Studies on the impact of shale gas extraction in Europe’s economy and energy security are mushrooming in the wake of the Ukraine crisis. The latest from the UK Onshore Operators Group (UKOOG) claims that the development of shale gas in the UK could generate “€40.2 billion” and “create up to 64,000 jobs” in Britain.
The industry-funded study is based on the “high-case scenario” from a May 2013 report by the Institute of Directors (IoD) of “what a shale pad could look like”, estimating that 4,000 wells would be drilled between 2016 and 2032. Both highlight the benefits of shale gas development over job creation, tax revenues and potentially lower carbon emissions than imported gas.
The authors of the UKOOG study estimate that €40.2 billion would be spent in total by 2024 for activities related to shale gas exploitation – hydraulic fracturing, drilling, waste management as well as storage and transportation.
A whole new industry
The report also praises the export potential the UK could gain by taking a “leadership position in shale gas”, but recognises the geological uncertainty that surrounds the whole endeavour.
The UK, which has important shale resources, has increasingly been advocating for the exploration of unconventional gas and in particular as a means to secure supply and energy independence from Russia.
The current British government is openly in favour of the development of shale gas, and has offered tax breaks to shale gas companies for that purpose, with the energy minister, Michael Fallon declaring that “shale gas has the potential to kickstart a whole new industry, building on the world leading expertise the UK already has in the energy sector.”
However, environmental campaigners have called the report “a lobby document full of wishful thinking”, with Friends of the Earth asking: “The shale production in the US is already about to decline. While it is supposed to have the biggest world potential, only after more than a decade of production, how could UK shale be a long-term option while they still have no idea how much gas they could economically and technically extract?”
The green campaigners however “welcomed” the fact that the report is clarifying the intentions of the industry over how many wells it plans to drill, warning that 4,000 is “a massive number” that “will generate significant industrialisation.”
Friends of the Earth’s Antoine Simon also said it was suspicious of the job creation target of the study, stressing that “the industry is subject to inherent boom-and-bust cycles due to the quick depletion of its wells’ productivity.”
The UKOOG report also says that “20 million homes could be heated by UK shale gas production at peak times”, but various studies have shown that the consumers’ gas bill is not necessarily going to fall.
Bloomberg new Energy Finance predicts that shale gas exploitation in the UK is “unlikely to result in low natural gas prices”, while the London School of Economics’ Graham Institute concluded that “it is unlikely that gas consumers would see much, if any, benefit in terms of reduced gas and electricity bills”.
Marcus Pepperell, spokesperson for Shale Gas Europe said: "Europe needs innovative solutions to its growing energy requirements to remain competitive, stimulate economic recovery and drive growth. UKOOG’s report provides further insight to the significant business opportunities that the development of a new onshore gas industry could bring to the UK economy. Shale Gas Europe has consistently called for more clarification on the potential benefits that may be created by the development of a sustainable, affordable, secure and reliable supply to power Europe forward as it meets its domestic and business energy needs. The possibility of generating such significant opportunities is an important consideration for all key decision makers as they look to meet our future energy challenges."
Shale gas is an 'unconventional' fossil fuel that is found within natural fissures and fractures underground. Until recently, no method of safely transporting it to the surface existed.
It is mined via hydraulic fracturing, or ‘fracking’, the process of breaking apart layers of shale by horizontally pumping liquids and a number of chemical additives under high pressure thereby releasing trapped gas reserves.
To proponents, shale gas represents an untapped and welcome alternative energy source to traditional fossil fuels. To detractors it is a hazardous and highly-polluting fossil fuel.
At the moment the continent depends on gas imported from Russia, and disputes between that country and Ukraine have disrupted winter supplies in recent years.
In the US, shale gas already accounts for 16% of the world's largest economy natural gas production, although analysts disagree about its long term potential.