A Look into Shale Gas Exploration and the Alternatives

The last Autumn Statement announced tax breaks for shale gas exploration and gave the approval for 30 new gas fired power stations that will be ‘unabated’ (without carbon capture and storage) until 2045.  This confirmed the UK Chancellor’s support for gas as a means of bolstering economic growth and providing lower carbon power generation, filling in gaps left by the Energy Bill. Osborne believes that developing shale gas will provide a source of cheap gas to power these new power plants.

There is certainly a need for more gas-fired power generation in the UK’s energy mix to replace dirtier, aging coal fired plants, particularly peaking plant. However, the true impact of shale gas is unknown at this stage; whilst many potential sites in the UK and elsewhere have been identified it is still not known if they are economically viable.  Much exploratory drilling will have to be done to find the answers.

Those who are supportive of shale gas in the UK, point to the success story in the US and projections that it will be a net exporter of gas by the end of 2015.   Those who are opposed to its development in the UK reference studies published last year revealing the huge costs associated with the US’s shale gas development that has taken more than 30 years and large government subsidies.  As a result, many policy makers and business leaders in the UK and Europe fear that shale gas will not provide a cheap or quick solution.  Furthermore, expansion of gas fired power stations, to the 37GW scenario, as painted by the Chancellor in the Autumn Statement, will almost certainly hinder the UK’s ability to meet its long term carbon targets.

There is a risk that such policy decisions made now will lock us into a fossil fuel source that will leave the UK exposed to international gas markets in the future because the success of shale gas cannot be guaranteed.  Projections by gas analysts all point to an upward trend in gas prices, which is a continuation of recent patterns. They believe demand will continue to outpace supply. However, not all gas need come from expensive, fossil fuel sources. Exposure to international price rises can be mitigated by investing in the UK’s advanced gasification industry, which will allow expansion of ‘green’ gas.

Investing in renewable fuels will reduce the UK’s reliance on potentially expensive and unproven shale gas exploration.  The expansion of “green gas” would allow the Chancellor to align his plans for gas expansion without becoming wholly dependent on controversial shale gas exploration or on foreign gas for our energy security. Substitute natural gas (bio-SNG) can be created directly from abundant commercial and municipal waste and other biomass sources for injection into the national grid. Gasification of waste can also provide a sustainable and carbon negative means of diverting waste from landfill.

In addition, there are many policies working to support the development of this secure, indigenous source of fuel.  Landfill taxes will hit £80 per tonne by 2014, so there is a need to find a more economically and sustainable means for diverting waste from landfill and the Green Investment Bank, which launched in November last year, has identified energy from waste as a key priority.

The future of global energy markets is uncertain so at this point the UK Government would be wise to invest in and encourage a diverse energy mix. With the population set to rise and with it demand for energy, the UK needs to plan for a future with reliable, secure, low-carbon and low cost energy and bio-SNG certainly has a role to play.

2 Responses to “A Look into Shale Gas Exploration and the Alternatives”

  1. US President Obama would be wise to take a look at what the UK is doing with respect to shale gas/oil.

  2. Nick says:

    A great way improve the economy of the country.A Positive step taken by the UK

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