To shale or not to shale

Tildy official edited small

It will perhaps not overly surprise our readers that those involved in the UK’s nascent shale gas sector, whether on the exploratory or the regulatory side, agree that there are numerous complex issues involved in actually bringing a UK industry to fruition – including serious consideration of whether the enterprise should be undertaken at all.

The speakers at Tuesday’s Westminster Energy, Environment & Transport Forum keynote seminar, ‘Shale gas in the UK: regulation, addressing challenges, and energy security’, presented a spectrum of views from pro- to anti-, with plenty of stops in between.  Meanwhile, an involuntary stop to the proceedings was precipitated by a brief power cut to the venue during the first session, which moderator Lord Hollick called “our own little energy crisis” and which spurred speaker Nigel Mills MP to quip that the Conservative government had apparently failed in its promise to ‘keep the lights on’ after only six weeks in power.  

Indeed, Jim Watson, director of the UK Energy Research Centre, tweeted: “That's what you get for discussing energy security at a #shale conference - a power cut!” And energy security was one of the more contentious topics of the morning, with a number of speakers seemingly unconvinced that shale gas would provide it. Watson himself reminded the crowd that “Domestic energy sources are not always more secure than imports. The argument for shale gas is that it’s domestic and would be more secure, but this really depends on our infrastructure and what else is happening in the gas system. Gas from somewhere else could be cheaper in the long run.”

Other speakers, such as Mills, disagreed. He said gas is “the single largest part of secure, clean and cheap energy. That is where the opportunity is for shale gas,” he continued: “to give us a new domestic source of gas as North Sea gas keeps on declining.” He added that “it’s not clear yet how much shale gas we can extract,” but noted that the UK needs “to have a domestic source to exploit so we’re not reliant on Putin or the Middle East, and not totally exposed to market price fluctuations as in imports”.

Moderator Lord Hollick said the economic benefits of shale gas for the UK “would be considerable” and would “bring great benefit to particular areas with shale reserves” including energy security, job creation, and “the ability to levy tax on gas revenues”. However, Tony Bosworth of Friends of the Earth argued that, even under “realistic” estimates for UK shale gas production, the nation’s gas imports would be “the same, or up to 11 per cent higher than they are now”, while the vaunted ‘dash for gas’ could raise imports by as much as 50 per cent. And he said the UK’s ability to meet its carbon targets could be hobbled by a push for shale. “Will shale gas be a temporary ‘bridge’ or lock us into reliance on fossil fuels?” he asked.

Other speakers were also concerned about the notion of gas as a bridging fuel to a low-carbon economy. According to Watson, the “gas bridge is something that we’re already on, and that we’ve been on for some time. The question is how much longer can that be? How much gas, for how long, could we burn in a way that’s compatible with our climate targets?”

And Lord Smith, chair of the Task Force on Shale Gas, stressed the need to meet climate targets. “If the development of [a UK] shale gas industry inhibits the development of proper commitment to renewable energy and energy efficiency, that would be a very bad thing,” he said. “So how can we make sure this is a genuinely interim bridge process into a future less dependent on carbon-producing fuels?”

The top concern for the speakers, though, was the need for public acceptance in order to move shale gas exploration forward. According to Mills, the government’s new rule that onshore wind projects can only proceed if supported by the local community “might be relevant for the shale gas debate”. And public acceptance is definitely not on the rise; Mills said “fracking doesn’t have particularly strong polling”, while Smith put it more strongly, saying: “The key thing here is, of course, generating trust – because when a proposal for a fracking exploration comes forward, local communities are understandably really terrified of what might happen”. 

Interestingly though, Mills said that in his experience as an MP, planning applications for energy projects as diverse as open-cast coal mines and solar farms have the same amount of local support – “none of them have any”. He continued: “Most people don’t want anything near them, but they do want cheap energy. These things have to go somewhere – so we need to try to take the public with us in that debate, rather than losing them at the outset.”

Jayne Francis-Ward, corporate director of policy, planning and corporate services for Nottinghamshire County Council, said her department is “not staffed to deal with” the public protest expected to arise around shale gas exploration, and that it “could be a real drain on local authority resources”. She said the council is “expecting considerable demonstrations – we’ve already had some and we haven’t yet even had a planning application [filed]”. Among the demonstrations was “a ‘frack-free’ parade organized by a community action group”.

According to Smith, “a lot of public concern rests on what happened in the early days in the US when there was something of a buccaneering spirit in the industry in many places. Things happened that should not have happened. We need to make sure that if the industry does take off here in the UK, we don’t make the same mistakes,” he warned. Mills agreed: “We can’t have the kinds of terrific disasters the US had, which will shatter any future confidence in” UK shale gas development.

Ed Heartney, the US Embassy’s counsellor for environment, science, technology and health, was on hand to offer suggestions on avoiding his country’s initial mistakes in shale exploration and exploitation. Among his recommendations were that UK developers make sure to do baseline studies to determine environmental quality before beginning work. “The US didn’t do baseline studies and it’s been a real problem,” he noted. “We have no idea what’s causing environmental problems, as in areas where there is shale exploration there used to be chemical industries or coal mining.” He said a website, FracFocus.org, has been invaluable in increasing positive communication with the public. And mitigation of visual and sonic irritation, such as placement of well pads “out of sight” and building sheds over drill pads during drilling to minimize noise, has also helped with acceptance. Finally, he said community outreach is “tough to do, but very important”.

Jeremy Leggett, chair of the Carbon Tracker Initiative, said US shale gas has not actually been as successful as other countries believe. “Nobody has mentioned the amount of money being lost in US shale fields,” he said, “approaching a quarter of a trillion dollars. If the economics doesn’t stack up in the US, what are we contemplating importing to the UK?”

“The Bank of England has said publicly that it’s worried about US economic problems around fracking as a threat to global markets. We worry about stranded assets, and there is huge scope for this in fracking. Also, nobody has mentioned the G7 agreement in Germany, which is an accord to go to 100 per cent zero net carbon by the end of the century. There is a really serious risk of stranded assets even if or when we get things away on shale gas in the UK. The costs of drilling, compliance, etc are much larger in the UK than the US,” he warned.  

In terms of public acceptance, he said polls show that “up to 50 per cent of the UK population is undecided on the shale question” and that “the shale narrative has to run the gauntlet” of the global fossil fuel divestment movement.

Given all of this, Leggett advised potential UK entrants to the shale gas sector: “Don’t waste your money – the economics are profoundly against you. The stranding risk is unconscionable and the politics are so toxic that they could even be fatal to parties that move forward in the face of opposition.”

Hollick perhaps summed up the morning’s discussions most succinctly in saying they had clearly raised “some tremendous food for thought”. The “three-quarters of $1tn down the drain in the US” is concerning, he said, while other signals “clearly point to risks”. But “the North Sea has been a resounding success in terms of regulation, so the industry shouldn’t be shy” – and the Royal Society of Engineers, “using a fact-based method, have concluded that fracking can be done safely”. On the public acceptance side, he noted cautiously that “it’s possible to tell a very important story here, and to keep telling it”.

 

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