Deloitte: Energy in focus at International Festival for Business

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 Deloitte Logo June 2014

Graham Stock, Deloitte
 
Graham Stock, planning and development partner at Deloitte in the North West

ONE year ago this month, Lancashire made British history when geologists discovered the biggest energy reserve in the Western hemisphere – 1,300 trillion cubic feet of gas under the rocks of Lancashire and Yorkshire. If only 20% of this reserve was extracted it would meet Britain’s gas demand for the next 80 years.

This is all the more important because the UK needs to start securing its energy sources. Some might say that we should be celebrating this breakthrough for the North West region but before we do, we need to get our story straight to enable the region to tap into the opportunity.

The issue we are facing is that the most obvious way to secure this fuel source is to embrace fracking, a technique which has major environmental concerns.

However, one could argue that the North West should be looking at Aberdeen, The Middle East and the US, which have all embraced the oil and gas industries. Seemingly overnight, oil extraction in the Middle East brought wealth, status and billion of dollars worth of investment and then there is the US where shale gas from fracking has revolutionised energy prices.

The North West has a great track record in embracing and developing new technologies, so the main question is what can this discovery do for Britain and more importantly for the North West region?

As the International Festival for Business gathers pace I am encouraged at the amount of international investment interest in the North West. With the discovery of shale gas, the interest from international firms specialising in extraction is set to grow rapidly.
The Institute of Directors also highlighted the employment opportunities that come with shale gas extraction – estimating that it will create just over 1,000 jobs (a combination of direct employment and in-directly through supply chain and other associated activity).

There is clear controversy surrounding how we extract the fuel and the need for further clarity and openness as to the extraction process and its environmental effects. These are challenges that the industry is addressing, as evidenced in the long-term approach that the operators are taking. We all know that the US market and land mass is different to the UK and our relatively high population density makes fracking a different proposition when it is closer to individual houses.

However, it is up to the North West and Lancashire to seize the opportunity to be the very centre of the UK fracking industry, as shale gas extraction in the region could attract £33bn of investment to the UK.

Aside from shale gas extraction, analysis suggests that the UK could attract 45% of the global offshore energy market. Combined with easy access to key strategic sites in the Irish Sea, excellent motorway links to all corners of the country, and three international airports at Manchester, Liverpool and Blackpool, it is not hard to see why the energy sector in the North West is brimming with opportunities.