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UK to lead EU frack fight?

By Sun Wei in London Source:Global Times Published: 2014-4-17 0:48:03



 

A protester holds a placard outside the main gate of the fracking site at Balcombe, West Sussex, Britain on August 1, 2013. Photo: CFP



 UN climate chiefs have backed hydraulic fracturing, or fracking, as part of the solution to global warming, according to a report carried by the Telegraph newspaper on Sunday. Fracking is the controversial process of extracting natural gas from shale rock layers deep within the earth.

Ottmar Edenhofer, co-chair of the working group that drew up the report, said it was "quite clear" that shale gas "can be very consistent with low carbon development and decarbonization."

The comments give support to British Prime Minister David Cameron's earlier call for energy independence and the adoption of technologies like shale gas fracking to top Europe's political agenda. Cameron said on March 25 that the Crimea crisis was a "wake-up call" for states reliant on Russian gas. Britain has a "duty" to embrace fracking, he added.

Europe fears that Russia might cut off the gas supply that they rely on as retaliation to Western sanctions.

Although the UK imports less than 1 percent of its gas directly from Russia, Russia's energy giant Gazprom claims it sells between 11 billion and 12 billion cubic metres to the UK, which is about 15 percent of the country's total need. Supplies of Russian gas indirectly reach Britain through other European countries. This explains why in 2009 UK gas prices soared by 17 percent when Russia cut off the gas to Ukraine.

The "shale gas revolution" in the US seems to inspire Britain's hope that it can also be a game-changer for the UK in terms of energy, economics and geopolitics.

The shale rush

Dieter Helm, professor of Energy Policy at the University of Oxford, told the Global Times, "Apart from the Eastern European countries, the UK is probably the only major Western European power which is seriously interested in doing something about the energy dependence on Russia."

While France and Bulgaria have already outlawed shale gas operations, Britain lifted an 18-month ban on fracking in December 2012 and carried out plans to spur shale exploration through tax breaks. This summer, Britain will auction new licenses for onshore oil and gas to attract several new players to the shale gas industry. In order to encourage energy self-sufficiency, David Cameron wanted some shale gas wells up and running as early as the end of this year.

There are good reasons for the British government's strong desire for a "shale gas revolution." It could potentially change the whole UK energy picture by reducing its dependence on imported gas and also lower gas prices.

Gas, as an integral part of the energy mix, generates around 40 percent of the UK's electricity. Currently, Britain gets most of its gas from the North Sea, Norway and Qatar. Britain will soon become more dependent on foreign energy as its North Sea output is declining rapidly.

"UK oil production has fallen from a peak of close to 2.82 million barrels a day in 1999, when the country's net exports were 972,000 barrels a day. Until recently, the UK's mature North Sea fields have seen decline rates averaging around 6 percent a year," according to a report published by the Organisation of Petroleum Exporting Countries in February. 

An estimated 1.3 quadrillion cubic feet of natural gas lies trapped in shale rock beneath northern England according to the British Geological Survey (BGS). The report claims that much of the large reserves are in the Bowland Basin beneath Lancashire.

Chancellor of the Exchequer George Osborne hailed the report and said it has "huge potential" to diversify energy supplies in Britain, create jobs, and improve energy security.

However, the BGS didn't predict how much shale gas could be commercially produced.

Tough road ahead

"It won't be a revolution," says Helm, ruling out Britain's chance of replicating the US shale revolution. The passion for copying the success achieved in the US is obstructed in several fronts.

"The US has completely different property rights and it has open areas. In America, if you own this land you own everything underneath it. By comparison, Britain has a dense population and the state owns the mineral rights underneath," Helm told the Global Times, adding that greater population density means that convincing local communities is a difficulty.

Paul Stevens, Senior Research Fellow with the Energy, Environment and Resources research department at Chatham House, believes there are considerable uncertainties over the cost of producing shale gas in the UK. "The two key determinants of production costs are the geology of the shale resource plays and the state of the service industry to undertake the horizontal drilling and the hydraulic fracturing," he said.

The potential environmental damage complicates the prospects for shale gas. Anti-fracking protests have taken place across the UK, from Lancashire to the East Midlands and Sussex. The risks of water pollution, fugitive emissions, and impacts on the landscape of local communities are major concerns.

Helm told the Global Times, "The environmentalists hate fracking because they see it as a threat to the renewables. What have been constructed are these incredibly scary stories - that the water is going to catch fire, an earthquake is going to take place, and the end of the world is going to come."

The fact about the fracking is "once we've done a bit, people will calm down because they will see it actually very unintrusive. The reality will be different from impression," he added.

Helm believes shale gas is cleaner than coal. Shale gas extraction has environmental costs, as do all energy technologies. It should be regulated to these costs into account and there are areas where it is inappropriate. However, a blanket ban is at best unhelpful.

Compared to the 20 years of development in the US to reach its current preeminence, the UK's shale gas industry is at an early stage with no commercial production. Industry experts predict large-scale production will take more than a decade. In addition, limited practice will face the strong hurdles of social and environmental concerns, which need to be adequately addressed. However, its great potential resources kindle the light of hope for the UK's dwindling gas industry.

Posted in: Europe