GO
Loading...

AMEC CEO flags barriers to UK fracking

Tuesday, 31 Dec 2013 | 4:58 AM ET
AMEC has strong position in US renewables: CEO
Tuesday, 31 Dec 2013 | 3:15 AM ET
Samir Brikho, CEO of AMEC, says the company is reducing its level of dependency on oil and gas through renewable energy projects, especially in the U.S.

The CEO of FTSE 100 engineering firm AMEC has warned of multiple barriers preventing the U.K. from creating a shale gas industry to rival that in the U.S., which remains its only significant producer.

Supporters of fracking -- the controversial process of recovering shale gas and oil from rock -- in Britain include Prime Minister David Cameron, who has argued that shale gas development would cut the U.K.'s reliance on gas imports and create thousands of jobs.

But AMEC CEO Samir Brikho told CNBC on Tuesday that although shale production was "technically and environmentally feasible" in the U.K., there were geographical, legal and business culture barriers to its success.

Dan Kitwood | Getty Images

"First is topography and population, availability of water, licensing and permits to be able to mix chemicals with water when you do the hydraulic fracking," Brikho said.

"Also in the U.S., people get excited about this (shale gas) because they own the mineral rights when they own the land. That is not the case in the U.K… You own maybe a slab of grass here.

"In addition, you have thousands of entrepreneurs in the U.S. who actually buy a couple of tracks and go out and do drilling. That's not the case here."

The U.K. will rely on imports for 70 percent of its overall gas consumption by 2025, according to government forecasts, so the U.S.'s progress with hydraulic fracturing -- or fracking -- has piqued interest.

However, the industry is in its infancy in U.K. and remains controversial due to environmental concerns. Indeed, the U.K. government temporarily banned shale gas exploration in 2011-12 after two earth tremors in Lancashire in North West England, which some blamed on nearby fracking.

(Read more: Why economic growth alone won't fire up oil in 2014)

Little drilling or testing has taken place in Britain's shale deposits so it is not yet known how much is recoverable. However, the Institute of Directors, a U.K. business lobby group, has argued that shale production could attract annual investment of up to £3.7 billion ($6.1 billion) and support up to 74,000 jobs.

But Brikho warned that business interest in U.K. shale was reliant on profit as well as government support.

"The question comes down to… political will and commercial will. So if the companies see they will not be able to get good returns, then they will not do it," he said.

(Track oil prices live with CNBC)

—By CNBC's Katy Barnato. Follow us on Twitter: @CNBCWorld

  Price   Change %Change
AMEC
---
FTSE
---
OIL
---
BRENT
---

Featured

Contact Europe News

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More

Europe Video