Shale gas “unlikely” to cut British electricity bills

Shale gas won’t make the UK self-sufficient for gas and is therefore unlikely to bring down the cost of electricity, according to evidence submitted to the House of Lords by […]

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Shale gas won’t make the UK self-sufficient for gas and is therefore unlikely to bring down the cost of electricity, according to evidence submitted to the House of Lords by Bloomberg New Energy Finance (BNEF).

The research group says UK shale gas has significant potential but will be 50-100% dearer than in the US.

It estimates the cost of extraction in Britain is likely to be between $7.10 (£4.41) and $12.20 (£7.59) per million British thermal units (MMBtu) compared to $5 (£3.10) to $6 (£3.73) per MMBtu for large American fields such as Marcellus and Barnet.

Among the reasons for the difference are the limited availability of drilling service providers, more expensive land and a lack of gas infrastructure.

In its submission to the Lords’ Economic Affairs Select Committee inquiry into shale gas, BNEF said: “Our conclusion is that even under the most favourable case for shale gas production, with production reaching 4.5bn cubic feet per day in the mid-2020s and low demand driven by a power sector emissions target of 50gCO2/kWh, the UK will not be self-sufficient in gas.

“The reliance on continued imports will ensure that UK gas prices remain tied to European and world markets and so the direct impact of shale on the cost of electricity in the UK will be limited.”

Earlier this week at the Conservative party conference David Cameron called for Blackpool to become the heart of the shale gas industry in Europe.