The decision to abandon UK shale exploration is likely to be detrimental both to the British economy and the environment – according to Ken Cronin, Chief Executive of UKOOG. Speaking at the Shale Engineering Summit, organized by the Institution of Mechanical Engineers last Tuesday, Ken Cronin argued that natural gas is, and will remain, crucial to the UK’s energy system, and with the North Sea reserves in decline, the country has been presented with a rare opportunity for energy self-sufficiency in the form of shale oil and gas.
The shift to natural gas from coal – which accounted for 60 percent of the country’s energy in 1965 – was possible thanks to the North Sea production which transformed the UK’s energy landscape. It caused carbon dioxide emissions to go down in the 90s by some 50 million tonnes a year, (a total annual decrease of about 85 percent) and annual methane emissions for the same period to go down by nearly 30 percent.
The UK of 2016 is thoroughly dependent on natural gas with 84 percent of homes heated by gas and around one-third of the country’s electricity generated by gas. A fact less known – but equally important – is that half a million jobs in the UK rely on gas as a feedstock needed to produce everyday items from toothpaste, through sofas, to medicines, and as fertilizer to grow food.
This dependence is reflected in research carried out by UKOOG and The Natural Gas Coalition last year, which found that 70 percent of the population feel heating or cooking – currently almost exclusively gas-based – are the most important energy uses in their daily life. The same research found that more than half of the country’s population – 55 percent – wants to prioritize gas produced in the UK, including shale gas produced by hydraulic fracturing, over energy imports from overseas. Two-thirds of respondents agreed that natural gas has a role to play in the UK becoming a low-carbon economy.
This same research, however, has showed that there is limited public awareness about the extent of the UK’s reliance on gas imports, and an extremely limited awareness about the products that contain gas in everyday use.
“If we do not understand what products contain gas and oil,” Mr Cronin said, “then we cannot have an adequate conversation about where to get that gas or oil from.”
“For example,” he pointed out, “40 percent of a mobile phone’s content actually have gas and oil in them. 60 litres of oil are required to produce a normal sofa, 9 litres of oil are needed to produce the casing for computers. Things like solar cells are embedded in a gas-based product.”
The lack of understanding regarding the varied used for gas and oil lead to misconceptions which unnecessarily polarizes the debate about fossil fuels versus renewables, versus nuclear.
“The reality is, we are going to need all of these – and not just for electricity production. You will never hear me – or anybody within my organization – questioning the need for other technologies. We are not here to polarize the debate,” Mr Cronin said.
Gas is crucial to a sustainable economy – it provides backup electricity where renewables (wind, solar) fall short. It’s also used as a raw material to manufacture renewable energy hardware such as solar panels and wind turbines, and it’s also needed to generate heat for furnaces to recycle materials such as glass.
“At a global level, gas is a part of the solution to climate change. The coal-to-gas switch that we have seen in Britain can and should be replicated in other countries. In the International Energy Agency ‘450 parts per million scenario’, global emissions are kept at a level that gives us a decent chance of avoiding more than two degrees warming. And in that scenario global gas is higher in 2035 than it is today. This scenario is backed up by the UK’s Committee on Climate Change which says that gas would play a very key role all the way through to 2050,” Mr Cronin argued.
However, with the North Sea production in decline, the UK has increasingly been relying on imports. While just twelve years ago Britain was a net exporter of gas, in 2016 imports make up more than half of the UK’s consumption, costing around 18 million pounds a day.
Loosening this reliance on imports may be possible if Britain decides to make the most of its domestic shale oil and gas deposits, argued Mr Cronin before exploring three possible scenarios for gas in the UK.
In the first scenario, Britain remains dependent on gas but does not develop its domestic shale reserves. In this scenario, according to data provided by the National Grid, Britain’s import dependency will rise up to 92 percent by 2035, with the import bill hitting 10 billion pounds a year, assuming today’s prices.
Such development would not only be detrimental to Britain’s economy but also have a negative impact on the environment as imported gas is often sourced from countries with lower environmental standards than those in the UK.
“As professors Mackay and Stone recently concluded, lifestyle greenhouse gas emissions from UK-produced shale are lower than for gas imported by LNG or long-distance pipeline. This conclusion isn’t surprising. Imported gas can come from parts of the world that lack the environmental safeguards we have in this country and it takes a lot of energy to freeze gas, transport it on a ship and then re-gasify it at a British terminal.
“This scenario raises a serious question – are we happy as a country to benefit from using gas but only as long as it is produced somewhere else? As the GMB union has pointed out recently, we need to honestly consider the moral and environmental issues about transporting gas across oceans and continents and becoming increasingly dependent on gas from countries with regulatory, environmental, and human rights standards lower than our own,” Ken Cronin said.
Scenario two explored in the presentation would involve moving away from gas altogether and towards exclusively low-carbon sources of energy. In 2015 renewables and nuclear amounted to nearly 40 percent of the UK’s electricity – 15 percent of our energy overall – however, this scenario assumes 100 percent low-carbon electricity is achieved and focuses on electrifying heat.
The first main challenge in this scenario is capacity. Current peak electricity is around 50 Gwatt, but demand for heating can reach 300 Gwatts in winter. Even accounting for heat pump efficiencies, electricity generation would most likely need to triple, yet it would largely lie idle for 9 months of the year.
Then there are transmission costs. To accommodate this extra electricity capacity, a much larger electricity grid would be needed to replace the existing gas grid. The capital cost of electricity infrastructure, as it is today, is at least 6 times that of the equivalent of gas infrastructure.
Finally there is the issue of consumer bills. Electricity is around three times more expensive per kilowatt hour than gas. This is why households with electric heating are far more likely to be in fuel poverty, which has been proven by various studies done in Scotland.
“For these reasons,” Mr Cronin said, “I don’t think that replacing gas is realistic.”
The final scenario is that of British shale resources being explored and produced on a large scale.
“We know there is a huge resource in the ground, 1,300 trillion cubic feet mid-case, in terms of BGS reports that have come out. We use less than 3 trillion cubic feet a year. So even if we only got a tenth of that gas out of the ground, it would be enough for more than 40 years,” Mr Cronin said, adding:
“According to the Institute of Directors, shale could cut gas imports by nearly half. National Grid believe that British shale gas could meet more than 40 percent of our gas use. Enough to heat every home in Britain. And according to EY, shale gas development could see more than 30 billion pounds of investment and create more than 60,000 jobs – many of them high-skilled and well-paid – with manufacturing benefiting from a reliable and affordable source of heat, electricity, and feedstock.”
“Shale gas is no threat to renewables, despite what the NGOs tell us. They fulfil different functions in the energy system, with renewables providing electricity and gas providing heat, backup electricity and manufacturing feedstock.” he argued, adding that in the US wind and solar generation have been growing rapidly along side intensive shale gas production. Texas is good case in point, being the state of high shale gas production and the most wind generation.
Between 2005 and 2013, electricity generation from wind increased by 678 percent in eighteen shale gas-producing states, making up almost 60 percent of the total wind generation in the US.
“The benefits of using domestic shale gas warrant UK-wide policies that will encourage and help markets prioritise the use of indigenous resources and technology in pursuit of carbon reduction. This will also add to the UK’s energy resilience. We do, however, need to ensure that all the public understand where gas comes from, how it is used, and why it’s so important to our future economy and the environment. That’s what our next task will be,” he concluded.
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