June 25, 2015 / 4:35 PM / 4 years ago

UPDATE 1-British officials reject key shale gas fracking application

(Adds detail, background, Councillor, Cuadrilla comments)

LONDON, June 25 (Reuters) - British officials on Thursday rejected a Cuadrilla Resources application for shale gas fracking in northwest England, a landmark decision that is likely to deter potential investors in Britain’s nascent shale gas industry.

The company’s project at Roseacre Wood near Blackpool could have become one of Britain’s first shale gas production sites, but the permit refusal demonstrates the continuing difficulties shale exploration companies face in overcoming local opposition.

Officials at Lancashire County Council rejected Cuadrilla’s permit application to hydraulically fracture at the site on the basis that the work would create too much traffic. A vote on a second Cuadrilla application for a nearby site is scheduled for June 29.

“We will now take time to consider our options, including our right to appeal,” Cuadrilla said in a statement.

The company said it was not surprised by the decision after council planning officers last week recommended the application should be rejected.

Britain is estimated to have substantial amounts of shale gas trapped in underground rocks and the government has been supportive of developing these reserves to counter declining North Sea oil and gas output.

However, progress has been slow because of opposition by local residents and environmental campaigners. Some are concerned about groundwater contamination from chemicals used in the process, while others fear the potential impact on property prices or tourism.

Lawmakers in Scotland, where some of Britain’s shale resources lie, have imposed a moratorium on granting fracking permits.

Only one shale gas well in Britain has been hydraulically fractured. The Cuadrilla project near Blackpool was abandoned after it triggered an earth tremor that resulted in an 18-month ban on fracking, which was lifted in 2012.

Since then, only three shale gas fracking applications have been made; two by shale gas explorer Cuadrilla and one by energy company Third Energy.

Other companies active in Britain’s shale gas industry are IGas, Egdon Resources and INEOS. (Reporting by Karolin Schaps and Susanna Twidale; Editing by David Goodman)

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