Filter By

Shale Gas: Why Undermine a British Renaissance?

Professor Alan Riley on shale gas and its potential

Andrew Rawnsley’s column "The Fracking Dream which is Putting Britain’s Future at Risk", Observer, 9th December is illustrative of much of what is wrong with the British “debate” on shale gas in the UK.

Mr Rawnsley tells us that the prospect of an economic rebirth in the North-West of England is a “dream” of “frack-heads”. There will be no “Dallas of the North  And he argues the jury is out on the environmental risks: There is he says the prospect of contaminated water supplies. Middle England will not put up with the disturbance caused by hydraulic fracturing. A ‘dash to gas’ as envisaged in the government’s new gas strategy will undermine energy security. He argues that the greatest hole in the dream of the ‘frack-heads’ is that the numbers do not add up and that the shale bearing rocks are too thin to extract significant quantities of gas.

In almost all respects the article is factually inaccurate or a grossly distorted version of the true situation.

Firstly, there is no recognition in his article or in the broader British debate on shale of the scale of the impact of the shale gas revolution. This revolution is the most significant event in the energy industry since coal was replaced as the principal transport fuel by oil in the 1920s. It has immense economic and geostrategic effects.  Frankly, even if the United Kingdom or even the entire European Union imposes a ban on shale gas exploration and development the effect on Europe will still be profound. Already liquid natural gas LNG originally destined for the United States is now arriving in Europe to be dumped on our markets putting downward pressure on gas prices. That effect is likely to be magnified over the next few years as more LNG and more shale gas sources become available worldwide.

There is no recognition in the Observer article how widely dispersed and accessible shale gas resources are and nor the scale of them. For the last three decades the West has had to live with the grim 80:10 ratio-that 80% of all the fossil fuel resources on the planet are in OPEC countries and Russia, whereas only 10% of those resources are in OECD countries and China. Shale gas eliminates this deeply destabilising situation. Shale gas production in North America has already resulted in the United States replacing Russia as the world’s largest gas producer. China has even more recoverable shale gas resources at 36 trillion cubic metres (compared with US shale gas resources which are estimated to be 24tcm) and is likely to overtake both US and Russian production by 2030. The Chinese government’s current shale gas strategy envisages 6.5billion cubic meters of production by 2015 and between 60-100bcm by 2020 (total UK yearly consumption is approximately 80bcm).

With widespread and diverse sources of gas coming on stream across the world it makes sense for the UK to seek in its new gas strategy to increase the number of gas fired CCGT power stations. Contrary to Mr Rawnsley’s assertion there is no energy security threat from using more gas and deploying more CCGT turbines.  Gas as a supply fuel is becoming a much more secure supply source not less. As the shale gas revolution gets underway worldwide the world will be awash in gas from numerous sources. Because gas can now come from so many sources it now complies with Churchill’s criteria for supply security of ‘variety, variety and variety alone’. With gas we now have many sources and thereby significant supply security.

Furthermore, there is little recognition in the current debate and none in the article of the potential for reducing C02 emissions. Gas is up to 50% less C02 emitting than coal. C02 emissions are flat in Europe and falling in the United States (as cheap gas forces coal fired power stations offline). Emissions however are rising in India, by 6% and China by 9% (2011 figures). The Chinese are adding two coal fired power stations and the Indians one per week. In this context the C02 emissions of the United Kingdom are marginal compared to the impact of C02 emissions from India and China. The great green hope for shale gas is that the availability of an immense Chinese gas resource base that can be accessed cheaply at scale and with the latest technology will encourage the Chinese to switch from coal to gas, blunting the rise of C02 emissions and giving the world more time to  decarbonize the global economy.

Dealing specifically with the issues raised by Mr Rawnsley.

The Dallas of the North: Manchester could indeed become the ‘Dallas of the North’ and it could lead to major renaissance of the northern industrial base. Contrary to the claims in his article the shale found in the Vale of Bowland is very very thick. The Marcellus Shale on the Eastern Seaboard of the United States, which is now a significant production centre for American gas has a shale thickness of 350ft. According to DECC’s own figures the thickness of the shale in the Vale of Bowland is 6000ft. This makes the Vale of Bowland potentially a world class resource.  It will need further exploration before we can be certain that the gas can be accessed with modern shale gas technology. If it can then the potential for the North-West of England and the whole country is immense.

The point lost in the UK debate which has largely focused around hydraulic fracturing is the significant multiplier effect of cheap energy to the surrounding industrial base. Cheap gas would give British industry a significant competitive advantage. It could lead to the onshoring of energy intensive industries into the United Kingdom and a major inwards shift of foreign direct investment. The multiplier effect has already been in play in the US where cheap gas has fuelled the onshoring of the US chemical industry and other energy intensive industries bringing in billions of dollars of investment; rebuilding the industrial base and providing tens of thousands of badly needed and high paying jobs back to what had been the ‘rust belt’.

The Environmental Risks: There has been a huge amount of hype around hydraulic fracturing across Europe. This bemuses energy industry engineers and geologists as hydraulic fracturing is a well known technique, first deployed in the 1940s. It has in fact regularly been used in the UK, most notably in Wytch Farm in Dorset, Western Europe’s largest but largely unnoticed oil field since the late 1970s.  The Royal Society in its June 2012 paper Shale Gas in the UK: A Review of Hydraulic Fracturing is very clear that shale gas can be extracted in a manner which would protect the environment with strong regulation based on existing UK energy rules. Water sources can be effectively protected and the environmental footprint of operations can be minimized.

There are environmental issues that are unique to shale gas such as the scaleability of the drilling operations. There is a need to ensure that the regulatory resources and treatment plants are available. There is also the need to improve the surveillance and sanctions regime due to the fact that the operations are taking place on land. However, all these issues can be dealt with proper regulation and sound administration of good rules.

Disturbance: Mr Rawnsley here is guilty of transferring American practice without taking account of the British context. One of the major factors for the scale of disturbance in places like Pennsylvania is that the subsoil rights are owned by the landowners not by the state. In the UK as in much of Europe the subsoil rights are owned by the state or in the UK case by the Crown. Ownership of subsoil rights can have a huge impact on the scale of disturbance.

Where the subsoil rights are owned by the landowners every landowner leases his rights to particular energy companies. Energy companies end up owning small bundles of leases. They can only drill as a result in a patchwork of leased areas. In such circumstances the disturbance can be significant, with many more drills being employed and a much larger number of crews, trucks and equipment making their way to each well site. With such limited well sites the most modern technologies cannot then be deployed to reduce the footprint operations. For example, modern shale gas technology allows energy companies to drill horizontally for a radius as great as 10km, significantly reducing the level of local disturbance.

In the UK where licence areas are much larger this technology can be fully deployed. As a consequence well pads will be much more productive, much more spaced out, there will be fewer of them and there will be far less disturbance.

In addition, because of the UK’s extensive piped water systems most British shale gas plays will have the water piped in. Middle England will not be disturbed with large numbers of water trucks rumbling through the night.

It is disappointing that the sister paper of the (Manchester) Guardian can take such a negative view of a potential resource base that could transform the economy of the North-West.

My advice to the North West local authorities is that if the Vale of Bowland resource base proves to be accessible to modern shale gas technology then they need to do everything possible to maximize the impact of development. Rather than absorbing negative views of Mr Rawnsley I would recommend they lobby the Chancellor for planning and tax breaks to ensure that energy intensive industries are onshored into the region. If and it still is an if, this resource based is proved, then Manchester may yet rise again to lead another British industrial revolution. It would helpful if the heirs of the founder of the (Manchester) Guardian, John Edward Taylor, did not seek to suppress the potential of such a Mancunian renaissance at its birth.

Comments on: Shale Gas: Why Undermine a British Renaissance?

Gravatar john king 15 December 2012
Being a Lancastrian, I found Rawnsley"s references to "Kiss me Quick" hats particularly offensive. I always though he seemed like a reasonable man.r/>r/>Also disappointed this is turning out to be a left-right argument.

Join the discussion Have opinions on this matter? Why not get involved and comment on this below.

Become a Member Joining ResPublica give you an exclusive amount of features. Gain early access to ResPublica events, contribute to topics and much more.

Detailed Summary

Date Published
13 December 2012

About The Authors

Professor Alan Riley

Professor Alan Riley is one of the leading competition law scholars in the United Kingdom. He chairs the Competition L...