UK’s dash for gas ties with the US

English: Schematic cross-section of the subsur...

English: Schematic cross-section of the subsurface illustrating types of natural gas deposits (Photo credit: Wikipedia)

According to a recent study released by Oxford Energy Forum, contribution to US GDP by shale gas was $76.9 billion in 2010, which will increase to $118 billion by 2015 and will then nearly triple to $231 billion in 2035.

Shale gas is natural gas that is found trapped within shale formations, which is associated in the process known as fracking. Fracking is the procedure of drilling down into the earth before a high-pressure water mixture is directed at the rock to release the gas inside.

The Institute for Sustainable Development and International Relations (IDDRI) said US shale boom has contributed to cheaper household energy prices and helped the competitiveness of gas-intensive manufacturing sectors such as plastics, petrochemicals and fertilisers.

These sectors account for about 1.2 per cent of US GDP and 3.3 per cent of all manufacturing, and IDDRI estimates the maximum long-term effect of shale gas on US GDP at around 0.84 per cent.

Shale gas represented more than 20 per cent of natural gas production in the US in 2010–up from one per cent in 2000–and there is a philosophy that this could be recurring in the UK, posing an alternative to renewable power generation.

Oana Mondoc, a campaigner for anti-fracking, said fracking costs in the UK and Europe; however, will be up to 50 per cent higher than the US.

“EU must take responsibility and weigh the effects it would have on other very important industries and to create a level playing field,” said Mondoc. “Tougher regulation means safer but not safe, European Environmental Law is not fit for purpose to regulate shale gas.”

Professor Mike Bradshaw, Professor of Human Geography, UK Energy Research Centre explained during a meeting of MPs in 2012 the impact shale gas will have on energy markets in the future.

“We really are a long way off knowing the competitiveness of UK shale,” Bradshaw said. “It’s one thing to drill for it in Texas – it’s another to do it in the Weald of Kent.”

But drilling in the US has now become a major topic of debate as President Barack Obama’s U.S. State Department released its Final Environmental Impact Statement (FEIS) in January on the proposed Keystone XL tar sands pipeline.

The State Department’s FEIS claims that the northern half of Keystone XL, if built, “remains unlikely to significantly impact the rate of extraction in the oil sands, or the continued demand for heavy crude oil at refineries in the United States.”

PM's shale gas visit

PM’s shale gas visit (Photo credit: The Prime Minister’s Office)

The use of fracking has resulted in a 50 per cent increase in projected yields and that has foreshadowed a “golden age of gas” and a huge decline in gas prices due to increased supply, according to Prime Policy Group, a government affairs firm. Increased domestic production has led some to speculate that the U.S. could become energy independent.  But recent exports to Europe and elsewhere using liquefied natural gas pipelines, ships and terminals have raised export and safety concerns.

But according to a recent poll done in the UK by the Institution of Mechanical Engineers (IME), for any person that would be happy to see shale gas developments within 10 miles of their home, there are more than three people that would not.

In other words, “47 per cent of people would not be happy for a gas well site using fracking to open within 10 miles of their home, compared to just 14 per cent who said they would be happy.”

But Prime Minister David Cameron said that fracking of onshore gas and oil is to benefit from 100 per cent business rate retentions for local authorities. The Local Government Association responded to the announcement, which they saw as a ‘step in the right direction’ but argued that more financial support should be given to communities.

In December of 2012, Ed Davey, Energy Change and Climate Secretary, said during the announced moratorium on hydraulic fracturing in the UK had been lifted that shale gas “could substitute for imports which are increasing as North Sea gas is decreasing.”

Shale Gas could contribute significantly to our energy security and reduce imports of gas as we move to a low carbon economy,” he said.

According to the Strategic Environmental Assessment (SEA) report, produced by AMEC, large scale shale gas production by the 2020s could boost the UK’s energy security, contribute to economic growth, create thousands of jobs and plough almost £1 billion back to local communities through benefit schemes.

Minister of State for Energy, Michael Fallon said in a government press release that shale gas production in the UK “is an exciting prospect, which could bring growth, jobs and energy security.” He argues though that the UK must develop shale responsibly for both “local communities and for the environment, with robust regulation in place.”

But for Mondoc, the UK and the EU are not allowing an equal playing field claiming they do not “regulate the energy source properly.”

“[The UK] is going down one route and if that is the tone that is being set by the government then you will not have financial institutions investing because it’s not profitable. It won’t be as profitable as the tone that is being set.”

While the political battle rages on both within the US and the UK on how to handle energy related regulations, including that of fracking, there are those who feel that politicians need to stand aside and take another look at the impacts fracking will have on worldwide stability and amity.

Energy security is a political issue. The stance that [the UK] takes in the sense of going for fossil fuel industry, which governments have high interest put in place will only help increase that instability worldwide,” Mondoc said. “So, a refresh in our thinking and our paradigm can contribute to a little bit more peace and stability.”

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