Resources, energy prices and emissions: the three big questions about UK shale gas
- 12 Dec 2012, 12:00
- Robin Webster
Shale gas has received the official nod - David Cameron told an
influential committee of MPs last night that there is a "gas
revolution taking place across the world" and "I want us to be part
of that revolution". But the government's support for shale gas has
also been criticised over the past few days by experts who have
labelled it "
misleading and dangerous" and "categorically and
mathematically" incompatible with the government's climate change
The arguments over shale - often repeated in
coverage of the issue - seem to boil down to three key
questions. We take a look at them.
1. How much shale gas is there in the UK?
In 2011, the British Geological Survey (BGS)
estimated the UK has
150 billion cubic metres of shale gas reserves - that's
about two years of current UK gas consumption. It's also around
5.3 trillion cubic feet, if we've got our conversion right. But
then oil and gas company Cuadrilla announced that it had discovered
200 trillion cubic feet of shale gas under Lancashire, near
This is obviously a much larger amount. How can the two figures
be compared? It's important first of all to note that the BGS
figure refers to reserves - the amount of shale gas it believes can
be extracted once economic and political limitations are taken into
Cuadrilla's figure refers to the total amount it believes is in
the ground, of which it might be possible to extract about 10 to 20 per
cent. If correct, Cuadrilla's find could still be globally
The BGS numbers are also about to be updated. The BGS has been
by the Department for Energy and Climate Change (DECC) to make
a thorough assessment of the onshore shale gas resource across the
whole of the UK. It's due to be launched in the New Year, but last
Times announced - presumably on the basis of a leaked copy -
that the report will:
"...estimate that the 1,000 square
kilometres covered by the Bowland Basin to the east of Blackpool
contains 300 trillion cubic feet of gas, equivalent to 17 times the
remaining known reserves in the North Sea."
This seems to be a surprise to the BGS however. A press
spokesperson told us yesterday that its assessment has not yet been
released, adding "we don't know where these figures have come
from". The figures are according to a BGS spokesperson currently a
"closely guarded secret" and not even senior managers know what
they are. (h/t to Leo
Hickman who rang BGS first).
This is all second guessing and none of this really tells us
what the BGS have concluded. But rumours
have been circulating for some time that the number is going to
be big. When it is finally released, it will be hailed by advocates
of the fuel as proof that the UK has adequate resources to
participate in David Cameron's "shale gas revolution".
2. Will UK shale gas cut energy prices?
Another "shale gas revolution" has already caused gas prices to
fall in the States, and the International Energy
Agency predicts that production of shale gas will continue to
bring down US energy prices over the next few decades.
The US shale experience has led many to
support exploitation of shale gas in this country. But will the
same thing happen over here? In a report published by Chatham
House, Professor Paul Stevens outlines twelve barriers to
development of shale gas that apply in Europe, but not in the
States - including stricter environmental regulations, a different
approach to property rights, an industry dominated by large players
rather than "smaller, entrepreneurial companies" and differences in
attacked George Osborne for failing to acknowledge those
barriers, calling his view of the energy system "misleading and
dangerous". Gas prices could decrease significantly, he said, but
any decrease "will certainly not be the result of any shale gas
revolution in the UK or Europe".
Experts at events we've attended seem to agree that significant
shale gas production Europe is not a serious
prospect for the next 15 to 20 years. Michael Liebreich of
Bloomberg New Energy finance, who describes
himself as "excited" about shale gas, says:
"There is no reason to believe that it
will push gas prices down in the U.K. in the same way as [it has]
recently in the U.S."
But the view is not universal. The respected consultancy Poyry
has just produced a new assessment of the impact of UK shale gas on
prices, using Cuadrilla's latest estimates for the amount of shale
gas it will be able to extract. It suggests that
UK gas prices will be from two and four per cent lower from
2021 if shale gas production by Cuadrilla in Lancashire proceeds as
the company expects it will.
3. Will shale gas cut carbon emissions?
If the UK starts to burn a lot of cheap shale gas, what will it
do to greenhouse gas emissions? In his most recent
Telegraph column, Mayor of London Boris Johnson argued that if
the UK follows America's model of expanding production of shale gas
emissions will fall - and yesterday David Cameron made the same
America's carbon dioxide emissions fell to a
20-year low at the beginning of 2012 - a change the
IEA partially attributed to a switch away from coal and towards
cheaply produced shale gas as a fuel source. Gas has about half the
emissions of coal, so this brings down emissions.
But there are complications. For example, the data indicates
that the USA has just exported
its coal elsewhere. Globally, emissions have not gone down.
Perhaps more importantly from a national perspective, the UK's
power sector doesn't look much much like America's. This country is
already dependent on gas for
just under half of its energy, compared to 15 per cent for
coal. There is a significant chance that cheap shale gas would outcompete
renewables rather than coal, driving up emissions.
Many experts take this view - gas is a fossil fuel, after all.
The Committee on Climate Change says that shale gas is "not a
game changer" and has
explicitly advised against a 'dash for gas' if the UK is to
meet its climate targets. Yesterday morning, the director of the Tyndall Centre
Professor Kevin Anderson told the Energy and Climate Change
Committee that shale gas "categorically and mathematically" cannot
be part of the energy mix if UK is to meet international emissions
The UK may have significant onshore resources of shale gas - and
when the BGS report is published early next year, we should get a
better answer to what has up until now been a fairly open
Shale gas looks likely to drive down energy prices
internationally. But it according to Chatham House, it appears
unlikely that shale gas produced in the UK will have much impact
over the next decade, and not just for reasons of government energy
policy. Domestic shale gas may have a small but significant effect
on prices after that, according to Poyry.
Finally, it may take some time for a UK-based shale gas industry
to get going - but assuming it does, shale gas could well raise
emissions in the UK, rather than cause them to fall.