(Corrects paragraph six by removing the words "and fracked". John Kemp is a Reuters market analyst. The views expressed are his own)
By John Kemp
LONDON, April 29 The village of Balcombe in West Sussex, with fewer than 2,000 residents, is set to test whether Britain's politicians, media and public can strike a sensible balance between climate change and energy security, local concerns and national priorities.
Balcombe has become a rallying point for a broad alliance of environmentalists and community groups opposed to the introduction of hydraulic fracturing for shale gas in Britain, as Guy Chazan explains in a thoughtful article in Monday's Financial Times ("Sussex village of Balcombe is focal point of fracking opposition" April 29).
Britain's pioneering fracking firm, Cuadrilla Resources, has planning permission from West Sussex County Council, the local authority, for exploratory drilling in the area, though it has no plans to do so at present, according to the firm's website.
Cuadrilla appears to be focusing on exploration and development in other parts of the country. The battle of Balcombe is therefore something of a phony war.
But Balcombe is a symbol for a much bigger fight over energy and climate policy, as well as local development. Even if Cuadrilla has no plans to drill and frack at Balcombe, shale wells will have to be drilled and fracked at similar locations.
Cuadrilla has already drilled several wells hundreds of miles to the north in the county of Lancashire. But the company was forced to suspend operations after fracking a well too close to a fault and triggering small earthquakes in April and May 2011.
The largest registered magnitude 2.3, just enough to be felt, though far too low to damage property or endanger life, according to the official report on "Preese Hall shale gas fracturing: review and recommendations for induced seismic mitigation" (link.reuters.com/hab77t).
In December 2012, the Department of Energy and Climate Change (DECC), which regulates oil and gas exploration, announced it would be prepared to allow fracking to resume, subject to stringent controls.
Fracking will be subject to a "traffic light" regime that will require operations to be paused and reviewed if there are signs they are starting to induce earthquakes. The initial monitoring threshold will be set at a very low level of magnitude 0.5. This could be raised over time as more experience is gained with the procedure, and, though DECC did not admit this, if public concern declines.
PERCEPTION AND POLITICS
Fracking opponents in both the United States and the United Kingdom cite a number of concerns. Chemicals used in fracturing operations could contaminate drinking water supplies. Fracking triggers earthquakes. And the enormous amounts of water used could put pressure on local rivers and aquifers.
So far, none has proved well-founded. Fracking can indeed create small earth tremors. But there are only three confirmed examples worldwide of significant induced seismicity even though more than 1 million wells have been fractured. None was large enough to damage property or endanger life. Geothermal energy and mining operations have caused more, and larger, earthquakes, without sparking equivalent levels of concern.
There are no confirmed instances of fracturing contaminating drinking water supplies. In most instances, fracking chemicals are pumped thousands of feet below the drinking water table. Preliminary reports of contamination from gas wells in Pavillion, Wyoming, are disputed and are being reviewed by independent scientists.
Pressure on rivers and aquifers is a legitimate concern. But water abstraction for farming, industry and local communities cause similar problems. Scarcity is a case for strict regulation of water use rather than an objection to fracking per se. ************************************************************** Frackers face daunting challenge in Britain Fracking by the truckload Frack on Your Majesty, you may be shale winner Seismic risk of fracking has been overstated Smart fracking will cut costs, save environment ***************************************************************
The real objections seem to be political. Environmentalists fear any increase in supplies of fossil fuels will lessen the momentum to develop cleaner alternatives like wind and solar. Local residents fear the impact of large-scale oil and gas development on their quality of life.
Fracking is enormously disruptive. Drilling and fracturing a single well can result in nearly 2,000 truck movements over the first two years, according to the Department of Transportation in North Dakota, which has more experience with the technique than anywhere else as a result of the Bakken oil boom.
Drilling and pressure pumping equipment must be brought in, assembled, then removed at the end of the process. Fracturing itself requires prodigious volumes of water and sand to be brought to the site. Once the well is fractured it must be connected to gas and oil gathering pipelines, or trucks must periodically visit the site to carry away produced liquids.
Community attitudes to fracking vary widely. Differences tend to reflect local economic conditions and previous experience with energy and mineral extraction.
In the United States, shale oil and gas has been encouraged in states like North Dakota, Oklahoma, Kansas and Texas, where it is seen as boosting the local economy, but viewed much more sceptically in New York and California.
Britain's shale gas deposits are widely distributed across the country, according to the last assessment of "The unconventional hydrocarbon resources of Britain's onshore basins" published by the British Geological Survey (link.reuters.com/xeb77t).
Some are located in northern England and Scotland, which have more experience with oil and gas extraction, as well as coal mining, and have been hit hard by the closure of much of the local mining, steelmaking and shipbuilding industries in the 1980s. Some may therefore welcome shale development if it promises local jobs and more revenue.
Other deposits, like Balcombe, are in the country's far more prosperous southeast and have less need for local development and less familiarity with resource extraction. Balcombe has almost 60 percent more people who describe themselves as managers, directors and senior officials than the national average, according to the latest census (link.reuters.com/tyb77t)
In such areas, shale drilling is more likely to be seen as a disruption rather than a benefit.
LOCAL REGULATION AND BENEFITS
In the United States, oil and gas drilling is regulated by the states, and in some cases local communities, and royalties are payable to the private owners of mineral rights, most of whom are local people. Local regulation and royalty payments have built an important constituency in favour of fracturing in some areas.
In Britain, licensing and regulation are conducted centrally by DECC and royalties are received by the government. Communities that host shale gas wells are likely to see all of the costs and disruption but with no input and no share of the benefits.
The government is keen to give residents more of a stake in the process and an incentive to approve drilling and fracturing projects. Local authorities already have substantial power to control the incidental aspects of drilling and fracturing because of their control of the planning process.
Ministers have floated the idea of extending these powers and allowing communities to share some of the benefits through reductions in their energy bills or funding for local facilities such as schools and sports facilities, to be paid for by fracking operators, according to the Financial Times ("Ministers consider fracking sweeteners" April 29).
With appropriate regulation, substantial oil and gas extraction is possible even in very sensitive locations in southern England.
Britain's largest onshore oil field, at Wytch Farm, produced more than 100,000 barrels per day at its peak from a series of horizontally drilled wells snaking under the World Heritage Site of the Jurassic Coast and the wealthy yachting centre of Poole Bay, which includes some of the most exclusive and expensive real estate in the country, all from a carefully landscaped site screened by thousands of trees.
Drilling is not entirely new in Balcombe, either. An oil well was drilled in the village by Conoco in 1986, though it was subsequently plugged and abandoned.
Many of the same local groups which are mobilising against shale gas also fiercely oppose onshore windfarms because of the visual blight. Yet the same voters complain bitterly about rising utility bills and still want to fly from nearby airports like Gatwick and Heathrow to take foreign holidays and business trips, all of which use enormous volumes of fossil fuel.
Shale development has become intensely political. Britain's finance ministry, concerned about economic competitiveness and energy prices, has become an enthusiastic supporter. DECC, which is more worried about climate change, is sceptical about whether shale gas supplies are big enough to make much difference and is adopting a far more cautious approach.
The British Geological Survey is preparing updated estimates which are expected to show a big upward revision in the country's shale gas resources. DECC has asked it to review some of the findings, apparently to dampen some of the enthusiasm.
Shale gas touches some of the rawest nerves in British politics, pitting national priorities against local concerns, economic development against the environment, fossil fuels against clean energy.
How the government, media and public handle the issue will be a key test of how well they can deal with even more complicated choices posed by climate change and the country's dwindling North Sea oil and gas supplies that cannot be reduced to a simple sound bite.
So far the indications are not good. (Editing by Anthony Barker)