England

Fracking: Yorkshire 'has chance to be centre of European industry'

Engineers at fracking site Image copyright Getty Images
Image caption Experts say if the fracking industry takes off it will create thousands of new jobs across the UK

The first fracking operation in England since a ban was lifted in 2012 has been approved at a site close to the North York Moors National Park.

When any fracking application is discussed attention focuses on the environmental arguments, but what could fracking in North Yorkshire mean for the regional economy?

"Our region has the chance to be at the centre of Europe's new fracking industry," according to Paul Glover, the chair of Petrophysics at the University of Leeds.

"Its all about first mover advantage. Look at what happened in Scotland. When they found oil under the North Sea they had a choice to base the new industry in either Aberdeen and Dundee. Aberdeen was chosen and history shows us that it's done very well."

For two days the often spirited arguments that were laid out at County Hall in Northallerton centred on the potential environmental impact of the development at Kirby Misperton by Third Energy.

In contrast, business and economic opinion about the plans to frack for shale gas has been more understated.

"The issue of fracking hasn't come up as a business issue. Our members haven't told us if they're excited or concerned about the process," says Sandy Needham, the chief executive of the West and North Yorkshire Chamber of Commerce.

Image copyright PA
Image caption Protesters demonstrated as planners met this week to consider plans for fracking in North Yorkshire

North Yorkshire has been at the centre of a number of recent controversial planning applications. Not only has fracking attracted protesters from across the UK but last year the North Yorkshire Moors Park Authority gave approval for a £1.7m potash mine to be built within the National Park.

The developers of both proposals have promised that the respective projects would bring substantial economic benefits to the wider area.

"Potash did generate a lot of interest because businesses could see tangible benefits; with fracking it's still an unknown," added Mr Needham.

"Manufacturing is not as visible as the tourism industry is within the region."

With York at its centre and two national parks, the county is perceived as being geared up to cater for tourists primarily. Perhaps unexpectedly though, North Yorkshire has a manufacturing base ready to take advantage of any new economic opportunities fracking may bring.

Figures from the Office for National Statistics show that 11% of the local workforce in North Yorkshire are involved in manufacturing. That's higher than the UK average of 8.5%.

Ken Cronin, chief executive of UK Onshore Oil and Gas (UKOOG), the body that represents the industry, says the whole of Yorkshire would benefit from an economic windfall.

"There is quite evidently a supply chain that will do well from the shale gas industry and its not only North Yorkshire that would benefit," he said.

"You have Teesside to the north, an area that has a huge amount of expertise, and a manufacturing base in West Yorkshire that will also do well."

But what could this mean in the way of potential jobs and new investment?

Image caption North Yorkshire employs a higher-than-average percentage of people in manufacturing

Perversely, the site at Kirby Misperton will hardly generate any new jobs. Third Energy has already been extracting gas from the area using conventional methods.

The recent planning application related to the method of extraction of gas from the ground and therefore won't require the building of a lot of new infrastructure.

Prof Glover from Leeds University says the potential value to the local economy from the industry would come further down the line.

"Its really speculative to try and put a precise figure on the numbers of local jobs that could be created," he says.

"Only when companies start building new wells will we see jobs created, but those will be well paid and highly skilled.

"Every year universities like mine turn out graduates with all the right skills to work in the fracking industry and if there is a new supply of local jobs that will bring benefits to the whole Yorkshire economy."

Accountancy firm EY predicts that, if the fracking industry was to take off, about 4,000 wells across the country could be supporting an additional 64,500 jobs by 2032.

There are others though who sound a more cautionary note.

"We still don't know if the gas under the ground is commercially viable," says Craig Stevens, a senior oil and gas manager at the accountancy firm PwC.

Image copyright Reuters
Image caption Fracking has driven down gas prices in the US

"We know that's there's a lot of it but until someone gets the permission to extract it we're not really sure if this industry is as viable as the fracking industry in the United States has been."

The fracking industry has transformed the US energy market. The latest estimates suggest that amount of shale gas and oil now being pumped from wells across the States has allowed the US to become energy-independent, meaning it no longer has to import gas and oil to meet its energy needs.

However, a global slump in energy prices has caused the US industry to contract in the past year, with shale companies closing wells because of the falling wholesale price of gas and oil.

Mr Stevens says at this stage it's too soon to compare the potential of the UK industry with the realities of the US fracking business.

"The debate about the UK shale industry is more about emotion and winning hearts and minds rather than pure economics," he says. "In the short term we're only going to be guessing as to what the potential economic benefits of the industry may be."

And when it comes to arguments about the longer-term economic impact of fracking, opponents point out there is a risk of causing irreversible damage to the county's most important industry of tourism.

Flamingo Land, a major local attraction, has said it fears tourism in the area would be "negatively affected permanently" if fracking were to go ahead.

North Yorkshire has already been the legal and environmental testing ground for whether the physical extraction of shale gas within the UK can be achieved.

The county now faces the prospect of becoming an economic testing ground as well.

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