December 28, 2012 1:11 pm

Weir sees UK as potential fracking hub

The UK’s decision to approve the controversial practice of fracking could turn the country into the European hub for the industry, according to the head of Weir Group.

Keith Cochrane, chief executive of the FTSE 100 engineer, said that the UK’s experience in the oil and gas sector made it the obvious choice as a hub for Europe’s nascent shale gas industry.

“The UK is in a fantastic position to take advantage of the changes, given the infrastructure that already exists off the back of our North Sea, to take a leading role in the development of this industry across Europe,” he said.

“We have the skills, we have the capability; it makes a lot of sense from a job creation and tax revenues point of view.

“We should get out there and prove the technology in a UK context, and use that as a platform to become a European hub as shale reserves are developed across both western and eastern Europe.”

The decision this month by the UK government to allow “fracking” – the hydraulic fracturing technique used to release natural gas trapped from dense shale rock deep underground – has polarised opinion.

Many in the energy industry hope that it will drive down gas prices, while environmentalists have condemned the decision as fraught with danger.

Fracking was suspended in the UK last year after Cuadrilla, the only company to have started exploring for shale gas in the country, triggered two small earthquakes in Lancashire.

Weir, a 141-year-old oilfield pump supplier, has become one of the biggest beneficiaries from the surge in shale oil and gas extraction in the US, with the country accounting for about one-third of Weir’s revenues.

Weir supplies half the high-pressure pumps used in the US and Canadian shale markets, and demand for equipment used in fracking has buoyed the group.

However, the pace of orders for the industrial pump supplier’s equipment has slowed over the past year, as the North American shale gas industry deals with oversupply following a recent production boom.

The slowdown in the US natural gas market in July prompted the Glasgow-based group to lower its full-year earnings guidance.

The growth of shale gas has transformed the energy landscape in the US, which pioneered fracking, by producing low-cost gas and in turn aiding the country’s manufacturing base.

David Cameron, prime minister, has expressed hopes to replicate this in the UK, dubbing the move a potential “shale gas revolution”.

Although it is unclear how much recoverable shale gas is present in the UK, some analysts have suggested that it is unlikely to have the impact seen in the US.

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