The industry-funded Task Force on Shale Gas has recommended fracking should get underway to establish how much gas there is in the UK.
But its chair, Lord Chris Smith, has criticised the government decision to cancel a £1 billion competition to develop technology for carbon capture and storage and questions the medium-term viability of shale gas without it.
The final report of the Task Force says:
“The government and local communities should make more of an effort to allow initial, exploratory wells to be established in order to be able to make reliable estimates of recoverable gas in place and potential production rates. Without such information operators cannot make the economic decisions that might lead to the development of a viable industry.”
It said shale gas:
- Would improve UK energy security
- Would create thousands of jobs (but predictions were based on inadequate data)
- Be unlikely to reduce gas prices
- Have an uncertain impact on house prices
CCS decision “absurd”
Lord Smith said the UK needed to do everything it could to create a long-term carbon future.
“We need gas for the short term, of course, but it’s not a long term option particularly not if you don’t have CCS.”
“In the medium term, particularly with the commitments made in Paris, we’re getting into dangerous territory if you abandon CCS.”
“It’s absurd what the Government has decided, because it really sets us back.”
“A serious development of CCS is in our opinion essential for the medium term viability of any significant shale gas industry.”
Lord Smith is the second person this week to link the future of shale gas to CCS. Yesterday, Professor Paul Younger said UK fracking was no longer viable with the cancellation of the CCS competition. Link
The Task Force, launched in September 2014, said its role was to provide an impartial, transparent and evidence-based assessment of the potential risks and benefits of shale gas extraction in the UK. It said operated independently of funders. It has produced three other reports this year on regulation, and environmental and climate change impacts of shale gas.
In the latest report it recommended:
- A number of exploratory shale gas wells to indicate how the industry might develop
- Greater clarity on tax arrangements for the industry
- Operators should outline as soon as possibly how they intend to provide £100,000 of community benefits for exploratory wells.
- Government and industry should define exactly what is meant by communities when referring to wider community payments
- Administration of community benefit payments should be independent and not be left to operators or local authorities.
What the Task Force said
“It [the Task Force] believes that the development of a shale gas industry in the UK will improve the UK’s energy security, and that this must be seen as a major driver for the development of the industry.”
“The internal European market for gas means that Europe as a whole would benefit from the reduction of UK gas imports and the enhancement of UK energy security.”
UK gas prices
“The impact of a shale gas industry in the UK alone would not be sufficient to reduce prices in Europe. This is because the UK’s shale gas output is likely to be small in comparison to the size of the European market. Similarly, the EU’s combined shale gas industries are unlikely to have a large impact.”
Based on evidence it considered, the Task Force concluded a shale gas industry in the UK would create thousands of jobs. But it said predictions are based on “less than ideal amounts of factual data coupled with intelligent guesswork”
“The development of a shale gas industry would provide substantial employment for the UK. However it will not be possible to ascertain an accurate estimate of the scale of this opportunity until we have a clearer idea of the amount of recoverable gas. For this reason it makes sense for exploratory drilling to begin so that a clearer decision can be made.”
Impact on other industries
The Tasks Force said shale could help the steel and fertiliser industries and it said it was confident the impact on tourism could be mitigated and minimised.
“The current regulatory system, which can make recommendations regarding vehicle movements and hours of operation, which could potentially impact on tourism, is well-suited to perform this function. Beyond this there is no evidence to suggest that shale gas operations should be treated any differently to comparable industrial operations.”
“The impact on property values of those properties affected by operations is uncertain. In the US any negative impact has been offset through royalty payments to the extent that those properties have actually increased in value. In the UK, both industry and Government must ensure that any community payment scheme directly and appropriately assists those property owners directly affected by shale operations. However, the US experience also shows that after completion of a well pad, property values tend rapidly to recover.”
“The Task Force has been struck by the lack of clarity over exactly how payments will be collected, administered and spent, or indeed what the precise definition of ‘community’ is. This lack of clarity, in our opinion, makes it difficult for residents living near to potential shale gas operations to understand precisely how they might benefit.”
Link to Task Force report