UK is 55 million years too late for fracking to work, says expert

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UK is 55 million years too late for fracking to work, says expert. The geology of the UK is unsuitable for fracking and the opportunity of the new energy source has been “overhyped”, a geoscience expert has claimed.

Professor John Underhill, chief scientist at Heriot-Watt University in Edinburgh, suggested the UK is “55 million years too late” for the gas extraction technique (fracking) to work. He said reservoirs of shale gas had been damaged by seismic activity 55 million years ago, causing some of the deposits to escape. Fracking, or hydraulic fracturing, involves drilling into the earth then injecting liquid into the rock at high pressure, forcing apart fractures and allowing gas to escape.

Opponents of the technique claim it will harm the environment, but supporters say it is a beneficial source of energy. Mr Underhill said: “Both sides of the hydraulic fracturing (fracking) debate assume that the geology is a ‘slam dunk’ and it will work if exploration drilling goes ahead. “Public support for fracking is at an all-time low of 17%, based in the main on environmental concerns, but the science shows that our country’s geology is simply unsuitable for shale oil and gas production.

The implication that because fracking works in the US, it must also work here is wrong. “For hydraulic fracturing to be successful, a number of geological criteria must be met. The source rock should have a high organic content, a good thickness, be sufficiently porous and have the right mineralogy. The organic matter must have been buried to a sufficient depth and heated to the degree that the source rock produces substantial amounts of gas or oil.

“However, in locations where fulfilment of some of the criteria have led to large potential deposits, uplift and the faulted structure of the basins are detrimental to its ultimate recovery. “Yet, the only question that has been addressed to date is how large the shale resource is in the UK.

The inherent complexity of the sedimentary basins has not been fully appreciated or articulated and, as a result, the opportunity has been overhyped.” He highlighted three potential fracking sites which he said have been subject to deformation – the Weald basin in southern England, the Bowland Shale in Lancashire and the West Lothian Oil Shale in Scotland.

Mr Underhill added: “Areas that were once buried sufficiently deeply with temperatures at which oil and gas maturation occurs, lifted to levels where they are no longer actively generating petroleum.

They have also been highly deformed by folds and faults that cause the shales to be offset and broken up into compartments. This has created pathways that have allowed some of the oil and gas to escape.

“There is a need to factor this considerable and fundamental geological uncertainty into the economic equation. It would be extremely unwise to rely on shale gas to ride to the rescue of the UK’s gas needs only to discover that we’re 55 million years too late.

“Friends of the Earth Scotland (FoES) said the report “adds weight to the already overwhelming case against fracking in Scotland, or indeed anywhere in these Isles”. Head of campaigns, Mary Church, added: “FoES has long highlighted the misleading use of US shale gas economics by industry players like Ineos to make a case for fracking in Scotland.

“However, even if Scotland’s geology presented ideal conditions for shale gas extraction, the case against fracking is still very clear.

“Fracking presents a whole host of risks to people’s health and our local environment, while in the context of irreversible climate change, going after a new source of fossil fuels is quite literally the last thing we should be doing.

“Support for fracking is at an all-time low. Over 60,000 people have responded to a consultation on fracking in Scotland with the vast majority calling for an all-out ban. “We urge the Scottish Government to put an end to this discussion by banning fracking once and for all, and focus instead on a rapid and fair transition to a zero carbon economy.”

 

 


Crawford Falconer takes up post as UK’s top trade negotiator

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Crawford Falconer takes up post as UK’s top trade negotiator. The man in charge of negotiating the UK’s trade deals once Brexit is finalised, starts his job this week.

Crawford Falconer will take up the post of chief trade negotiation adviser at the Department for International Trade.

Leaving the single market would mean the UK would have to establish new bilateral trade agreements, but cannot formally do so until after Brexit.

However, one economist suggested Mr Falconer would already be “building bridges” with the European Commission.

The UK faces a huge challenge in resetting its trading relationship with the EU and other countries when Brexit takes effect.

Trade pacts that have been negotiated by the EU with the rest of the world will no longer apply to the UK, while Britain will also need to define new trading relationships with the EU itself.

Membership of the EU has meant the UK does not have a large bank of trade negotiators with recent experience.

Prof Alan Winters, from the University of Sussex’s UK Trade Policy Observatory, said Mr Falconer’s experience and contacts at the WTO would mean the groundwork for separating UK trade policy from Brussels would be made easier.

“He knows quite a lot of the main players at the WTO and can build bridges at the European Council, which is good as there is work to be done right now,” he said.

“There is work he can do, such as discussions on whether the UK uses replicas or changes trade agreements that we have with nations by way of membership with the EU.”

One suggestion has been that initially trade agreements could be adopted by the UK in their current form – replicating them – at the point of Brexit, to be altered subsequently as new deals are agreed.

International Trade Secretary Liam Fox said of the new appointee: “Crawford Falconer brings a wealth of international trade expertise to our international economic department, ensuring that as we leave the EU, the UK will be at the forefront of global free trade and driving the case for international openness.”

Mr Falconer will lead trade policy and negotiation teams at the DIT. His appointment was first announced in June.

A New Zealander, Mr Falconer has more than 25 years trade experience. He has represented New Zealand at the World Trade Organization (WTO) and held various posts in foreign and trade affairs in his home country.


Yet another bank branch earmarked for the chop

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The axe is set to fall on yet another Wigan bank branch.

The latest victim of the remorseless march of technology will be the Barclays outlet within the Asda hypermarket at Newtown.

It is one of another 54 branches it is planning to close down in the coming weeks and Newtown will cash its final cheque on October 27. The move will bring its total number of Barclays closures in 2017 to 67 across the UK.

In a statement, the bank said along with a number of high street lenders, the closures are linked to the growing demand for digital services – such as the increasing shift towards immediate online and app banking facilities. A spokesman confirmed the closures will not result in any job losses, adding:

“The number of physical Barclays branches will reduce overall but our branch network and the colleagues who work in them remain a vital part of our offering. We will continue to evolve the shape and size of our branch network, as well as improving and investing in the experience in-branch.

We also provide our customers with a range of digital channels.” There was a time when there was a bank to be found in every modest-sized Wigan community upwards – sometimes several per town and village. But it was as early as the mid-1990s that branch closures began, one of the first being the NatWest in Shevington.

Few townships have been spared since as transactions are increasingly carried out digitally. According to consumer platform Which?, over 1,000 high street bank branches were axed between January 2015 and January 2017 alone, with HSBC the worst offender.


World’s biggest banks face £264bn bill for poor conduct

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Costs for 20 financial institutions for the five years to 2016 are higher than in the previous period, with RBS and Lloyds in top five

Fines, legal bills and the cost of compensating mistreated customers reached £264bn for 20 of the world’s biggest banks over the five years to 2016, according to new research that raises doubts about efforts by the major financial services players to restore trust in the sector.

This figure is higher than in the previous five-year period – when the costs amounted to £252bn – and is up 32% on the period 2008-12, the first time the data was collated by the CCP Research Foundation, one of the few bodies that analyses the “conduct costs” of banks.

The report said the data showed that 10 years on from the onset of the financial crisis, the consequences of misconduct continue to hang over the banking sector.

The latest analysis shows that in 2016 the total amount put aside by the banks surveyed rose to more than £28.6bn – higher than in the previous year when there had been a fall from a peak of £63bn in 2014.

Chris Stears, research director of the foundation, writes in the latest report: “Trust in, and the trustworthiness of, the banks must surely correlate to, and be conditional on, banks’ conduct costs. And persistent level of conduct cost provisioning is worrying.

“It remains to be seen whether or not the provisions will crystallise in 2017 [or later] and what effect this will have on the aggregated level of conduct costs.”

Two UK high street banks – Royal Bank of Scotland and Lloyds Banking Group – are in the top five of banks with the biggest conduct costs.

RBS set aside extra provisions for fines and legal costs largely related to a forthcoming penalty from the US Department of Justice for mis-selling toxic bonds in the run-up to the financial crisis.

That residential mortgage bond securitisation mis-selling scandal is responsible for £66bn of the costs incurred during the five-year period and the single largest factor, according to the foundation.

The payment protection insurance scandal, which is the main reason Lloyds Banking Group is in the list, caused the banks to set aside £27bn during the period. Lloyds has set aside more than £17bn to tackle the mis-selling of PPI.

Roger McCormick, managing director of the foundation, said: “It’s reasonable to assume that the long-running sorry tale of payments and provisions for PPI must come to an end eventually although UK banks made additional provisions for PPI mis-selling of more than £1.5bn midway through 2017.”

The foundation uses five-year rolling periods to try to provide a long-term analysis of the costs that banks face to rectify past mistakes, a major theme of the last 10 years, when they were also hit by penalties for rigging foreign exchange markets and interest rates (Libor).

“As has been the case since the first table, we find ourselves wondering when, if ever, the level of conduct costs will start to decrease,” said McCormick.

He noted that the 2016 figures showed a rapid decline in fines from the Financial Conduct Authority, which issued fines worth £819m in the first six months of 2015 alone, as a result of the market-rigging scandals.

Top of the table are major US banks Bank of America, which dominates the table because of its previous bill for the toxic bond mis-selling scandal, JP Morgan and Morgan Stanley.

The figures include money set aside for future penalties by the 20 banks and fines and other costs they have incurred to tackle regulatory and legal claims.

Stears said there would not be zero conduct costs but added: “The question is at what average level will these costs settle? And, moreover, is that level acceptable to the banks, their shareholders and the public?”

 

 


Commuters braced for rises in regulated rail fares

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Millions of rail users in the UK are bracing themselves for news of an increase in regulated rail fares from January 2018.

Train operators are allowed to raise fares by as much as the Retail Prices Index (RPI) figure for July, expected to be in the region of 3.5%.

The exact figure will be published later this morning.

Passenger groups said commuters would be worst-hit, and suggested that the RPI measure should be scrapped.

The rises will affect “anytime” and some off-peak fares as well as season tickets in England and Wales.

In Scotland, it is mainly commuters who will be affected, with off-peak fares rising by a smaller amount.

The Scottish government currently limits rises in off-peak fares to RPI minus 1%.

There are no plans for increases in Northern Ireland.

Unregulated fares, which include super off-peak travel and advance tickets, will be set in December.

Transport Focus, which represents the interests of passengers, said rail users were already fed up with getting poor value for money.

“Wages are not keeping pace with inflation and performance remains patchy,” said a spokesperson for the group.

“Passengers, especially commuters, face potential strike action, the consequences of the continual rise in passenger numbers, and disruption caused by railway upgrades.”

Transport Focus said it would also like to see the RPI measure replaced by the Consumer Prices Index (CPI), which is currently running at 2.6%.

CPI is typically lower than RPI.


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