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UK shale players tout benefits of domestic gas

Exploration is bearing fruit but operators say regulations and public perception are hampering their ambitions

The case for shale gas development in the UK has strengthened significantly over the last couple of years, some argue, especially those who believe gas is a “destination fuel” and not a transition one.

However, discussions over the industry’s future have been stalled amid the UK’s planned exit from the European Union, which has grabbed so much of the government’s attention.

A recent a summit in England to discuss the future of UK shale was postponed until later in the year, according to organisers, due to the government’s current focus on Brexit.

The delay has not deterred the industry from continuing its exploration phase — but in northern England only, as the rest of the UK has bans on hydraulic fracturing or similar restrictions in place.

To date, Cuadrilla Resources, IGas Energy, Third Energy and chemicals giant Ineos have been the headliners trying to kick-start shale production, and the initial data acquired through early exploration is encouraging.

However, further efforts in the development of shale hang on a government commitment from 2012 to review the policies and regulations overseeing fracking “based on accumulated experiences”.

As early results are now public, shale explorers and trade associations focused on onshore oil and gas have been calling for this much-anticipated review, particularly covering seismic event regulations that they say have slowed progress.

The UK does not produce enough gas to meet its needs, with around half of the country’s demand met by foreign supplies, most of which is piped into the country via continental Europe.

This means import bills for natural gas are growing — they were £14.2 billion ($18 billion) in 2017 and £11.7 billion in 2016 — with government projections indicating an upward trajectory for natural gas imports.

Ken Cronin, chief executive of UK Onshore Oil& Gas (UKOOG) says that based on current activity in the North Sea, by 2035 about 75% of the UK’s gas needs will be met by imports, “which will have economic and environmental consequences”.

He argues that gas imports over domestic production would mean “swapping the jobs we have in the North Sea to countries outside the UK, and also offshoring taxation”.

Footprint

In addition, transporting gas, either liquefied natural gas or pipeline gas, leaves an environmental footprint.

“This would mean essentially outsourcing CO2 emissions,” Cronin says. “The choice we have now is to continue to import gas or to start producing it domestically. We believe shale production is better environmentally than importing pipeline gas or LNG, since it produces 50% less emissions.”

Cronin’s position is echoed by Francis Egan, chief executive of Cuadrilla, who tells Upstream: “Establishing a domestic gas supply will create significant economic prosperity including jobs and tax revenues, reduce our reliance and expenditure on foreign gas imports and generate lower CO2 emissions than imported gas.

“We urge the government to support our request for a review of the regulations and assist the onshore shale gas industry in becoming commercially viable and assisting the country in achieving our ambitious climate change aims,” Egan adds.

However, the Climate Change Committee (CCC), the organisation that gives the government independent advice, concludes in a report that “shale gas exploitation by fracking on a significant scale is not compatible with the UK’s climate change targets unless certain criteria (are) met”.

Monitoring

According to the CCC, emissions “must be strictly limited during shale gas development, production and well decommissioning”, requiring “tight regulation, close monitoring of emissions, and rapid action to address methane leaks”.

In addition, the CCC recommends that production of UK shale gas must displace imports, rather than increase gas consumption, and that emissions from shale exploitation be offset by emissions reductions in other areas of the economy to ensure UK carbon budgets are met.

Professor Jim Skea, a member of the CCC, says: “Under best practice, UK shale gas may have a lower carbon footprint than much of the gas that we import.

“However, gas is a fossil fuel wherever it comes from and is not a low-carbon option, unless combined with carbon capture and storage.”

Last month, responding to a request from the government to reassess the UK’s long-term emissions targets, the CCC recommended a new target of “net-zero greenhouse gases by 2050” compared with the existing 2050 target for an 80% reduction from 1990 levels.

Economic cost

“It is achievable with known technologies, alongside improvements in people’s lives, and within the expected economic cost that Parliament accepted when it legislated the existing 2050 target for an 80% reduction from 1990,” the CCC said.

“However, this is only possible if clear, stable and well-designed policies to reduce emissions further are introduced across the economy without delay. Current policy is insufficient for even the existing targets.”

In response, the UK government committed itself to the net zero target, but no policies to achieve this goal have yet been set.

Meanwhile, anti-fracking campaigners rebut claims that shale gas would be a better environmental option.

Greenpeace says replacing one fossil fuel with another does “little good over the next few decades — especially if the gas leaks out, sending super-warming methane into the atmosphere”. “The government’s climate advisors say emissions need to fall by more than 80% in just a few decades, that means cutting down on the gas — yet Cuadrilla’s own analysis suggests they won’t even be producing much gas until the 2030s.

“Investing in fracking will divert vital cash and resources away from clean, renewable energy projects. And digging up more fossil fuels, right at the

time we need to stop burning them, will only make climate change worse,” the organisation says.

The UK government has not yet responded to calls for a revision on current shale gas policies and regulations.

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