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Why Shale Fails Abroad
How the UK Pays for Fracking

It isn’t easy to convince people to open the door to fracking in their local communities, as the UK has found out to its detriment in recent years. Here in the United States, mineral rights can be bought and sold by landowners, allowing their owners to work directly with fracking companies to negotiate financial compensation for the noise, disruption, and commotion that goes hand in hand with any energy boom. But property owners in Britain don’t have mineral rights and as a result have been much less willing to go along with shale development. To help confront this public resistance, the British government is putting together a fund that would compensate affected communities. Reuters reports:

Britons living near “fracking” developments will be able to decide how a 1 billion pound ($1.3 billion) shale gas wealth fund should be spent, either by accepting direct personal payments or supporting projects such as railways or flood defences, the government said on Monday. […]

Prime Minister Theresa May announced on Sunday that some tax proceeds from new shale gas developments could go directly into local residents’ pockets, showing her support for the nascent industry that she hopes can ease Britain’s growing reliance on imported gas. […]

“Local communities should be the first to benefit from the Shale Wealth Fund, and they should get to decide how a proportion of the funding is used,” the government said in its consultation document.

This is a step in the right direction for the UK, which for years has left its 1.3 quadrillion cubic feet of shale gas in the ground, largely because of NIMBY opposition. The Theresa May government is having to construct this somewhat elaborate fund to accomplish this goal because landowners in the UK cannot hold mineral rights.

The UK’s struggles with shale illustrates just how many ingredients were necessary for America’s shale success. Mineral rights, access to capital, an already established oil services industry, relatively plentiful water, favorable geology, low population density, and an extensive pipeline network all helped contribute to this energy revolution. The UK has some of those pieces in place, but if it wants to catch up to the United States it’s going to need to do more to sway a skeptical public. This shale fund could do just that.

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  • CaliforniaStark

    Paying the local landowners is a logical step that for some reason David Cameron refused to do. You now may see fracking begin in England. Brexit may have an unintended benefit for the British economy.

    • f1b0nacc1

      This is not entirely unlike what has been done in Alaska with oil drilling.
      Mind you I prefer property rights as a better solution, but since that isn’t going to happen in the UK, this is certainly worthwhile to pursue until something better comes along.

  • justin

    No discussion of the environmental or public health implications of fracking? I’m not sure you can call America’s experience with fracking a “shale success.” The science is becoming overwhelming. An example, among many others: http://pubs.acs.org/doi/abs/10.1021/acs.est.5b04970

    • rheddles

      No discussion of the environmental or public health implications of fracking?

      Perhaps because they are minimal and mainly due to accidents?

      See either (pdf) from the exhaustive EPA study:

      We did not find evidence that these mechanisms have led to widespread, systemic impacts on drinking water resources in the United States. Of the potential mechanisms identified in this report, we found specific instances where one or more mechanisms led to impacts on drinking water resources, including contamination of drinking water wells. The number of identified cases, however, was small compared to the number of hydraulically fractured wells.

    • CaliforniaStark

      It should be noted that the study referred to in the link was a repacking of a prior EPA study that was widely discredited. The EPA’s Pavillion, Wyoming study had some serious issues with its methodology. I would hardly call the science “overwhelming”, citing a questionable study at one location — considering there over 300,000 fracked wells in the United States.

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