UK

Fracking For Shale Gas 'May Not Reduce High Energy Bills' Say MPs

26/04/2013 07:40 BST | Updated 25/06/2013 10:12 BST
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File photo dated 01/12/12 of demonstrators hold placards calling for a ban on exploration and development of shale gas and coal bed methane in the UK as fracking won backing from the Government in the 2013 Budget with promises of a generous new tax regime for extracting shale gas.

Fracking for shale gas is not guaranteed to provide the "silver bullet" needed to solve Britain's high energy bill woes, according to MPs.

Although extraction has led to big energy cost reductions in the United States a similar "revolution" in the UK is not certain, MPs said.

The Energy and Climate Change Committee said it was "too soon to call" what impact the potential energy source could have in the UK but added companies must be able to "get on and drill" to establish what resources exist.

They warned government not to base future energy policy on future shale gas production.

Energy committee chairman Tim Yeo said: "It is still too soon to call whether shale gas will provide the silver bullet needed to solve our energy problems. Although the US shale gas has seen a dramatic fall in domestic gas prices, a similar 'revolution' here is not certain.

"If substantial shale resources do turn out to be recoverable in the UK - and community concerns can be addressed - then it could limit future energy price rises, reduce our reliance on imported gas and generate considerable tax revenues.

"The government has dithered on this issue and should now encourage companies to get on and drill, to establish whether significant recoverable resources exist.

"Ministers should be careful, though, not to base energy policy on an assumption that gas prices will fall in future as a result of shale gas production. Rising global demand for gas, particularly from Asia, could limit any potential price reductions."

Shale gas is exploited through drilling into rock and fracturing it with high pressure liquid to extract the gas, in a process known as fracking.

Supporters say shale gas production in the UK could provide a cheap, secure source of energy, but opponents are worried about the possibility of earthquakes and water pollution caused by fracking.

The committee concluded that it is "impossible" to come up with reliable estimates of shale gas in the UK without practical production experience so companies that meet the required standards should be encouraged to carry out exploratory work, although public concern must be taken into account.

Importing shale gas from the US is unlikely to reduce British bills because the shipping costs are too high, the Impact of Shale Gas on Energy Markets report said.

It adds that, while shale oil is likely to be present in the UK, it remains uncertain whether it is economically worthwhile to explore.

Greenpeace Climate Campaigner Leila Deen said: "This report confirms that what we know about UK shale gas is that we don't know much. The only thing most experts agree on is that it won't reduce bills.

"Fracking remains a fantasy and a dangerous distraction from renewables, which continue to fall in cost."

Friends of the Earth Energy Campaigner Tony Bosworth said: "Fracking is dirty, unnecessary and a threat to our climate and environment - it's little wonder so many communities are in opposition.

"Instead of gambling with shale gas we should be building an affordable power system based on our abundant clean energy from the wind, waves and sun."

Energy Minister Michael Fallon said: "This report is helpful analysis, it underlines what we know - that UK shale has potential to play a role in our energy security and to create valuable jobs. But the scale of future production and the impact it will have on prices is not yet clear.

"We have already set up the new Office of Unconventional Gas and Oil to promote the safe, responsible and environmentally sound recovery of the UK's reserves."

Ken Cronin, chief executive of industry body the UK Onshore Operators Group, told BBC Radio 4's Today programme: "We welcome the report and the central message that we need to be allowed to get on with the drilling. We need to get drilling to get practical experience and to understand the geology and the flow rates we have in the UK.

"What we now need to do as an industry is work out what is technically and economically recoverable, but we believe there is a significant amount of gas in the UK.

"I think the seismic issues are now well understood. Various independent reports came out saying the seismic issues were insignificant compared to background. We've put in place monitoring systems across the industry to ensure that we understand the situation a lot more, and we have also published our best practice guidelines in February which will manage environmental risk effectively.

"The important thing here is not just about prices, but it's about energy security. Our import dependence on gas is going to rise significantly over the next few years. It makes economic sense for us to produce our own gas and pay tax for it to the Exchequer rather than paying somebody else to produce the gas for us.

"Shale gas is pretty much across the UK in various different locations. There is the North West, the East Midlands, down in the southern area. For example, this morning IGas Energy will be announcing that they will be drilling in the Bowland Shale in the North West."