U.K. Seeks to Exploit Shale Gas and Wind to Curb Russian Imports

(Bloomberg) --

The U.K. government is seeking to exploit all forms of domestic energy production, including industries such as onshore wind and fracking that have previously faced strong public opposition, as part of a strategy to help wean the country off Russian energy.

Ministers are studying whether to further relax planning rules for onshore wind farms. They’re also debating a new licensing round for fresh North Sea oil and gas projects, and fracking may be given a reprieve if drillers can satisfy concerns about earthquakes, according to a person familiar with the plans, who asked not to be named while discussing policy that isn’t yet finalized. 

The U.K. is looking for ways to increase domestic energy supplies after pledging on Monday to phase out some 4 billion pounds ($5.3 billion) of annual imports of Russian oil by the end of the year. The measures under consideration may not deliver a boost within that time frame, since wind farms and North Sea fields typically take years to develop, while the country’s fracking industry has failed to get off the ground in the decade since the first discovery. 

The plan isn’t likely to be ready this week, but may come next week, the person said. 

The U.K. is also exploring how to reduce gas imports from Vladimir Putin’s administration, which currently make up less than 4% of supply. The move away from Russian fossil fuels -- even though they only make up a fraction of U.K. needs -- threatens to add further pressure on energy prices, with domestic bills already set to leap by more than 50% next month. 

“We need to meet the long-term impacts of the spike in energy prices, and that’s why I will be setting out an energy independence plan for this country in the course of the next few days,” Prime Minister Boris Johnson told the House of Commons on Wednesday. The aim is to “prepare our people for the long term with sustainable, cost-efficient energy supply.”

His spokesman later said that the government is currently looking at all energy options.  

Business Secretary Kwasi Kwarteng set out a skeleton of the U.K.’s plans in a Feb. 28 thread on Twitter. He said the country will back North Sea production, which could also help kick-start both carbon capture and storage technology and hydrogen fuel. He flagged the need for new nuclear, promising “more cash for future large projects.” The government is also accelerating renewables and pushing energy efficiency upgrades, he said. 

“We fully intend and we must end our dependency on all Russian oil and gas hydrocarbons,” Kwarteng told the Commons on Wednesday. “Businesses should use this year to ensure as smooth a transition as possible to ensure consumers will not be affected.”

In 2020, the U.K. Government lifted a five-year ban on building new onshore wind farms, which had been put in place after public opposition to the technology in England. But despite a lifting of the ban, the planning process for wind remains mired in red tape. About 600 megawatts of new capacity gets consent each year, which is less than half what’s needed to reach the government’s net zero goal, according to the trade association RenewableUK.

Kwarteng said the government will work with companies to find alternative supplies through a new task force that will also work with international parties including the U.S., the Netherlands and Persian Gulf countries. On Thursday, Group of seven energy ministers will hold an extraordinary meeting to discuss further steps, he said.

The U.K. is also calling for more investment in North Sea oil and gas production. But last month, the government’s independent climate change advisers said an increase in production won’t protect consumers from volatile energy prices. That’s because new projects would take decades to develop and barely impact prices because Britain is connected to the global market. On Wednesday, they also criticized the lack of policies to help insulate homes and buildings.

“With the shocking oil and gas price spike this is suddenly one of the most important consumer issues - most homes and offices are currently heated with fossil fuels,” said Climate Change Committee chief executive Chris Stark, on Twitter.

Fracking Plan

The government is also looking at ways to keep the possibility of domestic shale gas production alive. Cuadrilla Resources Ltd., which first sparked hopes for U.K. fracking with a discovery in Lancashire in 2011, had been required to seal off its two wells in the area that have been suspended for years because of concerns about earthquakes. 

The company may no longer have to do so, and British Geological Survey scientists may carry out further tests at the sites, the person said. 

Asked on Wednesday whether renewed fracking was a possibility, Johnson’s spokesman, Jamie Davies, said that while a moratorium remains in place, “you would expect the prime minister to look at all options” given the Russian invasion of Ukraine and spiking energy prices. Kwarteng told lawmakers on Wednesday that the government is “in conversations” over whether it makes sense to concrete over the existing wells. 

But those comments appear to represent a shift by Kwarteng, who as recently as Saturday argued strongly against onshore fracking. In an article for the Daily Mail newspaper, he said shale gas was “very different” to North Sea oil and gas.

The British Geological Survey said it hasn’t been approached regarding the re-purposing of the Lancashire sites. Cuadrilla Chief Executive Officer Francis Egan said in a statement that plans to plug the sites are “very advanced,” with the rig to begin the process due on site next week.

“We remain open to any other proposals or ideas the government may have, but as things stand nothing has changed,” Egan said. “It’s clear that he U.K. must do everything it can to secure domestic gas supply and not tolerate Putin’s vice-like grip over our energy costs.” 

(Updates with context throughout)

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