UK industry pushes for review of earthquake limits

The UK's nascent fracking firms are headed for a crunch moment that will determine whether the industry has a future, according to observers and insiders. The past fortnight has seen a concerted lobbying drive by two of the leading shale companies calling for the government to review rules on earthquakes caused by their operations.

The country's richest person, Jim Ratcliffe, founder of the petrochemicals firm Ineos, branded the regulations "absurd" and "unworkable", and implied the government should consider closer to those in the US.

Cuadrilla said it had only been able to frack 5% of its well near Blackpool because of the rules, and warned commercial fracking was not viable under the UK's regulatory regime. Last week it also had a planning appeal for a second site rejected. Neither firm has gone as far as saying it would pull the plug. But it is clear the sector is at an impasse and cannot proceed without a rethink by ministers and the Oil and Gas Authority (OGA), the industry regulator.

Both the government and the OGA have said they had no plans for a review of the "traffic light system", which forces

limits firms to stop fracking if they trigger tremors of greater than 0.5 in magnitude.

Claire Perry, the energy minister, has said repeatedly in the past few months that there were no plans for a review. But she has previously privately said the threshold could be "adjusted upwards" as the industry gains experience.

There are signs the lobbying could be falling on receptive ears, with reports that a review of the rules will be announced within weeks. Ken Cronin, chief executive of the shale industry group Ukoog, said now was the time to revisit the regulations, as the industry had evidence from Cuadrilla's fracking.

"It's right and proper now to say we've done a fairly major operation in Lancashire, we have 40,000 data points, let's do the review," he said.

Cronin said the industry had invested £400m-500m so far on exploring for shale, but investor confidence would be hurt if a review did not materialise, given companies' expectations. He added: "It becomes very, very difficult to warrant any more fracturing [without a review]. I think it's highly unlikely companies will invest based on what is the current [regulatory] position."

Natascha Engel, the government's independent commissioner for shale gas, said the industry was on the cusp of find- ing out how much of the gas was trapped underground, but seismicity rules were holding it back. She urged the OGA to undertake a review.

"Opponents are saying don't lift it, don't review it, which makes no sense. It's been made into a political decision rather than a technical decision and I think that's a mistake," she said. Companies could not wait forever for a review, she said. "Things are coming to a head. We've had a stalemate. Decisions will have to be made."

While Cuadrilla has come to a natural pause in operations after fracking its Blackpool well, other companies are still active. Tom Pickering, chief operating offi- cer of Ineos's shale unit, said the company was still working on its sites. One in South Yorkshire and one in Derbyshire have planning approval. A third, also in South Yorkshire, is waiting on a planning appeal that could take up to a year to decide.

IGas Energy, in which Ineos has a stake, failed to find the shale formation it was targeting at a site in Nottinghamshire and has abandoned it. But it said this week that drilling at Springs Road, also in the county, had "augured well for the future".

Another firm, Third Energy, which wants to frack an existing well in North Yorkshire, has experienced repeated delays.