Shale Gas News and Information
UK Insurers find shale gas "uncontroversial"
- Written by Nick Grealy
- Published: 18 April 2012
Now that shale has broken ground in the UK after the DECC go ahead of Tuesday,suddenly everyone will be an expert. One piece of expert opinion sure to repeated frequently is the notion that shale pollutes water, despite failure to find any actual proof. Listening to the FOE's Tony Bosworth yesterday when he was on Sky News with me would give people an assumption that he had lists of hundreds of major pollution incidents.But if there has been so much damage, where are the lawyers? Red-blooded, ambulance-chasing American lawyers convert even the hint of damage into damages: be it wrongful accident or simple bad luck, the US tort law system changes bad practice far more quickly than an army of regulators.
The evil twin of US lawyers are UK insurers. These are the guys who pay out the cash. Follow the money: Someone in the US gets poisoned by water, they find a lawyer, they win the case, the driller pays out and the buck stops at the driller's insurance company.But what if the insurance company isn't worried? Of all places this story appeared in The Guardian yesterday:
A leading City firm has defended the controversial practice of fracking for shale gas on the day the government received advice to give it the green light in Britain.
"Shale gas is here to stay," said Neil Smith, chief operating officer of global energy at insurance brokerage Willis. "It's a very cheap form of extraction
An energy report from Willis published on Tuesday looked at the risks posed by fracking - from groundwater and soil contamination to earthquakes - and concluded that as long as shale gas companies adhere to industry best practice, the risks can be significantly reduced.
The casing of the well is crucial, the report said. A well drilled simply with surface and production casing could indeed allow drilling fluid and gas to seep into the water supply, it admitted. But best industry practice is to drill a well with intermediate casing 4,000 feet deep into the layer of rock beneath which lie the vast majority of gas deposits.
"'A Macondo in the shale is a highly unlikely scenario," the report said, referring to the BP oil spill in the Gulf of Mexico. The report noted that fracking has been around since the 1950s.
Smith said: "The issues are of a political nature and a lot are born out of ignorance of what the operations are." He expects that with more information, and "greater insistence on best practice being adopted" - possibly through legislation - the concerns around fracking will diminish over time.
Going backward,it's easy to make the assumption that Lloyds brokers aren't worried because they haven't had any claims from gas companies,because drillers aren't losing any cases, because lawyers aren't bringing them to court, because there simply isn't any actual proof beyond hearsay and innuendo. And who insures the insurers?:
Dominick Hoare of Watkins Syndicate at the Lloyd's of London insurance market said the firm, which is managed by Munich Re, is heavily involved in insuring US shale exploration and production. "With a proper assessment it's a good risk to assume," he said.
Yet nine times out of ten in recent articles, fracking is "controversial". Go figure.