U.K. Approves Fracking

In a decision welcomed by the U.K. chemical industry, Prime Minister David Cameron says he is “going all out for shale.” Cameron predicts that recovering natural gas from shale using the drilling process known as hydraulic fracturing, or fracking, could generate 74,000 jobs, attract more than $4 billion in investment, and provide cheaper energy.

To encourage fracking, Cameron is permitting local governments to keep 100% of the business taxes, some $3 million annually, generated from each well drilled. Cameron made his comments on the same morning last week that Total, a French energy and chemical firm, announced it spent $47 million to acquire shares in two licenses to exploit shale gas in the U.K. Total is the first big oil and gas firm to invest in fracking in the country.

European chemical giant Ineos earlier stated that it may acquire a fracking license. The firm is building a terminal to import cheap ethane from the U.S. to feed its complex in Grangemouth, Scotland. Along with other chemical firms, Ineos could benefit from a local supply of ethane and other gas components. The British Geological Survey estimates that the country has enough shale gas to meet its needs for at least the next four decades.

Some European countries, notably France and Germany, do not permit fracking within their borders. Europe as a whole has no regulations to prevent use of the drilling technique, but later this week the European Commission is expected to propose rules to curb adverse effects from fracking.