The Scottish government is to ban hydraulic fracturing, or ‘fracking’ as it is better known. The decision comes after a four-month consultation, energy minister Paul Wheelhouse told MSPs this afternoon. A moratorium on fracking activity had been in place since 2015.
Fracking involves pumping a mixture of chemicals, sand and water at high pressures to stimulate the flow of gas and oil from tight shale rock and has raised several environmental concerns.
The news from Scotland does not directly impact the listed small cap companies in the UK which have prospective shale oil and shale gas assets. The likes of iGas Energy (IGAS:AIM), Europa Oil & Gas (EOG:AIM) and Egdon Resources (EDR:AIM) are focused instead on the North West and East Midlands.
POTENTIAL FOR SHALE IN SCOTLAND?
Today's decision does however close off a potential future avenue for activity. A 2014 report by the British Geological Survey and Oil & Gas Authority suggested the Midland Valley in Scotland - an area which encompasses much of the central belt between Glasgow and Edinburgh - could contain shale gas in place of between 49.4 and 134.6 trillion cubic feet (tcf), with the central estimate for the resource being 80.3 tcf.
The range of shale oil in place was estimated to be between 3.2 and 11.2 billion barrels, with the central estimate for the resource being 6 billion barrels.
North America, where the shale industry has expanded massively in the last decade, is blessed with a wealth of pipelines and drilling rigs and the understanding of the resources is supported by decades of conventional drilling in the most prominent shale basins.
To date efforts to exploit shale outside the US, where similar conditions do not exist, have made slow progress.
The UK is no exception with operators tripped up by landowners, environmental groups and the planning system. Today’s development being just the latest example.
