Amid all the furor over shale energy lately, some simple facts have at times been forgotten, says WSP’s David Symons
For one, it’s extremely early days yet and the reality is that we’re still not even sure how much gas there is. At present, neither the Department of Energy & Climate Change nor the industry currently have the engineering, geological or cost information to make a meaningful estimate of recoverable reserves. The closest we have come is the British Geological Society estimate in 2010 that there could be 5.3 trillion cubic feet of reserves UK wide.
Early indications actually show that offshore energy reserves in shale in the North Sea could provide up to five times that from onshore shale reserves. It is technically harder to extract and more expensive, of course, but Britain is well placed for offshore development, with its North Sea oil and gas sector long established.
Also, because the UK’s reserves are much deeper and therefore harder to access than the USA’s we are not sure, even if there is abundant resource, where it will be economically viable to extract it. Some of our formations are 5,000m much thicker than the US and the industry estimates that it will have to drill 20 to 40 wells over the next two years to establish the commercial viability. Even if we do proceed we won’t be using shale energy for at least eight to 10 years.
Understandably there are a lot of local concerns about everything from water pollution and earthquakes to air quality. The UK has a very strong regulatory regime compared to the US and so these are by and large very well managed and won’t be able to escalate into the crises being envisioned.
However, it must be said that we don’t have all the answers and we will have to learn on a case by case basis - and manage these issues very carefully to negate the risk.
In terms of energy security, shale could be a good thing. In the face of the Middle Eastern instability we would be very sensible to develop our local gas reserves to the best of our ability to avoid having to rely on a fluctuating external market in future. Having said that, because the North Sea gas supplies are forecast to drop off quickly, shale energy is unlikely to increase UK gas production or make the UK fully self-sufficient in gas. If we increase our gas usage we will struggle to meet our carbon reduction targets, so shale gas should replace, not complement, imported gas. It is not clear what the government’s approach to this is yet.
Energy prices are equally uncertain. As mentioned, we don’t know how much gas there is and how much it will cost to extract. We do know it will cost more than the US and that with our current gas supplies running out we’re still likely to still be subject to international market prices regardless. Even the UK energy committee accepts we cannot at this stage prove with any certainty what the price impact might be.
There’s also the issue of fossil fuels and preventing catastrophic climate change. The government still needs to meet its obligations to decarbonise energy supplies so, should we really be looking at exploiting another fossil fuel?
Finally, there has been a lot of talk about renewables versus shale. Energy efficiency is a massive market right now, and isn’t likely to slow down anytime soon. There is plenty of room in the market for both to progress, especially when you consider renewables still only represent 11% of our energy supply. A strong and functioning EU Emissions Trading Scheme will help the market to determine which fuels are most cost effective within an overall emissions cap.
The world has been obsessed with energy from shale in the past two years.
Yes it is potentially a significant source of fuel, but there are others as well. So just as we are looking hard at shale, Japan and others are getting excited about offshore gas hydrates. These reserves actually provide the opportunity for higher energy security, but neither must come at the expense of massive climate change.
David Symons is a director at consultancy WSP