The United Kingdom is rich in shale gas reserves with significant deposits in the North West, the East Midlands, Sussex, Wessex, Wales and Scotland.
The UK Parliament’s House of Commons Library has published a briefing paper on shale gas and fracking which provides an excellent overview of shale gas in the UK.
Size of the opportunity
In June 2013, the UK Department of Energy and Climate Change (DECC) published a study conducted by the British Geological Survey on the volume of gas in the Bowland and Hodder Shales in the north of England. The study concluded, that with a central estimate, the total amount of gas in place in the Bowland and Hodder shales were 37.6 trillion cubic metres (1328 trillion cubic feet). The amount of gas that is economically and technically recoverable will only be determined once exploration drilling commences.
The full size of the UK’s resources is still to be determined. The US Energy Information Administration’s initial estimate is that the UK holds 736 billion cubic metres (26 trillion cubic feet) of technically recoverable shale gas resources, equivalent to 10 years of supply.
Although commercial extraction has not yet started in the UK, DECC has to date awarded a total of 334 landward licences for onshore petroleum and gas exploration and its 14th onshore licensing round is due in late 2014.
Impact on energy security
The UK is increasingly dependent on imported gas due to a decline in its North Sea reserves and has to import close to a third of its total consumption.
The UK relies on gas to provide over 30% of all fuel consumed, according to DECC. In the first quarter of 2013, net imports of gas were up 20.3% on the previous year. March 2013 saw imports from Belgium to the UK temporarily cut. This led the UK to have increased reliance on LNG deliveries from Qatar to meet high demand during the period.
In 2011, net gas imports rose to their highest level since 1976. Commercial extraction of shale gas could offset this decline to some extent, according to a study by Deutsche Bank, reducing the UK’s dependency on imports from politically unstable regions such as the Middle East.
Impact on the economy
Cuadrilla Resources estimates that its production operations in the North-West of England could create as many as 6,500 jobs across the UK. At national level, a report by the Institute of Directors has suggested that shale gas development could bring with it investment of as much as £3.7 billion per year, creating 74,000 jobs – particularly in areas hard-hit by unemployment.
In 2013, the Grantham Institute on Climate Change and the Environment based at the London School of Economics published a report recommending a UK dash for “smart gas” and found that “should gas prices fall, for example as a consequence of increasing worldwide supply of gas from unconventional sources, there could be positive consequences for the UK economy”.
The UK House of Lords is currently investigating the economic impacts of shale gas in the UK. The study has called evidence from across various sectors of society and the evidence provided and updates on the reports drafting can be found here.
The UK Government is a strong supporter of shale gas development. On 13 December 2012 the UK government allowed the resumption of exploration for shale gas in the UK (full government statement here). The decision was based on the latest scientific evidence, including a report by the Royal Society and an independent expert report which recommended measures to mitigate any risk of seismic tremors.
The UK’s Secretary of State for Energy, Ed Davey stated on BBC Radio that the process of gaining permission to drill for shale gas in the UK “shows the UK has quite strict regulations, we [the UK Government] are not allowing people to go at full pelt, we are making sure that the interests of the environment and community groups are taken into account. But we are not standing in the way, absolutely not standing in the way, of trying to see whether we have a new energy resource in the UK which could benefit the UK.”
Following the British Geological Survey’s study the Energy Minister Michael Fallon stated that “[shale gas] will provide a welcome boost for communities who will host shale exploration and production as well as offering strong assurances that operators will engage with them and work to the highest health, safety and environmental standards.”
The UK Government has strongly committed itself to shale gas and Prime Minister David Cameron recently stated that, in light of the Ukraine crisis, Europe should pursue shale gas development.
Concerning fears about water contamination, a Commons Select Committee concluded in 2011 that there was no evidence that hydraulic fracturing poses a direct risk to underground water and concluded that a moratorium in the UK “is not justified or necessary.” A similar conclusion was reach by the UK’s Chartered Institution of Water and Environmental Management.