Shale gas exploration and development has been described as “just the boost the economy needs” in a newly published Institute of Directors ‘Big Picture’ document, which also lends support to the process of fracking – forcing fluid into rock layers to extract the gas trapped within.
Although the process has caused controversy among environmental groups, the IoD says it is as safe as other means of extraction – including ordinary hydrocarbon-based extraction – with associated benefits for CO2 emissions and air quality when the use of gas for fuel is compared with coal-fired power plants and petrol engines.
But it is not just the environmental benefits that make developing onshore gas reserves a tempting proposition – it is also the economic impact, and the major increase in long-term gas supply to the UK that might be achieved.
Fracking in Figures
Using broad estimates to give an example of the potential offered by the UK’s onshore gas reserves, the IoD begins by stating that 300 tcf (trillion cubic feet) of undeveloped shale gas reserves may lie within the UK’s land borders.
If 10% of this were to be developed, equivalent to 30 tcf, 10% of the UK’s annual gas demand could be supplied from shale development for an estimated 103 years.
An estimated 35,000 jobs would be created in the process, if employment and production are considered to be directly linked.
And 60% of the anticipated fall in UK gas production would be offset by 2022, keeping gas imports at less than 50% of the total quantity used each year.
The Energy Squeeze
All of this comes at a time when energy prices in general are rising – partly due to the cost of finding and developing new fossil fuel reserves, partly because of carbon-related charges on non-renewable fuels, and partly relating to investments made into renewable and eco-friendly alternatives.
Declining development of UK gas reserves, if shale were not to be developed, are forecasted to see 74% of gas consumed within the UK in 2030 imported from overseas.
This is a relatively rapid turnaround from the situation in 2000, when the overall figure was equivalent to a net export of gas of 13% of the UK’s total consumption.
“The UK’s energy and climate policies are adding more to industrial electricity prices than comparable programmes in competitor countries, putting UK industry at a disadvantage and making a rebalancing of the economy more difficult,” the IoD report states.
No Magic Pill
As always, there is no cure-all solution to many of the problems being faced in the UK energy sector – conventional development is in decline, and will continue to fall in the years to come, and international impacts on pricing are inevitable too.
However, the economic benefits of shale gas development – whether through fracking or other means – are derived not from overcoming the problems elsewhere, but simply through mitigating them, and thus helping to reduce gas imports and job losses, provide low-cost fuel for the future, and help cash-strapped consumers to avoid fuel poverty.
“Domestic shale gas is unlikely to account for a majority of the UK’s electricity generation, or even of its gas usage,” the IoD report concludes. “But it could and should play an important role.”
Download the IoD All Hail Shale PDF