North Yorkshire project halted for inquiry into stability of Third Energy, whose chairman is former chief executive of outsourcing giant

A controversial plan to start fracking for shale gas in rural North Yorkshire has been thrown into doubt amid mounting concerns over the finances and management of the company behind the scheme.

In a move that has encouraged anti-fracking protestors, energy secretary Greg Clark has ordered the start of drilling at Kirby Misperton to be put on hold pending an investigation into the “financial resilience” of Third Energy.

The Department for Business, Energy and Industrial Strategy has offered no guarantee that the project would get a final go-ahead.

Clark’s move, taken after the collapse of outsourcing firm Carillion, came as protest groups and Labour politicians drew attention to the fact that Carillion’s former chief executive, Keith Cochrane, is now the non-executive chairman of Third Energy.

Q&A What is fracking? Show Hide Fracking, or hydraulic fracturing, is a way of extracting natural gas from shale rock formations that are often deep underground. It involves pumping water, chemicals and usually sand underground at high pressure to fracture shale – hence the name – and release the gas trapped within to be collected back at the surface. The technology has transformed the US energy landscape in the last decade, owing to the combination of high-volume fracking – 1.5m gallons of water per well, on average – and the relatively modern ability to drill horizontally into shale after a vertical well has been drilled. In England, the government placed a moratorium on fracking in November 2019 after protests, legal challenges and planning rejections. A year earlier, the energy company Cuadrilla was forced to stop work at its Preston New Road site in Lancashire twice in four days due to minor earthquakes occurring while it was fracking. The tremors breached a seismic threshold imposed after fracking caused minor earthquakes at a nearby Cuadrilla site in 2011. In March 2019 the high court ruled that the government's fracking guidelines were unlawful because they had failed to sufficiently consider scientific evidence against fracking.

Friends of the Earth has piled on further pressure by writing to Clark raising further objections, including a claim that the firm’s ultimate parent company is Third Energy Holdings, based in the Cayman Islands.

Fracking or hydraulic fracturing is a process in which water, mixed with sand and chemicals, is injected into wells at high pressure to create fractures in shale beds and so release their reserves of gas and oil.

No fracking operations have taken place in the UK since 2011, when it was found to be the probable cause of minor earthquakes around a test site on the Fylde coastal plain in western Lancashire.

Those protesting around the site near the North York moors have vowed to put their lives on the line to prevent work starting. In October two campaigners had to be rescued from an 18 metre (60ft) rig after scaling the structure and waving flares. Police warned at the time of “the serious risk created by open flames and sparks on a live gas site”.

Third Energy had been expecting to start drilling several months ago, from but is now preparing to remove equipment from the site to use on other operations while the investigation takes place.

Alan Whitehead MP, shadow minister for energy and climate change, said: “The Tories continue to press ahead with fracking across Yorkshire against the wishes of local communities, despite the environmental risks and suggestions that the economic opportunities are considerably less than initially projected.

“Serious questions need to be asked as to why the instability of this company was only noticed now, just before fracking was due to start and worryingly there appears to be an element of involvement of former Carillion executives in the company.

“Labour would ban fracking, instead investing in renewable and low-carbon energy projects to build the clean economy of the future.”

Writing to Clark, David Abrahams, a lawyer for Friends of the Earth, said the ownership, management, and financial accounts of Third Energy – whose most recent returns showed a loss of £3.8m and debts of more than £50m to parent and sister companies – demonstrated “a distinct lack of financial resilience”.

Simon Bowens, a campaigner for Friends of the Earth, added: “Third Energy is now facing an in-depth government investigation into its financial health, and they were four months late filing their accounts.

“The accounts also raise questions about its ability to restore their fracking site if things go wrong. The government should pull the plug: fracking makes no sense for our environment, climate or energy needs.”

Third Energy said: “We will be providing the information required for this review to be completed. This means that there will be a further period before we can expect final consent from the government to proceed with our operations.”

In a statement to parliament Clark said he had asked the Infrastructure and Projects Authority “to assess the financial resilience of the applicant, including its ability to fund decommissioning costs”. His department said a decision on the next step would be taken in due course.