Frack off?

Fracking, it has been a large issue in the Netherlands, now it is starting to get grounds on several levels in the UK. Some of the shown issues can be found at http://news.sky.com/story/1194087/fracking-cameron-offers-councils-drill-money. The first paragraph gives us two of several issues connected to this, as is stated “David Cameron has announced £1.7m for councils which agree to drill for shale gas sparking angry protests from campaigners who say it amounts to little more than bribery.”

The issue is whether the environmental issues are dealt with. The incentive is a powerful one, and the complication is that this is now business against the future, not the consequences set against the present.

Why am I stating this?

One part of that evidence is coming from the Netherlands. The NOS stated “De gaswinning in Groningen leidde dit jaar tot een recordaantal aardbevingen.Gemiddeld twee keer per week: in totaal 127 keer. ” [Translated: the gathering of shale gas through fracking has led to a record amount of earthquakes. At present they are hit with two earthquakes a week, a total of 127 quakes]. The fracking as it is happening under direction of the Dutch NAM is having serious consequences. The quakes have been as high as a 3.7 on the Richter scale. The political field is still all open on finding some way to make this all continue in the Netherlands, which amounts to a strong devaluation of a unique architectural form in the Netherlands. In addition, on November 1st 2013 the following was also quoted by the NOS. “de Nederlandse aardoliemaatschappij NAM zo’n 900 miljoen euro voor compensatie moeten uittrekken.” [Translated: the NAM would have to pay 900 million euro in compensations, dealing with these damages].

[Addition] One reader had issues with the translation as mentioned earlier. In the literal sense, the commenter was correct, yet the information the commenter had not been aware of was (at http://www.nam.nl/nl/technology-and-innovation/optimization-natural-gas/fracking.html). There is however another issue I add to this (25th January 2014). The quote “De techniek wordt al sinds de jaren ’50 regelmatig en succesvol toegepast in Nederland.” [Translated: The technique has been used regularly and succesfully since the 50’s.] The latter part is important for two reasons. First is that fracking had been used a lot longer and in addition, when I grew up there were no earthquakes in the Netherlands (at least none that I was aware of). So what other factors are part of the escalations in the Netherlands? Just more drilling?

Has David Cameron (and his advisers) taken these costs into account? Let’s not forget that Groningen is one of the lesser populated counties in the Netherlands. We are talking about a county with just over 510,000 people, compared to the national population of almost 17 million. Consider these numbers when fracking will commence all over Britain, especially in the southern parts the UK.

Now, the UK does not have the soft ground that is found in the Netherlands, yet the dangers will not be any less. When we look at the quote that Sky News gave us in the earlier mentioned article “The Government estimates the industry could attract £3.7bn a year in investment and support 74,000 jobs.” ‘Could’ is not a given, neither is the damage that the Netherlands are currently facing. I do however wonder about the short sighted look on 3.7 billion, when the UK is dealing with a 1 trillion debt. Now, as I mention this, you will think that this is all a good thing to have something that lowers the total debt and I would agree. However, consider the next quote, also from Sky News “A Local Government Association spokesman said: ‘Given the significant tax breaks being proposed to drive forward the development of shale gas and the impact drilling will have on local communities, these areas should not be short-changed by fracking schemes.’”

So, these companies get even more tax breaks? Remember the old days? A company was visionary and had a good idea. There was no tax break and the tax paying people did not have to pay for their short-sightedness, once it reared its ugly head. Now, the topic of ‘tax break’ seems to be the introduction to any investment conversation. It is better than gambling as it is legally permitted. If it goes wrong they have no worry as no taxes are due, if they win they avoid massive taxation, a slightly rigged game, so to speak.

There are additional issues. Some of the environmentalists talk about the contamination of ground water as well as depletion of fresh water. It is hard to comment on those two claims as I am no expert on it. In one part, groundwater contamination could be avoided if it is properly investigated, yet the 1.7 million pound handout as mentioned in the very beginning could be cause to less vigorous investigation. If so, when the cost of living goes up for those drinking bottled water from 70 pence to lets say 125 pence per 1,5 liter, the issue will then become a colossal one, at which time it will be too late to do anything about it.

In the end, we must acknowledge that these risks have not been proven and as such the calamities the Netherlands are currently facing in Groningen should be investigated in regards to the risks that could exist for the UK. The latest statement by David Cameron “David Cameron said the Government was ‘going all out for shale’” does not qualify as evidence in either direction, but the economic state as it is faced by both Cameron and Osborne implies that they do not seem to be moving in a cautious direction.

The next quote to look at is “Mr Cameron’s announcement comes as the French energy giant Total has announced it will invest millions with a 40% interest in two shale gas exploration licences in the UK.” It is interesting how much France would like to get into this field in the UK, yet they suspended three gas exploration permits in France (exploration is just looking, not active drilling on a production level). There is something to be said for the expression not soiling one’s own bed. Other reports states that fracking would be at the centre of all kinds of water pollution issues. I reckon that being on an island, hazarding once water supply is just not advisable.

If we look at the BBC news (at http://www.bbc.co.uk/news/uk-politics-25705550) we see the final quote. “Councils that back fracking will get to keep more money in tax revenue“. Sky News mentioned the same thing, yet when we look at the tax breaks offered and the possible damages that someone has to pay for, in the end, how much of all that diminished cash will end up in the coffers of the British Empire?

There are loads of considerations and I have strong feelings that only the spread sheet boys have looked at this picture. I wonder how much positivity remains once the fixers, engineers and water boys have taken a deep look at the consequences of this entire endeavour.

Fracking is bad and sees to have dangerous very long term consequences. There is no doubt that there are a few places in the UK where this could be done without harmful consequence. Yet, the French view (pre French super debt date) has been cautious as they have a lot to lose. That cautious approach should have been taken for the Netherlands and the UK should follow along that same path. The realist in me also knows that under these heavy economic pressured the environment will most likely lose, it remains doubtful whether the population will ever get to see a clear and complete picture in regards to the cost of doing business in this regard and fracking could become the most expensive form of business we ever knew.