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Fracking firms plan £1bn legal battle over ban after government suddenly changed its mind on shale gas extraction
- Companies associated with the sector are considering launching one or more cases
- Liz Truss lifted moratorium on fracking during her brief premiership
- Businesses and investors furious after another moratorium by Rishi Sunak
The fracking industry is investigating a massive legal challenge of between £500m and £1bn against the government after it suddenly re-banned shale gas extraction last month.
Companies and other groups associated with the sector are considering launching one or more cases.
Liz Truss lifted a moratorium on fracking during her brief premiership, claiming that kick-starting Britain’s shale industry could bolster the country’s energy security.
Concern: The main reason the government has turned against fracking is because it can cause small earthquakes
The UK is estimated to have up to 50 years of shale gas reserves. But businesses and investors were outraged when the moratorium was quickly reinstated when Rishi Sunak came to power, in line with a pledge in the 2019 Conservative manifesto.
If pressure on the government to lift the ban doesn’t work, the industry now wants compensation for years of investment.
A source said: ‘It would almost certainly reach hundreds of millions of pounds – at least £500 million and possibly as much as £1 billion.’
Ministers claim they need new scientific evidence that fracking does no harm. The process involves pumping a mixture of sand, water and chemicals into the earth to crack shale rock and release trapped gas.
The main reason the government has turned against fracking is because it can create small earthquakes.
Fracking is subject to stricter requirements than many other industries. The source said: ‘If the same rules applied, the UK would have no quarries, construction or geothermal energy.’
The Post understands that until the day before the U-turn, the sector was plotting a strategy with officials.
Industry sources claim the plans could have secured the supply of UK-produced natural gas within two years.
Major players include Cuadrilla, Jim Ratcliffe’s Ineos, Aurora Energy Resources and the publicly traded companies Egdon Resources and IGas, whose investors are the fund managed by financier Crispin Odey.
In a statement in response to the ban, IGas said it was “shocked and disappointed” by the decision and that it “reserved the right to pursue any legal process.”
A spokesperson for the UK Onshore Oil & Gas industry association said ‘no option’ was off the table after the U-turn.