Partner Article

MPs cautious on shale gas fanfare

Shale gas production in the UK might not be boon it is purported to be, suggests a group of MPs.

A report from the Energy and Climate Change Committee suggests that shale gas production in the UK could enhance our energy security and boost tax revenues, but is too early to tell if it will reduce energy prices.

Proponents of shale gas have cited successes in the US, which now has the cheapest gas market in the world.

The report says UK shale drilling would face a “very different set of factors,” and the amount of resource to extract is relatively unknown.

Tim Yeo MP, chairman of the Energy and Climate Change Committee, commented: “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.”

The MPs say that regulation and technological uncertainties could hamper UK developers, and if the process was to prove successful, it would impact statutory climate change targets.

Part of the report goes on to say: “It would be wrong for the Government to base policy decisions at this stage on the assumption that gas prices will fall (it is possible that they will rise) in the future.

“However, if large quantities are found they will either bring down prices in the UK, or generate substantial tax revenues, or both – and will certainly reduce imports with benefits to our balance of payments and energy security. For all these reasons the Government should encourage exploration to establish whether significant recoverable reserves exist.”

This was posted in Bdaily's Members' News section by Tom Keighley .