How viable will shale gas be to extract?
The debate over the impact of shale gas rumbles on. Leading industrialists, including Sir Ian Wood, former chairman of Wood Group, and Ian Marchant chief executive of Scottish and Southern Energy, were taking part in a recent Strathclyde University seminar at Glasgow Science Centre.
Sir Ian argued: “I’m not saying shale gas is a [complete] solution but it is more efficient, more cost-effective and the reserves are absolutely gigantic across the world. In five to 10 years time we will have an entirely different mindset about gas and we will realise that there has been a revolution and that there is a major new energy source available.”
Ian Marchant added: “There is a lot more gas in the world at cheaper prices than we thought five or six years ago. Gas-fired generation can be built in two to two-and-a-half years. It can be very flexible, providing the balancing services that [the grid] needs. A combination of gas and renewables can keep us on our carbon trajectory in the UK and in Scotland for probably the next 15-20 years.”
However, not everyone is convinced of the economics, putting to one side the environmental concerns. According to an analysis by Bloomberg New Energy Finance the cost of shale gas extraction in Europe is likely to be two to three times that of the US. It estimated UK shale gas will cost between $7.10 and $12.20/MMBtu to extract, compared to $4.54 to $4.83/MMBtu in the US. The UK figures are similar to the range of market prices for natural gas in 2012, meaning shale gas developers could struggle to compete.
Guy Turner, Bloomberg head of economics said: “Shale gas might seem to offer a new dawn of low energy prices for the UK. Our analysis suggests such hopes should be treated as wishful thinking. The UK imports half of its natural gas, a proportion set to grow. Shale gas may help replace some of our declining conventional production, but it is unlikely to arrive quickly enough in sufficient volume to drive UK prices below international levels.”
- Posted in: Gas