Special Investigation: Council invested in fracking company behind controversial planning approval

Carl Les

Carl Les is leader of North Yorkshire County Council.

North Yorkshire County Council gave planning permission for frackers Halliburton - while having shares in ... Halliburton. The council argues the decisions were made by different committees, avoiding a conflict of interest. JAN GOODEY investigates

We appoint fund managers for North Yorkshire County Council’s pension fund and they determine which investments to buy and sell - decisions which are outside of the council’s day to day control.

A council which gave planning permission for a controversial scheme to bring fracking to North Yorkshire had at the time of the decision pensions investments in one of the companies set to benefit - the US oil giant, Halliburton.

The Conservative-led North Yorkshire County Council (NYCC) gave the green light for exploratory drilling by Third Energy UK Gas Ltd at Kirby Misperton in May 2016. In turn, Third Energy UK Gas Ltd signed a contract with Halliburton “to support its onshore development activities”.

That same year the council - through its North Yorkshire Pension Fund (NYPF) - had £572,000 invested in Halliburton. North Yorkshire County Council (NYCC) has since jettisoned its stake. However, it still invests in fracking concerns.

Conflict and injustice

Elaine Williams, a spokesperson for NYCC, told The Ecologist: “We appoint fund managers for North Yorkshire County Council’s pension fund and they determine which investments to buy and sell - decisions which are outside of the council’s day to day control.

 “The pension fund committee is completely separate to the county council’s planning committee. The pension fund committee is charged with delivering value to members of the pension fund, independent of council business.”

The Joseph Rowntree Charitable Trust (JRCT), was a stakeholder in the NYPF. A spokesperson said today: "JRCT is no longer a stakeholder in NYPF and has moved to another provider for financial reasons."

Susannah Swinton, operations manager at JRCT, previously told The Ecologist: “The trust has raised the issue of ethical and responsible investment with NYPF. We are currently an admitted member of the North Yorkshire Pension Fund, which is part of the Local Government Pension scheme. Decisions on the fund’s investment policy and strategy are the responsibility of NYPF and are not under the control of JRCT.”

In 2014, JRCT – the philanthropic Quaker group funding people who address the root causes of conflict and injustice - was one of 17 of the world's largest funds to say they would divest from fossil fuels and reinvest their money in clean energy.

Chemicals conglomerate

Third Energy’s accounts state under the Under a Contingent Liabilities section: “The Group [Third Energy] has entered into a contract with Halliburton Manufacturing and Services Ltd for the provision of services to support its onshore development activities. 

We appoint fund managers for North Yorkshire County Council’s pension fund and they determine which investments to buy and sell - decisions which are outside of the council’s day to day control.

“As a result of this arrangement Halliburton may receive additional payments at a future date if these activities are successful. Due to the nature of the agreement management are unable to quantify these additional payments at the balance sheet date.”

Halliburton has a questionable environmental record. It was BP’s “cement contractor” for the Deepwater Horizon well and drilling rig that exploded in 2010 in the Mexican Gulf, killing 11 workers and leading to the largest ever marine oil spill.

The company also played a part in the creation of the infamous ‘Halliburton Loophole’, which describes laws that left the Environmental Protection Agency powerless to regulate fracking in the USA. More recently in June 2014, it was responsible for a devastating spill of fracking chemicals in Monroe County, Ohio, which polluted the nearby river and killed over 70,000 fish.

Third Energy is among the companies hoping to frack since the lifting of a government moratorium in December 2012 following minor earthquakes near Blackpool the previous Spring. Other companies include Cuadrilla Resource Ltd and the multinational chemicals conglomerate, INEOS.

Private equity

Cuadrilla was the first company to use high volume hydraulic fracturing for shale gas in the UK.  It was these fracking activities at Preese Hall, Lancashire, which caused the tremors.

Third Energy UK Gas Ltd is one of a group of companies - including Third Energy Offshore Ltd, Third Energy EBT, Third Energy Trading Ltd and Third Energy Services Ltd - owned by parent company Third Energy Holdings Ltd, based in the Cayman Islands, where no details are available on company personnel or accounts. The full details of the subsidiary companies are available in the UK on Companies House. 

According to Third Energy Offshore Ltd’s 2016 accounts (filed four months late in February and recording losses of over £1.1m): “In the opinion of the Directors, the ultimate parent company of Third Energy Holdings Limited is Barclays PLC. There is no ultimate controlling party.”

Barclays had announced at its AGM in May 2017 that it planned to sell its 97 percent stake in Third Energy Holdings which it owns through its private equity arm, Global Natural Resource Investments, but this has yet to materialise.

Requests under the Freedom of Information Act revealed that out of a total fund of £3.3bn North Yorkshire Pension Fund in 2017 had investments of £4.1m in “named investments”. 

Granted permission

North Yorkshire Pension Fund’s named holdings are: £1.3m in oil and gas company Total - half the amount from the previous year; £1.2m in investment house Macquarie Group Ltd; and £1.6m in chemicals company BASF.

The rest of the money is invested in “unnamed investments” - those managed through pooled funds. Unnamed investments held by UK Local Government Pension Funds can average between 40 to 60 percent of total holdings.

The North Yorkshire Pension Fund has divested from Centrica plc - in which it held a £2.2m stake in 2016.  Centrica holds fracking licenses in partnership with Cuadrilla for operations in Blackpool. It appears to have also sold a £2.1m stake in investors HSBC holdings plc.

The Yorkshire Dales National Park (YDNP) is another public sector organisation which is a stakeholder in the North Yorkshire fund. Its employees have pensions invested in the fund. Andrew Fagg, a spokesperson for YDNP, said: “The pension fund is an independent body. As such YDNPA is not a ‘member’ and we don’t control its investment strategy.” The University of Hull is another a stakeholder.

Third Energy is currently has been asked to report to the Infrastructure and Major Projects Authority to test for ‘financial resilience’.  The well has been drilled. If the company is granted permission fracking would commence in the Autumn.

This Author

Brendan Montague is editor of The Ecologist.

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