French giant buys into UK fracking as councils get cash carrot

Have your say

FRENCH energy giant Total has confirmed it is to invest in the controversial process of fracking for shale gas in the UK.

The company has taken a 40% share in two gas exploration licences for drilling in the Gainsborough Trough, in an area between Doncaster and Lincoln.

David Cameron takes a guided tour of the IGas shale drilling plant oil depot near Gainsborough, Lincolnshire.

David Cameron takes a guided tour of the IGas shale drilling plant oil depot near Gainsborough, Lincolnshire.

Total, which is already involved in shale gas projects in the US, China, Australia, Argentina, Poland and Denmark, described the move as an important milestone for the company in the UK.

The announcement came as David Cameron said councils which give the green-light to fracking projects will be allowed to keep millions of pounds more in tax revenue.

The Prime Minister said local authorities in England would receive 100% of the business rates collected from shale gas schemes - rather than the usual 50%.

The move is part of an “all out” drive to exploit the controversial technique which uses high-pressure liquid to fracture rock and extract the gas in it.

But environmentalists accused ministers of trying to “bribe” local authorities into accepting fracking, a process that has raised concerns over inappropriate development and disturbance in rural areas, minor earthquakes and water pollution.

Announcing the move into the shale industry in the UK, Patrice de Vivies, Total’s senior vice president for Northern Europe, said: “This opportunity is an important milestone for Total E&P UK and opens a new chapter for the subsidiary in a promising onshore play.

“The group is already involved in shale gas projects in the US, Argentina, China, Australia, and in Europe in Poland and in Denmark, and will leverage its expertise in this new venture in the UK.”

The initial exploration will be conducted by partner IGas, and Total will take over operations as the project develops.

The project is part of £1.2 billion annual investments in oil and gas production by Total E&P, which is set to make it the largest oil and gas producer in this country by 2015.

The Government claims that exploitation of shale will mean more jobs and opportunities for people, and economic security for the UK.

Mr Cameron said: “A key part of our long-term economic plan to secure Britain’s future is to back businesses with better infrastructure.

“That’s why we’re going all out for shale. It will mean more jobs and opportunities for people, and economic security for our country”.

The commitment on business rates would mean councils hanging on to up to £1.7 million extra a year from each fracking site, officials said.

The industry has already pledged to give local communities £100,000 for each test drilling - and a further 1% of the revenues if shale gas is discovered.

And today it was announced that the industry would further consult on how to deliver the money to communities, with options including direct cash payments to people living near the site or setting up of local funds directly managed by local communities.

But green groups warned that the latest moves show how much opposition there is to fracking.

Friends of the Earth Jane Thomas: “This latest Government move highlights the depth of local opposition to fracking and the desperate lengths ministers are prepared to go to overcome it.

“People are right to be concerned about the impact of shale gas extraction on their communities - especially as experts say it won’t lead to cheaper fuel bills.

“This move raises potentially serious concerns about conflicts of interest, if councils that benefit from this money are also the ones who decide on planning applications from fracking firms in the first place.

“The Government should be encouraging the development of Britain’s huge renewable power potential, instead of coming up with new incentives that keep the nation hooked on climate-changing fossil fuels.”

Nick Molho, head of climate and energy policy at WWF-UK, said: “At a time when the Government has an important decision to make on our future climate change ambitions and in urging European partners to agree challenging emission reduction targets for the next 20 years, one has to hope that their boundless enthusiasm for shale gas will at least be matched by a similar willingness to rapidly decarbonise the UK’s energy system.

“Otherwise, the UK’s commitments to meet its obligations under the Climate Change Act and its stated ambition to rapidly grow Britain’s low-carbon industries will seriously lack credibility.”

A spokesman for the Department of Energy and Climate Change said: “Total’s investment is one of a series of major shale investments in the UK in recent months, and is a sign of industry confidence in the regulatory regime that the Government is putting in place.”

Speaking during a visit to iGas in Gainsborough, Mr Cameron defended the plans, saying environmental concerns would be assuaged once people saw the benefits of fracking.

He said: “We have the strongest environmental controls in this country, nothing would go ahead if there were environmental dangers.

“I think people can be reassured by that.

“But I actually believe it’s when these wells go ahead, when people start to see the benefit, when people see there aren’t environmental concerns, they will see that it is quite right that this is part of our long-term economic plan.”

During his visit to the Lincolnshire site, the Prime Minister, wearing full protective clothing, viewed working equipment used in conventional oil extraction and discussed the plans with employees.

He said he wanted the UK to benefit from development of reserves of shale gas in the same way as parts of North America have.

“This is a really significant announcement,” he said.

“Shale is important for our country - it could bring 74,00 jobs, over £3 billion of investment, give us cheaper energy for the future, and increase our energy security.

“I want us to get on board this change that is doing so much good and bringing so much change to North America. I want us to benefit from it here as well.”

Energy Minister Michael Fallon said the 100% business rates incentive on offer was the same as for renewable technologies such as wind farms and solar energy.

But Anna Jones, climate campaigner at Greenpeace said: “Comparing the incentives for renewable energy to the naked bribery of the Government’s business rate bung simply isn’t comparing like with like.

“Renewable energy is a proven energy source that will not damage the environment. Compare this to the environmental damage and disruption that fracking for a dirty fossil fuel would cause, and which may be too costly to extract.

“It’s an obvious no-brainer that renewables are the energy of the future not shale gas.”

Green Party MP Caroline Lucas said: “It’s bad enough that the Government is allowing fracking to go ahead at all.

“Encouraging it by offering bribes to councils - as well as handing tax-payer funded tax breaks to fracking companies - is beyond irresponsible.

“It’s outrageous that councils are being put under financial pressure to accept this at a time when they’re being forced to make cuts to vital services.”

And she said: “We need to keep the vast majority of existing fossil fuel reserves in the ground to have any hope of keeping global warming at safe levels.

“The Government is not just ignoring local people who don’t want fracking near their homes, but also jeopardising efforts to tackle climate change.”

Kathryn McWhirter, from Balcombe, West Sussex, which saw protesters take direct action while energy company Cuadrilla conducted exploratory drilling at a site on the outskirts of the village last year, claimed Mr Cameron was giving out more misinformation on fracking to the British public.

She said: “First he said shale gas would lower prices and create vast numbers of jobs.

“Both claims have been shot down by his own advisors, yet he continues to repeat them.

“Now he wants to bribe local people and council planners - what a conflict of interest, what desperation.

“After two years’ sober research, we in Balcombe are all too aware of the hazards of modern fracking and our message to him is this: Our health and our environment are not for sale.”