The UK needs to get a move on and exploit its rich shale gas resources to avoid losing its energy intensive industries, the House of Lords' economics committee has reported.
So far only tentative exploratory work to research the quality of the shale formations has taken place in the UK – and commercial exploitation appears to be years away. A start date is nowhere in sight. The Lords economics committee says this isn't good enough.
"Despite Ministerial encouragement and eagerness on the part of the industry to get on with exploratory drilling, progress on the ground has been at a snail's pace while industry and officials come to grips with a dauntingly complex regulatory regime for onshore shale gas and oil," the peers note.
“If the UK does not develop its shale resources in a timely fashion, it runs a serious risk of losing the energy intensive and petrochemical industries which depend on competitively-priced energy and raw materials,” they warn.
Exploiting natural gas trapped thousands of feet below the surface has become feasible thanks to a combination of two older techniques: shale horizontal drilling and hydraulic fracturing. In the US, gas has fallen to a third of the price in the UK, creating an economic revival based on new investment in manufacturing and industry – which becomes a lot more competitive with cheap energy.
In the UK, however, the media has rarely mentioned this, focussing instead on small anti-fracking protests – particularly favoured by BBC news editors. Given that the broadcaster has a 70 per cent share of the news market, this skews the population's perception of hydraulic fracturing. The lords aren't impressed by a focus on what they called "some strident local opposition", stating there is actually "little hard evidence of public opinion" one way or another on fracking.
The committee recommends that "the Government should amend relevant legislation to ensure that subsurface drilling for oil and gas can go ahead without undue delay or cost. This change should ensure that the fact that UK landowners do not own petroleum rights makes little difference to the speed of shale gas and oil development; in practice, it may even make subsurface drilling under third party land easier in the UK than it is in the US."
The Institute of Directors reckons the UK spends £15bn a year importing gas, which could be reduced by half by 2030 if the UK's shale fields are tapped. The UK would then be less reliant on Russian gas.
Evidence from Professor Dieter Helm, an Oxford University economist specialising in utilities, infrastructure, regulation and the environment, warned that the "capacity margin" – the ability to generate more electricity than consumers need – will be "very close to zero” by 2015 and 2016 - leaving several years of negative margin (ie, power cuts or hugely expensive imports) to plug the gap, before new nuclear capacity comes on line. Prof Helm described UK energy policy as "a slow motion car crash".
You can read committee's the report here. ®