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Self-harming in Scotland

Author : Alan Franck, Editor, Hazardex

01 September 2016

The latest annual Government Expenditure and Revenue Scotland (GERS) report makes stark reading for the UK’s oil and gas industry. In the past 12 months, revenues paid to the state by the industry have dropped from £1.8 billion ($2.4 billion) to just £60 million ($79 million). In comparison to the £9.6 billion ($12.6 billion) raised in 2011, this represents a 99% decrease in returns in the last five years. 

The Grangemouth refinery in central Scotland
The Grangemouth refinery in central Scotland

At the same time, employment in the industry has fallen from 450,000 before the price crash in 2014 to an expected figure of less than 330,000 by end-2016, a drop of over a quarter. An investigation by The Guardian found the ‘Oil Capital of Europe’, Aberdeen, now has twice the number of emergency food banks it did a year ago.

And the bad news continues. At the end of August, consultancy group Wood Mackenzie cut $55 billion from its North Sea Investment Forecast between 2016 and 2020. 

With this in the background, it seems strange that the Scottish Government maintains its moratorium on the exploitation of the country’s shale oil and gas assets.

Despite the anti-fracking scare tactics whipped up by environmental groups and their hangers-on in Holyrood, the British Geological Survey, Environment Agency and water companies all say that regulations are in place to ensure shale fracking can be carried out in a safe and environmentally friendly manner across the country.

Meanwhile, the UK government’s pro-fracking stance has seen the first of the latest round of exploratory shale drilling operations go ahead in Yorkshire.

INEOS, which has extensive shale exploration licences in the central belt of Scotland as well as in northern England, had been keen to start shale operations in Scotland to supply its Grangemouth refinery with locally sourced gas.

But speaking to Scotland on Sunday in late May, INEOS Director of Corporate Affairs Tom Crotty said that because of the moratorium, the group had redeployed all its shale resources south of the border and was putting its efforts into developing potential shale sites in England.

Although even the most optimistic estimates of future UK shale operations put employment in the sector in the tens rather than hundreds of thousands, it seems an act of self harm for Scotland to deny itself these energy resources and jobs at a time when its economy and employment prospects have taken such a hit from the decline in North Sea oil and gas.

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