industry and businesses.

Investors in shale gas projects take a long-term view on commodity prices, so the recent slump in oil prices is considered unlikely to have lasting impact on UK shale projects.

Addtional reporting by Vera Eckert in Frankfurt; Editing by Kate Holton and John Stonestreet

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