The ‘Frack Off’ website summed up the current position succinctly saying: “For several years the fracking industry in the UK has been hoping for a breakout year where they finally get to push aside community opposition, drill a load of wells, flow some gas and get a load more investment cash as a result! Instead, due to concerted resistance from communities across the country, every year seems to be worse for the fracking industry than the year before.”
In 2019 Cuadrilla hoped to produce shale gas commercially from Preston New Road, however exploration at the site was halted at the end of August after it triggered an earthquake of 2.9 magnitude. After the Oil and Gas Authority report concluded that it was not possible with current technology to “accurately predict the probability of tremors associated with fracking”, the UK government declared a moratorium and withdrew support for fracking. Further blows to the industry came in the form of the rejection of the proposal to make fracking a ‘permitted development’ and the announcement that fracking would not be categorised as ‘nationally significant infrastructure’.
As a result of these factors, and also the anti-fracking campaigns, community resistance, and the increase in the number of reports about the adverse effect of fracking on health and climate change, key players in the fracking industry began to lose investors. AJ Lucas own 48% of the shares in Cuadrilla, and after the moratorium shares in AJ Lucas, which is listed in Australia, dropped 23% while shares in other UK-based fracking companies, including IGas and Egdon Resources, dropped by 10% and 25% respectively.
In the USA, since 2007, the oil and gas industry has lost $280 billion betting on the shale boom due to fracking and Wall Street financing. These companies are still borrowing heavily and the industry is struggling to recoup costs — much less profits. 26 companies in the USA declared bankruptcy in 2019. In over their heads with debt, US shale oil and gas firms are now moving from a boom in fracking to a boom in bankruptcies. This trend of failing finances has had an impact on the US public, having to pay to properly shut down and clean up even more drilling sites.
Questionable lending practices reminiscent of the mid-2000s housing bubble may be setting up another bubble in the USA, which would happen in the UK should the industry get off the ground.
Another factor to consider is that although the demand for gas worldwide continues to rise due to third world countries, production in the USA and Russia continues to rise and the oversupply has meant significant reduction in the price of imported LNG. Estimates of onshore extraction costs have been produced that range from 48p to £1.02 per therm, whilst natural gas futures price hover around 50p per therm for the medium term, meaning it will probably be cheaper to import LNG than produce domestic shale gas. It would appear that this is not an industry which would inspire confidence even if it were not being so fiercely resisted.
If you are interested in joining our campaign we meet on the first Wednesday of the month at 7.00pm. See our Facebook page — Frack Free Sherwood Forest and Edwinstowe — for venue.
Frack Free Sherwood Forest and Edwinstowe