There has
been speculation and assertions about the impact of shale gas on gas prices. UK PM David Cameron said unequivocally that ‘fracking
has real potential to drive energy bills down… gas and electric bills can go
down when our home-grown energy supply goes up’. But Lord Stern disagreed, arguing that the
economics were very uncertain.
While Sir David King, ex Chief Scientist, said the eco-impacts of shale
gas may be large and the UK contribution limited: www.theguardian.com/environment/2013/sep/16/david-king-fracking-shale-gas
Energy
Secretary Ed Davey warned that it was ‘no quick fix and no silver bullet’ and was at ‘the very early stages’. So the UK was unlikely to see benefits
from shale gas until the next decade and, with the
uncertain scale and nature of the resource, it was ‘far from
clear that UK shale gas production could ever replicate the price effects seen
in the US’. www.ft.com/cms/s/0/6090d082-1954-11e3-83b9-00144feab7de.html#axzz2eQ6sk4mW
However some see
the prospects differently given international energy trading patterns: www.independent.co.uk/voices/letters/letters-frack-and-cut-gas-prices-by-a-third-8800063.html
. It is certainly complicated.
Prices have certainly fallen in the USA, though that may be a unique event- the
geology and population densities in the EU are different. So is the market. The
US doesn’t import much gas, and in the past hasn't used as much gas for heating
as the UK- it’s been expensive there and they didn't have the North Sea boom.
So Shale gas has had a big impact, expanding the market and pushing the price
down. They can even export some-and some freed up coal. In the EU there is a
big internal gas market fed from the North Sea but increasingly from Russia,
and prices are competitive- topped up though by expensive imports of LPG. Shale
gas might reduce the scale of the later, but then LPG may get cheaper now the
USA is exporting into the world market. So shale gas may change patterns of
supply, but it’s hard to say whether a shale gas boom in the UK or EU would
reduce prices. Especially since Japans use of LPG to replace nuclear (hopefully
temporarily until renewables can take over) has raised global LPG prices.
Then again the
shale gas boom may not last. Well productivity falls rapidly, so early gains
may not be sustained: you have to invest continually in new wells and the costs
are significant. Jeremy Leggett
has provided regular updates to his book ‘The Energy of Nations’ and says ‘the top 15 players in US shale
drilling have written off $35 billion since the boom started, and that
investors are beginning to pull out. Meanwhile, production has peaked and is
now falling in all but one of the major shale-gas drilling regions. The boom is
looking like it could turn into a bust before too long’. www.jeremyleggett.net/
So
not surprisingly views on what will happen next vary. Writing in New Scientist (10/8/13), Michael Brooks noted the concern expressed by Sergey
Paltsev, an energy economist at MIT, that, seduced by a false promise of cheap,
plentiful energy from shale gas, we will cut back on investment in renewable
alternatives. If so, Brooks said, as the costs and emissions associated with
shale gas rise, as they inevitably will, we will end up on a costly bridge to
nowhere. DECC by contrast still sees shale gas as the bridge to a green energy
future.
However, despite
DECC’s assertions that shale gas has lower GHG impacts than coal or imported
LPG, the environmental impact issues continue to be debated. http://www.eeb.cornell.edu/howarth/web/Marcellus.html
Fugitive emissions/leaks of the powerful GHG methane
are a key worry, water contamination another, along with the sheer volume of
water needed, and there is also the possible risk of radioactive radon gas
pollution: http://gdacc.org/2012/01/10/radon-in-natural-gas-from-marcellus-shale-by-marvin-resnikoff-radioactive-waste-management-associates/
For a
good overview of the impacts issues see www.carbonbrief.org/blog/2013/08/shale-gas-more-or-less-polluting-than-coal/ For a short if partisan guide: http://www.resilience.org/stories/2014-04-21/those-fracking-lies And for an independent technological assessment, which identifies a range of
worrying drilling and site problems associated with fracking, see:
www.davidsmythe.org/fracking/fracking.htm
The debate in the
UK has gone on, as more details emerged. An AMEC report for the government,
said that a major fracking effort could deliver about 25% of the UK's annual
gas needs in its peak years in the 2020s and provide up to 32,000 jobs. But
that could involve up to 2,880 wells being drilled and run for 20 years. Fracking would need 58-144bn litres of
water, with up to 108bn litres of waste water being contaminated by fracking
chemicals and radioactive elements that occur naturally in rock. This would
AMEC said ‘place a significant burden on existing wastewater treatment
capacity’. Some of the fracking water would need to be trucked into sites, with
wastewater being trucked out, and Amec estimated 14 –51 journeys a day for each
site, which ‘could have an adverse impact on traffic congestion, noise or
air quality’. www.gov.uk/government/consultations/environmental-report-for-further-onshore-oil-and-gas-licensing
However the
pressure is on to press ahead fast. Energy Minister, Michael Fallon said. ‘There
is a huge amount of shale gas underneath us all and what is important for
public confidence is to show the regulatory framework is robust’ and Shale gas fracking could take place across over half
of Britain if plans to ‘step up the search’ for shale gas and oil are fruitful,
with many new exploration sites being licensed.
To help things along Local Councils that back shale gas projects will
get to keep 100% of the business rates collected from the schemes, rather than
the usual 50%, and up to £10m per wellhead if shale gas is successfully
extracted in their communities, through a1% levy on revenues. Fallon said ‘We
expect 20 to 40 wells to be drilled in exploration over the next couple of
years and I think it's very important that local communities see some of the
benefit”.
So
what next? While the Lords Economic Affairs select committee said that the UK was
‘exceptionally fortunate’ to have substantial shale gas and oil
resources, and urged the Prime Minister to lead a ‘sustained and concerted effort’
to go ‘all out’ for shale development , it accepted that drilling could not
proceed without the support of the public, even if the majority of
environmental and health concerns were ‘unfounded’ and leading to unnecessary
delay. DECC, and
Ed Davey especially, has been less that forthright is backing rapid expansion:
DECC says shale gas has to be put in perspective: it should be pursued in combination with carbon capture
and storage, and should not be seen as an alternative to renewables.
That
view was reinforced by a WWF reaction relayed by the Economist Intelligence
Unit: the UK needed to decarbonise, so shale gas, which may not be
cheap, plentiful or fast, was a diversion http://www.economistinsights.com/energy/opinion/uk-shale-gas?
And Paul Mobbs writing in The Ecologist saw it unequivocally
as a diabolical stitch up:
http://www.theecologist.org/News/news_analysis/2417288/fracking_as_bad_for_climate_as_coal_uks_dodgy_dossier_exposed.html
The
National Trust and CPRE may be wobbling a bit, but local protests continue,
further stimulated by the spectre of gas pipe link up projects going ahead
without consultation.
So what’s
the bottom line? We can all agree that tight regulation will be needed if shale
gas goes ahead on any scale, but
it is still far from certain that it will- much less should. Not least since
the threat to renewables still remains. AD biogas from waste would be a better
bet surely. Some say it will in fact all blow over: the US shale gas boom is a
short term one-off episode driven more by speculation than by the scale of the
realistic resource. Some see it accelerating in net terms, up to 2040 and beyond (see the
EIA’s projection for the US at http://www.eia.gov/pressroom/presentations/sieminski_03012013.pdf). Others think it will fade way long before then. In practice the outcome is likely to be
shaped by other factors- for example, if carbon emissions are taken seriously
then shale gas use may be constrained, unless CCS can be deployed on a wide
scale. The US EIA suggested that under high carbon costs,
renewables and nuclear would boom more, with coal being all but extinguished.
In the short term however shale gas does represent a threat to non-fossil
fuels. It’s one reason why nuclear has declined so dramatically in the USA, but
its impact on renewables has so far been more muted- as their costs fall, they
are still booming in the US and elsewhere, although perhaps not as much as they
would if there was no shale boom. Then again there are those that say fossil
gas, of whatever sort, is a good partner for renewables. So shale gas
represents no real problem. Although try telling that to those having fracking
projects imposed on them!
