Cluff pulls back from Underground Coal Gasification (UGC) project

There will be some relief at the news that plans for Scotland’s first Underground Coal Gasification (UGC) project have been put on hold.

The developers, Cluff Natural Resources cited the uncertainty over the outcome of the Scottish Government’s energy commission, which reports in September, as well as a motion at the SNP conference for UGC to be included the moratorium on fracking as reasons for the decision to postpone the project. The company’s interim statement says: “We have deemed it prudent to await clarity on these matters before committing fully to, in particular, the expense of an Environmental Impact Study. As a result, work on a planning application will likely be postponed until after such time as the political situation is more certain. Preparatory work including site selection studies, modelling and design work are however well underway.”

Cluff’s statement also gives a clear indication of their concern over local planning pressures and their hope that the Scottish Government might be more sympathetic, it says: “Assuming that with all due respect to our opponents, common sense prevails and political support is forthcoming for the unconventional resources business, it is in the planning context that Government can, and I argue, must, help. In short, planning for approvals for energy related projects should be vested in the control of Central Government.”

Friends of the Earth Scotland, welcomed the news saying; “Cluff is clearly running scared at the strength of feeling within both the community and the SNP grassroots membership, who have put out a powerful call to get Underground Coal Gasification included in the current moratorium on unconventional gas. Cluff has now revised its plans twice regarding the Kincardine UCG project, clearly because it is aware of how unwanted the development is by communities living around the Forth. Underground Coal Gasification is a highly risky technology that has caused widespread environmental damage in test projects around the world. The SNP conference is clearly heading for a very lively debate.”

The political concerns are reflected by John McNally, the MP for Falkirk, who said his SNP colleagues at Westminster viewed unconventional oil and gas with “trepidation” and called for clarity over what is covered by the moratorium.

The SNP’s trade union group has also submitted a resolution to the party’s annual conference in October calling for a total ban on unconventional gas extraction.

John Wilson, the MSP who quit the SNP last September is still waiting for clarification from Fergus Ewing. He said: “I find the Scottish Government is being disingenuous. It would be useful if they came clean sooner rather than later on whether they intend to allow fracking and UCG. It would be interesting to find out if the First Minister and Energy Minister have been pulling the wool over the eyes of not only the electorate but a large number of party members during the Westminster campaign who wore anti-fracking badges with the SNP logo on them.”

There may also be wider economic concerns behind the Cluff decision. The most dramatic change for the energy sector has been a fall in natural gas prices. From a peak of 73p per therm (a unit of heat from gas) in December 2013, the price halved last summer, and now sits at 41p. At this price it is doubtful if any fracking sites in the UK will be profitable. In the US, shale projects are operating at a loss and capital markets are pulling out of the technology they have been so aggressively funding.

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  • Posted in: Gas

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