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Gas from shale could create 35,000 jobs in UK – but should it?

The UK was a net exporter of gas until 8 years ago, thanks to our supplies from the North Sea. Now we are spending £5.2bn per year on imports as North Sea supplies dwindle. Obtaining gas from shale is somewhat controversial, and involves ‘fracking’, or hydraulic fracturing, which enables gas to be obtained from deep below the surface.

With North Sea supplies running out, should we contemplate shale gas?

A new report from the Institute of Directors (IoD) reveals the huge potential of Britain’s shale gas reserves. British onshore shale gas reserves, estimated at 5.3 trillion cubic feet (tcf) in 2010, are now believed to be much larger. Exploration companies themselves have identified resources of nearly 300 tcf so far. Offshore reserves – which are harder to extract – are estimated to be 5-10 times larger than those onshore.

In the US, shale gas now accounts for 23% of domestic gas production and 22% of domestic consumption, helping to contribute to a drastic fall in energy prices for industry and householders. It is estimated that by 2020 a total of 3.6m jobs will have been created in the US both directly and through the benefits of cheaper energy to the wider economy.

The report uses a conservative estimate of UK production, assuming we would be half as successful as the Americans. This would mean 35,000 extra jobs, helping to offset the ongoing decline in the North Sea oil and gas industries. Also, enough onshore supply to meet 10% of the UK’s gas demand for the next 103 years, preventing the expected rise in costly gas imports. The report also claims environmental benefits from moving from coal-burning electricity generation to shale gas, as a result of lower carbon emissions, suggesting that we could save 8% of our total carbon emissions.

However, I said at the beginning that this process of ‘fracking’ was controversial. There is evidence of earthquakes being caused, although the effects so far have been fairly minor. But, a major concern at the moment is the effect on groundwater. The fluids used in the process of extracting the gas are thought to include toxins and there are growing concerns that these toxins will enter the water supplies.

An article in the Guardian yesterday has Amy Goodman quoting former Pittsburgh Councilman Doug Shields as saying: “Only 20% of that water returns, and that water returns with radioactive material … It’s inherently dangerous. There’s no environmental impact studies on the part of the state. The state …. failed miserably to do any kind of due diligence … no environmental impact studies, no health risk studies.  And now I’ve got sick people all over.”

Towns in the US where fracking is carried out nearby are now fighting the industry and trying to get it stopped. Although in the UK we could do with the extra jobs, and the reduced dependence on imports, it would be a bad mistake not to work out a detailed cost benefit analysis, factoring in the health and environmental impacts. What would be the cost of the negative externalities?

With the coalition government reducing planning controls on house extensions and new building, in order to stimulate the construction industry, I would wager that there won’t be that much concern for the long-term consequences of producing shale gas in the UK.

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Posted in Energy, Energy supply and security

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