Minister Foster Comes Out in Support of Fracking

DUP Minister for Enterprise, Trade & Investment, Arlene Foster, was afforded a full page in today’s Impartial Reporter to discuss the relative merits of proposals for extensive hydraulic fracturing ‘Fracking’ to proceed in West Fermanagh. Unfortunately, the paper has not published the article on-line for a wider audience to read as it is significant and needs analysis.

The article’s tone is reticent. Arlene no longer makes the mistake of coming out openly in support of Fracking as she initially did when her Department first awarded the license to Tamboran Resources Plc to investigate opportunities for gas exploration in West Fermanagh.

“As you would expect me to say for Fermanagh in particular it will come as great news if we can follow through on what Tamboran are saying.” – Arlene Foster, February 2012

 Arlene’s more nuanced approach is to detract from the scale and even likelihood of it proceeding while injecting the article with a full account of the potential benefits.

The problem is for Arlene that the positive benefits she seeks to attribute to fracking sourced, of course, from Tamboran Resources Plc themselves, have been thoroughly discredited probably most decisively on this blog.

To recap, Arlene Foster has uncritically repeated Tamboran’s estimates of economic benefit resulting from Fracking proceeding. Well, actually she did more than that – she called their figures realistic!

So she considers ‘realistic’ Tamboran’s estimates of 600 full-time jobs to be created directly with the gas exploration and a further 2,400 full-time jobs created through an economic multipler (indirect and induced).

The first problem with this estimate is that the direct job creation figure appears to be inflated by Tamboran – very few jobs are needed after the initial frack period: Tamboran’s assumptions – which I have to hand – are sky-high. Once gas is flowing at a site – you are basically talking about minimal levels of security and a central office monitoring flow rates across a range of fields.

Meanwhile there is the obvious ‘cost’ in terms of jobs. Fracking going ahead threatens employment in Fermanagh’s two biggest sectors in terms of employment: agriculture and tourism. Those jobs have to be subtracted from any jobs created. When you discount the majority of jobs involved in the fracking process itself – which will go to experts brought in from places like Scotland – there is almost certainly going to be net job losses associated with the process.

What’s even more transparently wrong however is the estimated indirect and induced economic multiplier. Tamboran’s figures mean that for every job created in Fracking a further four jobs will be created in the wider economy. That’s just unrealistic. The best estimate available for economic multipliers for the whole of Northern Ireland (which would be far above that for Fermanagh alone) would be less than half the figure of Tamboran.

Arlene points to the massive potential contribution that fracking could have on fiscal receipts for the UK Exchequer and points to the fact that these underpin public services in Northern Ireland. While this is true, we must question the scale of the potential receipts associated with fracking. The oil and gas industry have proved very adept in the past in lowering taxes paid – as a proportion of total revenues just how much will go into the public purse. After capital investment costs and the like have been written off – probably a very small proportion.

Mysteriously Arlene quotes Tamboran’s figures in relation to the £5 to £6 billion in investment that fracking will bring about but leaves out the estimate of £46 billion in revenues that is associated with that. Of course that is likely to be a massive over-estimate. The oil and gas industry are known to inflate revenue estimates in order to sway political representatives behind them and to attract investors’ money.

Of course, local people might ask why Tamboran’s owners are likely to become billionaires while we gain relatively nothing and risk losing everything from the exercise.

So much

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