WITH the Ukraine crisis intensifying and concerns growing over its impact on energy security, the government has responded this week with rather inconsistent messages: it announced more multi-billion subsidies for unreliable renewable energy projects and another promise to speed up shale gas extraction in Britain.
Speaking at a conference in Blackpool, and with a new report finding that shale could attract £33bn in investment and create 64,000 jobs, energy minister Michael Fallon claimed that this week will see the “kick off” in the development of shale gas in the UK. We’ve heard similar pronouncements before. Exactly one year ago, Fallon announced that Britain was “on track to accelerate” its shale gas programme. Yet there has been no progress in actually getting shale gas out of the ground.
In Texas, it takes seven days to get a permission for hydraulic fracturing of shale. In Britain, the wait has been going on for a whopping seven years. In 2007, Cuadrilla was granted a licence for shale gas exploration in Lancashire. Seven years later, not a single cubic foot of gas has been extracted.
Compare this with the Vaca Muerta shale basin in Argentina, discovered just over three years ago. The first horizontal well was drilled within 12 months. One year on, it produced over 20,000 barrels of shale oil per day.
For too long, the coalition has been talking the talk. Christopher Wright, a leading US shale investor, told a parliamentary committee last year that he won’t invest in UK shale exploration because green tape and bureaucratic hurdles are making the approval process far too long and convoluted.
The government has promised a new, fast-track regulatory framework for fracking licences. Whether it will remove the existing obstacles remains to be seen. But in any case, the government seems far more concerned with speeding up the approval of costly green energy projects. This week, energy secretary Ed Davey announced generous subsidies for new offshore wind farms and other renewable projects. They will cost consumers more than twice the amount they have to pay for the current wholesale price of electricity, increasing household electricity bills by 2 per cent.
Interestingly, Davey no longer denies the growing burden of his subsidies, but argues that renewable energy is essential to boost energy security in light of Ukraine. In reality, wind and solar energy have become a serious energy security risk in a number of European countries, because they are intermittent and thus an unreliable way to generate electricity. Preferential support for green energy projects and environmental opposition to fracking have also slowed or stopped shale exploration in many parts of Europe.
Only now that the Ukraine crisis is intensifying by the day are European leaders calling for the EU to speed up the development and exploitation of shale resources. They have identified shale gas as one of the “indigenous” sources of energy that will help reduce dependency on gas imports from an increasingly erratic Russia.
In light of this, and the need to bring down (rather than drive up) energy prices, the UK would be well advised to proceed as rapidly as possible with its domestic shale development.