Peel man in plea over shale gas

A SENIOR Peel Gas and Oil manager says the energy debate needs to move on from not “if the UK should use shale gas” but “whether we are going to take advantage of the supply under our feet or rely on foreign imports”.

The company’s commercial strategy manager Tony Smith made his comments after the INEOS Inteprid, the world’s largest LNG multi gas carrier, left the Marcus Hook terminal near Philadelphia bound for Norway last week carrying 27,500m3 of US shale gas ethane. The first time that US shale gas has ever been shipped to Europe.

Today, senior UK energy industry figures will gather for a summit in Westminster, the day before Chancellor George Osborne delivers his eighth budget. High on their agenda will be policy priorities for ensuring energy security for the UK, including the role of unconventional gas.

Smith, who has more than 30 years’ experience in the oil and gas sector, told TheBusinessDesk history shows that geopolitics and economics have a part to play in energy strategy, not least due to the requirement for the UK to have an acceptable gas supply security position.

He said: “Shale gas represents an exciting new potential energy resource for the UK, and could play an important part in providing that energy security.

“The 2013 British Geological Survey (BGS) independent study estimated that in northern England alone there is 1,329 trillion cubic feet (tcf) of shale gas in place.

“Assuming only 5% of this resource was recoverable that’s still 66 tcf. The UK consumes less than 3 tcf per annum, so in simple terms that’s 22 years of supply.”

As well as supplying the UK with ‘home grown’ gas, Smith said the emerging industry would act as a bridging fuel to a more decarbonised UK energy supply replacing coal in the short to mid-term and acting as a source of peak supply during peak demand periods.
   
It would also underpin the UK petrochemical industry which requires gas as a feedstock for manufacture of plastics, pharmaceuticals and many other household items.

The development of jobs to support the emerging industry would be facilitated, with economic studies suggesting more than 60,000 jobs could be created and the industry could be worth billions to the UK economy.

He said it would replace imported gas at the margin with significant tax benefits to the UK and provide local community benefits through retention of business rates and through schemes for production related payments to local communities and landowners.

He added: “UK shale gas development is in the exploration stage; to date the UK still has not drilled, fractured and flow tested a horizontal shale gas well.

“In the meantime the emergence of USA shale gas (methane) exports at Cheniere’s Sabine Pass may well see American derived shale gas being consumed in the UK in 2016.

“So the question may evolve from ‘should the UK consume shale gas?’ to ‘which shale gas should the UK consume?’

“There are lots of reasons to be optimistic about shale gas, but of course there are significant barriers to overcome. 

“Not least the Social Licence to Operate, including concerns over the environmental risks of hydraulic fracturing.

“These issues must be managed through adoption of industry best practice, the application of appropriate regulation, industry transparency and effective communication.  

“UK gas prices may have declined significantly over the past year or so but all credible analysis shows gas to be critically important on the road to a more decarbonised UK energy supply.

“The next few years will define whether UK shale gas can stall the progress of imported gas to supply the nation’s electricity, heating and cooking and petrochemical needs. One thing is for sure though; there will have to be gas.”