Liberty Resources CEO says surplus of fracking rigs following US boom could find their way into UK market
By Sophie Yeo
America is ready to send its ready supply of fracking rigs to the UK, says the CEO of Liberty Resources, a company which helped to pioneer the US dash for gas.
Speaking to a House of Lords committee today, Chris Wright said that the fracking boom had led to a surplus of drilling rigs in the US, and that he was sure there would be many producers who “would love” to sell them to the UK.
An influx of American rigs is unlikely to prove popular in public opinion, where there is already significant opposition to the new technology, which requires rocks deep below the surface of the earth to be fractured in order to extract gas.
Poor well construction has been held responsible for the problems that fracking has caused in the US, including methane and water leakage. Peers present at the meeting questioned whether the American rigs would be modern enough to adhere to the UK’s tighter environmental regulation.
Prime Minister David Cameron announced this week that he wants Britain to go “all out for shale gas”, and is prepared to offer local communities 100% of the business rates from the fracking sites, instead of the standard 50%.
Wright pointed out that the financial incentives for landowners in America – who uniquely own the mineral rights beneath their land – has “helped enormously” in getting the industry off the ground.
“I would offer 2% of revenues to surface owners in the UK because that makes them want it to happen,” said Wright, adding that he had no intention to develop his own business in the UK.
MPs in Lancashire today wrote to David Cameron demanding a 10% of profits if fracking were to go ahead. Wright said that if this amounted to the total royalties and it got everybody “on side” then it should be considered.
In any case, he added that he would not consider investing in UK shale at the moment, as strict environmental regulations were still lacking, and there was still no way of aligning communities to the process, which committee members acknowledged had hindered the spread of the industry.
“I constantly chastise myself and the industry of not reaching out and explaining what we’re doing…I think a lot more of that needs to happen,” said Wright.
But he added: “It would happen quite quickly if the business climate was here.”
Energy company Cuadrilla is currently exploring the Bowland Shale basin in Lancashire for new supplies of gas. French oil major announced this week that it would invest £30 million in drilling licenses in the Midlands.
Wright added that fracking would impose a “noticeable visual impact” on the landscape should the UK’s experience match the US. He said that, for the UK to reap similar benefits, it would need to construct about 35 drilling rigs, compared to the 350 rigs across America, which drill about 7,000 wells a year.
The wells become barely visible after they have been drilled, with the well heads rising to about 15ft, although he added that the trucks and infrastructure serving the industry would also change landscape.
Based on his own journey through Lancashire, he said, the area “looks like North Dakota after it has rained”. North Dakota is where the profitable Bakken shale basin is located.