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Sunday Times: The Wonder Gas That Could Cut Your Energy Bills

It is said to be cleaner, cheaper and more abundant than the ‘natural’ form. So could shale gas save us from ever higher prices?

When it comes to energy use, Mark and Michelle Zouch are a model couple. Their new-build house is insulated and they switched supplier just nine months ago to get a better deal. But at £1,500 a year, their bill for heating and cooking is still too high and they suspect the market is rigged against the consumer.

“It’s incredibly difficult to work out which supplier is cheapest, because they give you so many units at this price, and then it goes to that price, and so on,” says Mark, a project manager who spends 15% of his net income on energy. “Then you switch and they put the prices up a few months later.”

Gas prices have doubled in recent years and are forecast to rise further. In the past few months, the six energy companies that control 99% of the market have raised tariffs by up to 19%, with electricity prices going up too.

Last week Chris Huhne, the energy secretary, said people should shop around and that companies should make it easier to switch. However, he held out little prospect of any long-term relief. “The government’s prediction — and the prediction of virtually everybody else — is that in the medium run, prices are going to go up,” he said.

Not everyone is so pessimistic. Some do see hope of cheaper prices on the horizon or, to be more precise, beneath our feet. In fact, it lies a mile or two under the feet of Mark and Michelle in their West Yorkshire village — shale gas.

In just a decade shale gas has transformed the market in the United States, where it has proved to be so abundant that prices have collapsed. And there are thought to be trillions of cubic metres of it in Britain, including 5.6 trillion cubic metres in the Blackpool area.

The shale — fine-grained rock formed from compressed mud and other deposits, including dead creatures that collected on the seabed when Britain was covered by water 320m years ago — extends from near the Scottish border to Derbyshire, with a younger layer from the East Midlands all the way to the south coast.

Until recently it was too expensive to tap. Then came a technological revolution that is now poised to be exploited in Britain. Could it be our own cheap energy of the future? […]

Americans have signed more than a million leases allowing energy companies to drill on their land, and the US Geological Survey believes that as much as 60% of future hydrocarbon production will come from shale. Shale gas has gone from 1% of the market to 20% in just 10 years.

The quantities are so large some experts believe it is time to rewrite the rule book on energy. According to the International Energy Agency, the world has enough “unconventional” gas to last for 250 years — and it is a cleaner fuel than coal, still a significant energy source in many countries.

For Britain, the implications are profound. The arrival of commercial shale gas on world markets could make nuclear power and offshore wind look very expensive.

Dieter Helm, professor of energy policy at Oxford University, believes a rapid switch to electricity generation by gas, which has about half the emissions of coal, could save the taxpayer billions, cut household bills and bring about faster falls in emissions.

He said: “We’re going to spend £100 billion on offshore wind, and my guess is that it would cost £10 billion or less to achieve the same carbon dioxide emissions if you closed lots of coal and built gas instead.” The costs are high partly because of the big subsidies for renewable energy.

He added: “If shale gas really delivers, there could be substantial falls in price.”

In Britain, a company called Cuadrilla Resources has been drilling for shale gas in rural Lancashire. It stopped in May, after a second small earthquake — the first was in April — occurred in the area. It will hand over the findings of an investigation, carried out in partnership with the British Geological Survey, to the energy department next month. “We’re pretty confident that the findings will allow us to proceed,” said Mark Miller, Cuadrilla’s chief executive.

Local people, who have been promised 1,700 jobs by 2016, see their area as the next Texas. “People are excited,” said a spokesman for Fylde council, the district near Blackpool where the wells are. “There are fears of earthquakes and they want to know more about that. They are excited and worried at the same time.” […]

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