Carbon Briefing: Britain’s shale gas
Overview
- New data from the British Geological Society (BGS) shows that the UK has more shale gas than previously expected
- Bowland shale in Lancashire is now estimated to have has 1300 trillion cubic feet (tcf) of shale gas. Last month the US Energy Information Administration estimated that the country has 623tcf
- The new estimate refers to the total amount of shale gas in the ground, rather than the amount that it will be possible to extract
- For numerous reasons – including a different regulatory system and geology – it may be more difficult to get shale gas out of the ground in the UK than in the USA
- There is still substantial uncertainty about whether UK shale gas has the potential to bring down gas prices and by when, and concerns that it could lead to greenhouse gas emissions going up.
The North of England has 1300 trillion cubic feet of shale gas, according to a new estimate. The figure is about twice as high as a recent estimate from the US’s Energy Information Administration (EIA) for the whole country. The number doesn’t include the country’s offshore shale gas resource, which BGS has suggested may be larger.
The large estimate may strengthen the position of politicians who believe exploiting UK shale gas will increase the country’s energy security and reduce consumer bills. But the real test will is how much of the gas it will be possible or economical to extract – and what role a significant new source of a fossil fuel can have in a country committed to emissions reductions targets.
Background – fracking, politics and a North American revolution
Shale gas is extracted from shale rock using a technique known as fracking. Fracking has been used in the oil industry since the mid nineteenth century, but using it to extract shale gas is a relatively recent innovation.
A representative diagram of the fracking process
Image - Screen Shot 2013-06-26 At 16.28.13 (note)Source: SciTech Daily website. Shale is a fine-grained rock and so shale gas is harder to get out from shale than it is from limestone or sandstone. Fracking involves pumping materials at high pressure into a fracture in the rock.
Over the last decade, shale gas production has boomed in the USA, growing from less than one per cent of domestic production in 2000 to 23 per cent in 2010. The EIA predicts that it is going to grow further:
Image - Screen Shot 2013-06-26 At 16.31.45 (note)
Source: US Energy Information Administration, Annual Energy Outlook 2013 early release
US shale gas will continue to drive down energy prices in North America over the next few decades according to the International Energy Agency. The agency predicts this heralds a “a sweeping transformation” of the energy system around the world, as other countries like China and Argentina discover and exploit unconventional sources of energy.
Estimating UK shale gas
It is easy to confuse estimates of how much oil and gas the UK’s shale contains with the amount that can feasibly be extracted.
The BGS has previously suggested that in the USA, it was possible to extract ten per cent of the shale gas resource. Last month, EIA estimated that the UK has a total shale gas resource of 623 tcf and a ‘technically recoverable shale gas resource’ of 26tcf. – just four per cent of the total amoutnf ot shal gas
In 2011, BGS estimated for the Department of Energy and Climate Change (DECC) that the whole of the UK might have have a “total recoverable reserve potential” of 5.3 trillion cubic feet (tcf) of shale gas. Its new estimate is not not directly comparable as it is for resource, not reserves, and is therefore much larger.
Comparing shale gas terms
Image - Screen Shot 2013-06-26 At 16.48.33 (note) Sources: Written evidence submitted by the British Geological Survey to the Energy and Climate Change Committee (ECC); a report on the impact of shale gas on energy markets – ECC, 2013
Where will the drilling be?
Shale rock is very common – according to BGS, it makes up 35 per cent of the world’s surface rocks. The following map, taken from a previous BGS report, illustrates the regions where shale is found in this country:
Image - Screen Shot 2013-06-26 At 16.38.13 (note)
Source: The unconventional hydrocarbon resources of Britain’s onshore basins – shale gas. DECC, 2012.
Shale rocks are found in two regions in the UK:
1. The North UK Carboniferous Shale Region: stretches across northern England and southern Scotland. The shale rock was created in the Carboniferous period. It includes the Bowland Shale in Lancashire – but there are also other basins of rock in Cleveland, Cheshire and Northumberland amongst others.
2. The South UK Jurassic Shale Region: this is includes basins of rock in Wessex and the Weald – as well as extending offshore into the English channel. This rock is not included in today’s estimate.
Who will drill?
The government has already invited companies to apply for licences as a part of the 14th onshore oil and gas licensing round.
Oil and gas company Cuadrilla Resources is the only one to have drilled test well for shale gas in the UK so far. The company recently suspended plans to drill this year, but it says that it could be producing shale gas in Lancashire by 2014.
But Cuadrilla isn’t the only company with a licence for shale gas fracking in the UK – or even the biggest.
According to an analysis of government data by Greenpeace’s Energydesk blog, IGas holds the largest proportion (16.4 per cent) of UK drilling rights. Cuadrilla is the fourth-largest holder with 5.2 per cent of licence blocks. But once shale gas is a going concern in the UK it’s likely that larger and better- known oil and gas companies will buy up smaller companies and get involved.
What does this mean for the UK energy industry?
BGS’s estimate may encourage interest from investors, but getting the gas out of the ground is still going to take a lot of work. This is how the EIA describes the situation in the UK:
“with a small existing onshore conventional oil and gas industry, the UK has limited domestic service sector capability for shale exploration â?¦ geologic conditions are much more complex [than in North America]. Faults are numerous, geologic data control is weak, and shale wells are more costly to drill. While the UK’s shale resource base appears substantial, commercial levels of shale production are yet to be established”.
The barriers to the expansion of the industry detailed in the table below mean most experts agree that if the UK is going to develop a shale gas industry in this country, it’s going to take a decade or two.
Some of the different conditions affecting the development of shale gas industry in Europe and North America
Image - Screen Shot 2013-06-26 At 16.40.05 (note)
Source: Chatham House briefing on shale gas, 2012. For full list see p.9 of the report
What will this mean for energy bills?
In the USA, access to cheap, indigenously-produced gas has reduced gas prices – and therefore consumer energy bills. The IEA predicts that gas prices will keep going down in the United States in the future.
Some politicians hope the UK might be able to replicate the same effect. But many experts have questioned whether it is possible – at least in the short term. Professor Paul Stevenson of Chatham House says it is “misleading and dangerous” to assume that gas prices will go down as a result of shale gas extracted in the UK because it ignores the barriers to shale gas development in the UK and therefore the speed at which the industry can develop.
The UK Parliament’s energy and climate change committee says there is ” substantial uncertainty” over what impact shale gas will have on gas prices and it is “by no means certain” that prices will fall.
One reason is that gas resources in the North Sea are dwindling, meaning that shale gas is less likely to alleviate the country’s dependence on imported gas or its vulnerability to international price variability. Another reason is that it may take some time for the shale gas industry to develop in this country.
Overall, the question remains whether it will be possible – practically, politically and economically – to extract large amounts of shale gas in the UK, or indeed anywhere in densely populated Europe.
What will this mean for greenhouse gas emissions?
Last year, emissions fell to a twenty year low in the United States. The IEA says that this is partially because the country burnt more gas and less coal. Natural gas produces about half the emissions of coal when burnt.
Some experts argue that that shale gas can therefore be used as a ‘transition fuel’ in this country – that is, a cheap and relatively low-emissions fossil fuel that could help meet the UK’s energy needs until (hopefully) emissions cutting renewables or nuclear take over.
But the reality may be more complicated:
- The switch from coal to gas isn’t the whole story. A report from Bloomberg new energy finance identified three trends cutting US emissions – increased energy efficiency, more power from renewables and cheaper natural gas;
- The decline in gas consumption in the United States meant it exported more coal. As a result, coal prices went down in the European Union and coal consumption went up;
- If it’s going to hit its climate change targets, the UK needs to reduce the amount of power it gets from burning gas;
- Carbon capture and storage (CCS) technology could reduce emissions from gas power stations – but CCS isn’t up and running yet;
- During the process of extracting shale gas – fracking – gas can leak out. According to academics at Cornell university, ‘fugitive emissions‘ of methane may mean shale gas releases more emissions than coal. But the question is hotly contested – many other academics disagree.
For more information see our blog on shale gas and greenhouse gas emissions.