If shale gas can cut the UK’s energy dependence, we must jump hurdles to do it
Hydraulic fracturing (commonly known as fracking) is back in the headlines – an infrastructure bill will be included in the Queen’s speech that will allow energy companies to frack for shale gas under private land.
Domestic energy production is officially back at the top of political and policy-making agendas, and Prime Minister David Cameron has vowed to go “all out for shale”.
Recent geopolitical events serve to underline that no country should rely too heavily on the resources of another state. The UK relies heavily on oil and gas exports from the EU, Russia and the Middle East. By 2020 it is predicted we will be reliant on imports to meet 70 per cent of our gas requirements. As for security of supply, clearly there is a very urgent requirement for solutions.
This is where fracking and unlocking the UK’s large (or at least estimated to be) shale gas reserves rides to the rescue. As the North Sea supplies dwindle, shale gas increasingly appears to be a critical part of the UK’s future energy mix.
At the most recent Spectator breakfast event hosted by DLA Piper, the pros and cons of fracking were debated at length. The result was a broad consensus that, for its own security, to help drive down wholesale energy prices and to plug the gap until renewables are a viable source, the UK needs to exploit its natural shale gas resources.
Issues around the large volumes of water required for the fracking process and various planning dilemmas are not insurmountable and, with the help of the UK’s legal sector, questions around infrastructure capacity and planning, along with community and environmental impacts can be gauged and overcome by diligent preparation and surveys.
What is clear is that the UK must not allow itself to be held hostage by extra-territorial energy suppliers. Tapping into just the Bowland Shale Formation – an area said to hold around 1,329 trillion cubic feet of shale gas – would supply that immediate energy security and cost-of-energy benefit – not to mention create well-needed jobs.
Although there is still a debate as to how much shale gas in the UK is recoverable, the British Geological Survey has proved there are large reserves, and companies such as Cuadrilla are satisfied they can extract significant volumes. Now is the time for the UK to secure its own energy provision.
Law firms will be instrumental in this development – I expect a good deal of work to derive from it and it is our chance to help mining businesses and local councils/communities agree on fracking activity that will bring prosperity and energy security to the nation.
Treasure our law export
Chancellor George Osborne has announced a new trade finance facility to be offered to British exporting businesses by the Bank of England.
This is designed to make it extremely straightforward for UK businesses to access trade finance and the aim is to encourage British businesses to export more of their products.
Britain’s trade surplus figures were released a day later and were quite revealing. While the trade deficit narrowed to £9.2bn, this was down to a fall in imports. Exports also fell, something that will likely worry the Chancellor, as the rebalancing of the economy based on an increase of exports is one of the central planks of his economic plan.
This brings to mind one of our less discussed exports – English law. International contracts are often written in English law and London is an internationally renowned centre for dispute resolution.
Anecdotally the adoption of English law by foreign businesses and governments appears to be going from strength to strength. It is one factor that has enabled major UK headquartered law firms to ‘go global’ with success.
However, the Foreign and Commonwealth Office’s recent proposal of new contract sanctions is a real threat to London as the destination of choice for global dispute resolution. Prohibiting British courts from enforcing commercial agreements involving a “targeted regime” or rogue state risks damaging our competitiveness.
Many of the world’s leading centres of dispute resolution, Hong Kong and Singapore for example, would not be bound by the sanctions, making it inevitable that the law of such jurisdictions would be chosen over that of the UK. After all the hard work done to promote the exportability of English law, it would be a great shame if the outcome of the consultation saw London’s position in the global legal services market damaged.