The future of shale gas in the UK

The exponential growth in US shale gas production has been a boon for the country’s energy security over the past few years. Now the UK is looking to follow suit, with the government and big oil throwing their weight behind the dash for gas. But at what c

This morning David Cameron announced plans to give a greater share of tax revenues to those councils which support shale gas schemes. Under the proposed plans, local authorities would receive 100 per cent, as opposed to the usual 50, of business rates from shale gas projects, which could amount to up £1.7million extra per site for councils every year.

Over the weekend Total UK, one of the world’s largest oil companies, also announced that it would be investing in the UK’s shale gas industry, starting with the drilling of two exploratory wells in a project worth £30 million.

Such a vote of confidence in shale gas in this country is bound to encourage others to invest, but judging by the opposition from local communities witnessed so far, the industry still has a long way to go before it allays the fears surrounding the controversial fracking process used to extract the gas.

Ever since videos of flaming taps began appearing on YouTube in 2010, shale gas has been in the spotlight for its potential to contaminate groundwater and cause seismic disturbances. The mining industry has tried to respond to people’s fear by offering one per cent of revenues from shale projects to the local community. Responding to this morning’s announcement, the Local Government Association remained unimpressed:

Given the significant tax breaks being proposed to drive forward the development of shale gas and the impact drilling will have on local communities, these areas should not be short-changed by fracking schemes ... One percent of gross revenues distributed locally is not good enough; returns should be more in line with payments across the rest of the world and be set at 10 per cent.

This back and forth comes at a time when the UK is in need of fresh energy supplies to ward off the looming ‘energy gap’, in whatever form they might come. Without new electricity generation capacity, experts have been warning for several years that the UK is likely to suffer blackouts in the next decade as old power plants are taken offline and not replaced.

Emulating the successes of the US shale gas industry is clearly a sound means of warding off the energy gap, given the fantastic success achieved across the pond. In fact, 2012 saw 25.7 billion cubic feet of shale gas extracted per day in the US, making up a massive 39 per cent of its total natural gas production. Energy self-sufficiency, something thought impossible just a few years ago, could become a reality within the next two decades.

But you have to wonder what cost this renewed dependence of fossil fuels will have on the UK’s green commitments. David Cameron has already downsized funding for renewable energy in order to get household energy bills under control. By reducing the green levies that consumers have added to their bills, this vital source of support for the nascent renewable energy industries has been drastically cut.

To add insult to injury, several wind farm developers have recently cancelled or curtailed their plans for new offshore wind energy capacity in British waters, with RWE Npower Renwables announcing last week that its Triton Knoll project off the Lincolnshire coast will have its capacity almost halved, following news in November that it would also no longer develop the £5.4billion Atlantic Array project. This is compounded by the government’s recent decision to back several new nuclear power plants around the country, instead of investing in other green energy sources. New reactors will be built in Oldbury, Wylfa, Sizewell and Hinkley Point.

It seems that the path the government thinks best for achieving Britain’s energy security will be shale gas and nuclear, regardless of the concerns of local communities and of environmentalists.

Placards adorn the road alongside the campsite of anti-gas fracking activists next to The IGas Energy exploratorygas drilling site at Barton Moss. Photograph: Getty Images.

Mark Brierley is a group editor at Global Trade Media

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North Yorkshire has approved the UK’s first fracking tests in five years. What does this mean?

Is fracking the answer to the UK's energy future? Or a serious risk to the environment?

The UK's first shale gas operation has been approved, the first since a ban introduced after two minor earthquakes in 2011 were shown to be caused by fracking in the area. On Tuesday night, after two days of heated debate, North Yorkshire councillors finally granted an application to frack in the North York Moors National Park.

The vote by the Tory-dominated council was passed by seven votes to four, and sets an important precedent for the scores of other applications still awaiting decision across the country. It also gives a much-needed boost David Cameron’s 2014 promise to “go all out for shale”. But with regional authorities pitted against local communities, and national government in dispute with global NGOs, what is the wider verdict on the industry?

What is fracking?

Fracking, or “hydraulic fracturing”, is the extraction of shale gas from deep underground. A mixture of water, sand and chemicals is pumped into the earth at such high pressure that it literally fractures the rocks and releases the gas trapped inside.

Opponents claim that the side effects include earthquakes, polluted ground water, and noise and traffic pollution. The image the industry would least like you to associate with the process is this clip of a man setting fire to a running tap, from the 2010 US documentary Gasland

Advocates dispute the above criticisms, and instead argue that that shale gas extraction will create jobs, help the UK transition to a carbon-neutral world, reduce reliance on imports and boost tax revenues.

So do these claims stands up? Let’s take each in turn...

Will it create jobs? Yes, but mostly in the short-term.

Industry insiders argue that job creation in the UK could rival that seen in the US, while the medium-sized production company Cuadrilla claims that shale gas production would create 1,700 jobs in Lancashire alone.

But claims about employment may be exaggerated. A US study overseen by Penn State University showed only one in seven of the jobs the industry said would be created actually materialised. In the UK, a Friends of the Earth report contends that the majority of jobs to be created by fracking in Lancashire would only be short-term – with under 200 surviving the initial burst.

Environmentalists, in contrast, point to evidence that green energy creates 10 times more jobs than similar-sized fossil fuel investments.  And it’s not just climate campaigners who don’t buy the employment promise. Trade union members also have their doubts. Ian Gallagher, Secretary of Blackburn and District Trade Unions Council, told Friends of the Earth that: “Investment in the areas identified by the Million Climate Jobs Campaign [...] is a far more certain way of addressing both climate change and economic growth than drilling for shale gas.”

Will it deliver cleaner energy? Not as completely as renewables would.

America’s “shale revolution” has been credited with reversing the country’s reliance on dirty coal and helping them lead the world in carbon-emissions reduction. Thanks to the relatively low carbon dioxide content of natural gas (emitting half the amount of coal to generate the same amount of electricity), the US reduced its annual emissions of carbon dioxide by 556 million metric tons between 2007 and 2014. Banning it, advocates argue, would “immediately increase the use of coal”.

Yet a new report from the Royal Society for the Protection of Birds (previously known for its opposition to wind farm applications), has laid out a number of ways that the UK government can meet its target of 80 per cent emissions reduction by 2050 without the introduction of fracking and without harming the natural world. Renewable, home-produced, energy, they argue, could cover the UK’s energy needs three times over. They’ve even included some handy maps:


Map of UK land available for renewable technologies. Source: RSPB’s 2050 Energy Vision.

Will it deliver secure energy? Yes, up to a point.

For energy to be “sustainable” it also has to be secure; it has to be available on demand and not threatened by international upheaval. Gas-fired “peaking” plants can be used to even-out input into the electricity grid when the sun doesn’t shine or the wind is not so blowy. The government thus claims that fracking is an essential part of the UK’s future “energy mix”, which, if produced domestically, will also free us from reliance on imports tarnished by volatile Russian politics.

But, time is running out. Recent analysis by Carbon Brief suggests that we are only have five years left of current CO2 emission levels before we blow the carbon budget and risk breaching the climate’s crucial 1.5°C tipping point. Whichever energy choices we make now need to starting brining down the carbon over-spend immediately.

Will it help stablise the wider economy? Yes, but not forever.

With so many “Yes, buts...” in the above list, you might wonder why the government is still pressing so hard for fracking’s expansion? Part of the answer may lie in their vested interest in supporting the wider industry.

Tax revenues from UK oil and gas generate a large portion of the government’s income. In 2013-14, the revenue from license fees, petroleum revenue tax, corporation tax and the supplementary charge accounted for nearly £5bn of UK exchequer receipts. The Treasury cannot afford to lose these, as evidenced in the last budget when George Osborne further subsidied North Sea oil operations through increased tax breaks.

The more that the Conservaitves support the industry, the more they can tax it. In 2012 DECC said it wanted to “guarantee... every last economic drop of oil and gas is produced for the benefit of the UK”. This is a sentiment that was repeated yesterday by energy minister Andrea Leadsom, when she welcomed the North Yorkshire decision as a “fantastic opportunity” for fracking.

Dependence on finite domestic fuel reserves, however, is not a long-term economic solution. Not least because of the question of their replacement once they eventually run out: “Pensions already have enough stranded assets as they are,” says Danielle Pafford from 350.org.

Is it worth it? Most European countries have decided it’s not.

There is currently no commercial shale-gas drilling in Europe. Sustained protests against the industry in Romania, combined with poor exploration results, have already caused energy giant Chevron to pull out of the country. Total has also abandonned explorations in Denmark, Poland is being referred to the European Court of Justice for failing to adequately assess fracking’s impact, and, in Germany, brewers have launched special bottle-caps with the slogan “Nein! Zu Fracking” to warn against the threat to their water supply.

Back in the UK, the government's latest survey of public attitudes to fracking found that 44 per cent neither supported nor opposed the practice, but also that opinion is gradually shifting out of favour. If the government doesn't come up with arguments that hold water soon, it seems likely that the UK's fracking future could still be blasted apart.

India Bourke is the New Statesman's editorial assistant.