MPs on Parliament’s energy watchdog are launching an inquiry into the impact of shale gas on the energy UK market. The energy select committee wants to find out whether shale gas could push down the price of conventional gas, as well as why estimates of the UK’s shale gas resources are so “changeable”.
This follows the Committee’s previous inquiry earlier this year. Some optimistic analysis puts the figure at more than a trillion cubic metres in reserves under the UK.
Some developers hail shale gas as a “game changer” but the fuel has taken flak from environmentalists who say the UK would be better to focus on renewable energy. There also concerns the technology has not been fully tested for its impact on local water supplies.
The committee will also ask whether the UK should consider setting up a wealth fund with the tax revenue from shale gas, something Norwegians have done successfully with their own oil and gas assets.
Energy Live News, 30 July 2012
In May 2011, the Committee published a Report on Shale Gas. Since the Committee’s inquiry, there have been further estimates of the amount of shale gas in both the UK and Europe, but these have fluctuated significantly.
Gas has traditionally been a high-volume, low-value commodity, that has been expensive to transport (as LNG). Trade has largely been restricted to specific regions, which has led to regional markets with regional prices. The Committee previously concluded that, while UK shale gas resources could be considerable, they were unlikely to be a “game changer”. But there was evidence that offshore unconventional gas resources could be substantial, and that there was uncertainty in the extent to which a glut in shale gas production could drive down the price of conventional gas.
Large volumes of shale gas being discovered could lead to a global market in gas, as more opportunities for trade arise and the costs of LNG fall. The first LNG export facility in the lower 48 states has recently acquired federal approval in the US, with a post-Fukushima Japan being its initial market.
This inquiry will follow up on the Committee’s previous report and investigate the different estimates made for recoverable shale gas reserves in the UK (on and offshore), Europe, and the rest of the world and the implications of the “shale gas revolution” for energy markets around the world.
Terms of reference
The Committee invites written evidence from interested parties addressing some or all of the following questions:
- What are the estimates for the amount of shale gas in place in the UK, Europe, and the rest of the world, and what proportion is recoverable?
- Why are the estimates for shale gas so changeable?
- What are the prospects for offshore shale gas in the UK Continental Shelf?
- Should the UK consider setting up a wealth fund with the tax revenue from shale gas?
- What have been the effects of shale gas on the LNG industry?
- Could shale gas lead to the emergence of a single, global gas market?
- What are the effects on investment in lower-carbon energy technologies?
- What is the potential impact on climate change objectives of greater use of shale gas?
The deadline for the submission of written evidence is Monday 1 October 2012
More information here