A step closer to a game changer with shale?
At our recent Energy Debate, Energy Minister Michael Fallon set out the government’s vision for keeping the lights on in Britain, emphasising how innovation and diversity were both key for a secure and affordable energy future. There’s no doubt now that gas will play a significant part, at least over the next few decades, alongside nuclear and other low-carbon technologies. But the question that’s causing a lot of excitement – and not all of it positive – is how much of a role, if any, will shale gas have?
“Shale gas is a prime example of a new option available because of technological innovation,” the Minister told our audience. “There is no doubt in my mind it has the potential to add to our indigenous energy supplies and we are building up momentum for its exploration.”
Clearly in the US, it’s had a massive impact, heralding what many are calling an energy renaissance. Tapping shale deposits puts America in a position where it has more natural gas than Saudi Arabia has oil. Over a million shale wells now cover the country from coast to coast, with production or exploration under way in 30 of its 50 states.
The result is that the price of gas in the US has fallen to around a third of what we pay in the UK. This is good news for American consumers and also for the US economy, not least because many energy intensive industries tempted overseas by cheaper labour are now ‘reshoring’ operations to take advantage of cheaper and more secure energy at home.
But while it’s unlikely that we in the UK could replicate the US success story for a number of reasons – population density and tighter environmental controls among them – there are still some important benefits to consider.
We currently rely on imports for around half our gas requirements, with approximately 40% of our electricity powered by gas-fired generation. Yet our gas storage facilities are woefully inadequate – we only have the capacity to store 4% of our annual consumption, which equates to around two weeks supply. We therefore have to rely on regular imports from Qatar, and also from Africa and Russia, via huge container ships. Not only are these regions subject to political instability, but gas containers are also in demand – ships can change course mid journey if someone is willing to pay a higher price elsewhere.
It’s easy then to see why the appeal of shale is about more than cheaper gas supplies – it’s also about enhancing security of supply. What’s more, the business of extracting shale is complex, labour intensive and requires a vast array of equipment and materials from a wider supply chain. The IoD estimates investment could reach £3.7-billion a year, supporting 74,000 jobs. In these times of economic gloom, this would provide a very welcome boost. But there are other factors to consider.
We in the UK are ultimately working towards the decarbonisation of our energy infrastructure, if we stick to our environmental targets of reducing greenhouse gas emissions by 80% by 2050. This means that gas, unless carbon capture and storage technologies can be successfully implemented on a commercial scale, can only be viewed as a transition fuel.
But even for the relative short-term, using home-grown shale is better in theory than importing gas from afar. However, what isn’t yet clear are the wider environmental impacts. For one, methane can be released from deep within the earth when shale gas is extracted. And methane has an emissions impact around 25 times more powerful than carbon.
The other issue is that while using gas is better emissions wise than using coal, it doesn’t necessarily cut these emissions from the global picture. For example, the switch to shale is partly credited for why US emissions have fallen to a 20-year low – but globally, emissions have gone up. America’s reduced need for coal has led to a fall in global prices, which has made it more economically viable for other nations – Britain included – to use more. And that’s one of the environmental arguments against shale extraction – while it could help to cut emissions domestically, it’s likely to increase emissions globally unless a worldwide ban on coal can be agreed. And I can’t imagine that’s very likely.
Shale gas extraction also requires millions of gallons of water, so for us in the UK – where hosepipe bans are necessary when reserves become stretched – this is an important consideration. Research published this week from Duke University in North Carolina also shows that fracking – the deep drilling and hydraulic fracturing process required to extract shale gas from deep beneath the earth – can contaminate ground water.
It’s certainly a tricky picture, like much else in the energy arena right now. So we can only wait and watch as developments unfold before pinning any hopes on shale providing a cheaper, more secure answer to our future energy needs.