Opposition to fracking has been strong in the UK. AP
Opposition to fracking has been strong in the UK. AP
Opposition to fracking has been strong in the UK. AP
Opposition to fracking has been strong in the UK. AP

Fracking could return to UK 'if companies can reduce earthquakes'


Alice Haine
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Fracking could make a comeback to the UK, said the chief executive of Britain’s Oil and Gas Authority, as Europe faces an energy crisis amid Russia’s invasion of Ukraine

Andy Samuel said at least one company is looking to resume fracking with new techniques that reduce the chances of earthquakes triggered by the process.

His comments came as Prime Minister Boris Johnson faces increasing pressure to reverse the government’s opposition to commercial fracking to allow the UK to exploit its shale gas reserves and reduce the country’s reliance on imports.

While a 2019 ban on existing fracking methods meant sites were filled in with concrete, MPs want the authority to reverse an order to fill in two further fracking wells in Lancashire, the UK, next week — as they could boost Britain’s energy security.

Mr Samuel indicated that the authority has “left the door open to industry”, with the technique potentially returning in the years to come despite concerns from communities over the damage the extraction method can cause.

“One operator is wanting to … progress the science, and try to understand if there is a way it could be done without exceeding the seismic event limits,” Mr Samuel told The Telegraph.

The controversial process of hydraulic fracturing involves liquid being pumped deep underground at high pressure to fracture shale rock and release gas or oil trapped within it.

A worker at the Cuadrilla fracking site in Preston New Road, Little Plumpton, Lancashire. Getty Images
A worker at the Cuadrilla fracking site in Preston New Road, Little Plumpton, Lancashire. Getty Images

A moratorium was imposed on fracking in November 2019 after it caused two minor earthquakes in Lancashire, with fierce confrontations between shale gas companies and communities who said the process was dangerous.

The government has not ruled out the prospect of fracking being used in the future as long as tremors can be kept to a minimum.

Mr Samuel said the new techniques being proposed could avoid tremors of above 0.5 on the Richter scale, which is the current limit.

However, the government has insisted that there are currently no plans to lift the fracking moratorium and that any projects could take at least 10 years to set up.

Mr Samuel said the process is “not easy geology to understand”.

“From what we have seen in geology and the bar that needs to be crossed, it will be a long way off,” he said.

MPs have questioned why the UK's limit on the Richter scale for tremors is 0.5, when the US has a limit four times higher.

Meanwhile, a study by the authority found that the tremors had caused “slight non-structural” damage to buildings near a fracking site.

Lee Anderson, MP for Ashfield, described the ban on fracking as “total lunacy” in the light of the Ukraine war.

“At the time of increasing insecurity over fuel supplies, we should be using the huge shale gas resources right under our feet,” he said.

Mr Anderson said fracking can deliver lower fuel prices to the UK, which is already facing a cost-of-living crisis as energy bills spiral.

From April, the energy price cap — the maximum suppliers can charge consumers in a year — will more than double to close to £2,000 ($2,645) for the average household.

But household energy bills could rise even further over the course of the year because prices are now more than 20 times higher than they were two years ago, increasing on Monday from what were already record highs last week.

The price of a therm of gas, the commonly used measure, shot up to about 800 pence during the morning. It had been at around 460 pence on Friday.

Last week, when gas was trading at much lower levels than on Monday, experts predicted the price cap would rise by about £1,000 to more than £2,900 in October when it is next changed.

However, the rise could come sooner if industry regulator Ofgem, the industry regulator, decides the market cannot handle the pressure.

Although Britain imports less than 5 per cent of its gas from Russia, Europe is more exposed — receiving about 40 per cent from the country.

However, Business Secretary Kwasi Kwarteng said at the weekend that a return to fracking would not solve the energy crisis.

“No amount of shale gas from hundreds of wells dotted across rural England would be enough to lower the European price any time soon,” he said. “And … private companies are not going to sell the shale gas they produce to UK consumers below the market price.”

Ways to control drones

Countries have been coming up with ways to restrict and monitor the use of non-commercial drones to keep them from trespassing on controlled areas such as airports.

"Drones vary in size and some can be as big as a small city car - so imagine the impact of one hitting an airplane. It's a huge risk, especially when commercial airliners are not designed to make or take sudden evasive manoeuvres like drones can" says Saj Ahmed, chief analyst at London-based StrategicAero Research.

New measures have now been taken to monitor drone activity, Geo-fencing technology is one.

It's a method designed to prevent drones from drifting into banned areas. The technology uses GPS location signals to stop its machines flying close to airports and other restricted zones.

The European commission has recently announced a blueprint to make drone use in low-level airspace safe, secure and environmentally friendly. This process is called “U-Space” – it covers altitudes of up to 150 metres. It is also noteworthy that that UK Civil Aviation Authority recommends drones to be flown at no higher than 400ft. “U-Space” technology will be governed by a system similar to air traffic control management, which will be automated using tools like geo-fencing.

The UAE has drawn serious measures to ensure users register their devices under strict new laws. Authorities have urged that users must obtain approval in advance before flying the drones, non registered drone use in Dubai will result in a fine of up to twenty thousand dirhams under a new resolution approved by Sheikh Hamdan bin Mohammed, Crown Prince of Dubai.

Mr Ahmad suggest that "Hefty fines running into hundreds of thousands of dollars need to compensate for the cost of airport disruption and flight diversions to lengthy jail spells, confiscation of travel rights and use of drones for a lengthy period" must be enforced in order to reduce airport intrusion.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Updated: March 07, 2022, 12:16 PM