The Dash for Gas

The Dash for Gas

“US to become world leader in Oil and Gas thanks to fracking”

The Independent, 13th November 2012

 It’s easy to see why Osborne and his cronies must be casting envious glances across the Atlantic. A Government lacking a coherent energy policy, innately skeptical about the claims of the “environmental Taliban”, and faced with the dilemma as to where to find the £200 billion needed to upgrade the UK’s ageing energy infrastructure and keep the lights on, must be looking with admiration at the recent energy transformation in the USA.

The States will move above Saudi Arabia and Russia to become the world’s largest producer of oil and gas in the next 5 years. US oil and gas production will leap by about a quarter as the rapid growth of fracking for hydrocarbons, embedded in shale rock, drives the country towards meeting all of its own energy needs by 2035. Since 2002 the exploration of natural gas deposits in shale, has created around a 1 million jobs in the USA – pretty impressive when taken out of a total of 2.7 million created in the whole of the USA during the decade.

Even better from a Tory Government standpoint, this it appears has all been achieved by an unfettered free market in the US. Indeed debate on energy policy during the election contest seemed to largely consist of the Republicans attacking the Democrats’ for their policies of giving “Corporate welfare handouts” to flakey, tree-hugging CleanTech companies many of which had failed, according to Romney, when the dash for gas in the States had been driven by commerce. The only thing Governments need to do, so the argument went, was loosen (or get rid of)  environmental regulations and then stand back and watch while private sector investment in new technological solutions and  business models created a plentiful energy supply for the nation.

So why not do the same in the UK? Create a free market solution and business funded innovations will come to the rescue and unlike other renewable energies, all at no cost to the tax payer. Simple eh?

Firstly it’s not the case that the boom in the US gas industry has happened due to private sector investment in drilling technology. Over the last 30 years the US Federal government has contributed more than $100 million in research to develop fracking techniques and billions more in tax breaks to the Oil and Gas Industries. Geologists have long known gas was contained in shale rock but it is only recent advances in deep and horizontal drilling techniques, funded by Federal Government research programmes that have now made the gas commercially accessible.

Research and technology will ultimately deliver innovation but there is clear evidence that the public sector has a role in backing long term innovation. Business cannot afford to invest in technologies that have short pay back periods. Advances, for example in fuel cell technologies will simply not happen without sustained UK and European research funding.

Secondly in the UK the opportunities for fracking don’t neatly correspond to established “bad neighbour” land use activities such as former colliery sites or tracts of brownfield land where drilling plants would be more likely to be acceptable.

The British Geological Survey, will soon report back to Government on the scale and location of the UK’s potential shale gas reserves. However it’s hard to imagine many proposals being given the go ahead in the face of concerned residents and nervous Planning Committees. Fracking is a highly controversial practice which involves blasting a mixture of sand, water and chemicals into shale rock to release the oil and gas inside. Although the jury is still out as to the extent to which fracking is responsible for seismic activities and groundwater problems, public perceptions rather than scientific evidence will determine the extent to which such technologies find a home in the UK. It’s pretty hard to see local residents, faced with the prospects of a fracking proposal in their area, being won over when they can view YouTube videos of US householders setting fire to gas emissions from their kitchen taps as a result of local fracking activity. Add to that the noise emissions from the  fracking drill sites and an average of 1000 frack truck movements/day in the vicinity of the extraction site then it is difficult to see many proposals passing the necessary regulatory hurdles which  include gaining consents from not only the local planning authority but also the Environment Agency, Dept of Energy and Climate Change and the Health and Safety Executive.

New forms of gas extraction or generation are already taking place – companies like Nottinghamshire based Alkane have created successful methane extraction plants at a number of former colliery sites. While according to “Business Green”, the country’s first commercial-scale biomethane plant connected directly to the grid has just been opened in Dorset. “The 5MW anaerobic digestor should be capable of supplying renewable gas to 56,000 new-build homes when at maximum capacity in the summer with output falling by around 4,000 homes in the winter.” There are 10 further plants due to begin operation in the UK by 2013

The importance of these projects, as first steps toward creating more localised forms of micro energy production, should be acknowledged. However the amounts of gas generated by such schemes will, for the foreseeable future, be modest in relation to the country’s needs.

In the UK shale gas extraction will be hampered by a combination of regulatory hurdles, the  lengthy time frames to secure drilling consents, public perceptions about the impacts of shale gas drilling, the high production costs, shortage of technical skills, the attraction of more lucrative opportunities in the US and a lack of  confidence in the UK Government’s energy policy.

According to industry experts shale gas will play a role in Europe but it’s unlikely to provide more than 5-10% supply before 2020 (Wall Street Journal October 5th). As much as Osborne and Co would like to emulate the US, where gas accounts for over third of the country’s energy supply, it’s not likely to happen in the UK.

See an excellent cartoon of Prof Mike Stephenson, British Geological Survey discussing fracking issues at

https://www.youtube.com/watch?v=TKW4_UGVGBw

 This is the blog of CleanTech Business Ltd a “plans, programmes and projects” Consultancy  linked to the GreenTech Business Network- the UK’s fastest growing low carbon business network. See www.cleantech-business.com for details of our projects, services and  free low carbon business events programme

 

 

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