Economies of shale

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Alexander Larman

What happened to the Rishi Sunak I knew at school?

The vast reserves of gas concealed in shale have long been known about, but until recently there was no economic means to extract them. Over the past five years, however, the situation has changed dramatically, thanks to a method of hydraulically fracturing rock along its seams — or ‘fracking’ for short. While Britain and Europe have been throwing hundreds of billions in subsidies at renewable energy, the US shale gas industry has expanded to account for one quarter of all the country’s gas production — all without subsidies. In doing so it has caught many environmentalists completely unawares. The energy-scarce world of their dreams has been put off for a couple of centuries at least; instead we are staring at a future of potential energy abundance.

Moreover, exploitation of shale gas is not at odds with carbon reduction policies: kilo­watt for kilowatt, energy generated from shale gas emits only half as much carbon as coal — the energy source which it is already beginning to replace in many American states. It is estimated that $4 spent on shale delivers the same energy as $25 spent on oil Even Barack Obama has belatedly started to extol the virtues of shale: little wonder, given that a shale-driven glut of natural gas has halved US electricity prices. Over the last three years, more than 4,000 wells have been drilled in the Marcellus shale formation in Pennsylvania.

Early indications are that Europe may be no less fortunate in its reserves than the US. Current estimates are that the continent has 630 trillion cubic feet of shale; not far behind the US’s potential of 862 trillion cubic feet. Britain’s recoverable reserves are estimated at 20 trillion cubic feet, which will produce perhaps enough energy for the next 100 years. This is, to put it mildly, a claim that cannot be made about Britain’s wind farms. And this is what infuriates the environmental lobby: the discovery of shale threatens to make redundant their carefully planned, heavily subsidised plans for renewable energy. There may be no energy crisis after all.

Fracking is not a pretty process: it involves drilling a large well and then pumping large quantities of water and sand down it in order to fracture the appropriate strata of rock. Once the rock is fractured, gas can seep into the well and be forced to the surface. But it isn’t anything like as hazardous as environmentalists — in a repeat of the fantasy and exaggeration which characterised the campaign against GM foods a decade ago — like to claim.

Another fear is that fracking causes earth tremors. True, a couple of very minor tremors — of the sort that occur in Britain hundreds of times a year — do appear to have been caused by test-drilling near Blackpool, the epicentre of an embryonic British fracking industry which is now temporarily stalled as a result. But then coal-mining also causes minor earth tremors. It is a problem to be managed, not to be used as a reason to close down an entire industry. Mike Stephenson, head of energy science at the British Geological Survey, said that ‘most geologists think this is a pretty safe activity’ because ‘the risk is pretty low and we have the scientific tools to tell if there is a problem’.

In the 1990s, Britain allowed environmentalist propaganda to obliterate Britain’s foothold in the GM food industry. Far from keeping Britain GM-free, as the environmental lobby fantasised, we ended up eating GM soya imported from the US — and nobody has suffered as a result. All that the campaign achieved was to ensure that Britain will not profit from the technology.

The same must not be allowed to happen with shale gas. At present, more people die from the cold in Britain — because they are unable to afford to heat their houses — than are killed on the roads. This is an appalling state of affairs for a supposedly rich country. Britain could be on the cusp of a new era of clean, cheap shale energy — but only if we seize the opportunity, as the Americans have.