After the discovery of natural gas in the North Sea in the late 1960s and 1970s the infrastructure was created to distribute and use gas around the UK. Today the UK relies on natural gas to a large extent for heating homes and offices, for cooking and for generating electricity.
However, as North Sea gas production has declined (down 64% since 2000) increasingly gas has been imported by pipeline from countries such as Norway or as liquefied natural gas (LNG) from countries such as Qatar. Since 2010 imports have exceeded production in the UK. Thus, there is a clear concern about energy security regarding the UK’s gas supplies. As will become clear below, any increase in energy security that might be provided in the short-term by shale gas could come at the price of environmental degradation, increased greenhouse gas emissions and the diversion of investment away from sources of renewable energy.
Shale gas has been exploited extensively in the USA for less than 10 years and has been touted by some politicians as a revolutionary cheap form of energy. In fact, although initially in 2008 the flood of shale gas onto the natural gas market did cause US prices to drop, since then the price, although volatile, has always been considerably less than in Europe. Since late 2007 production has flattened out.
However, the conditions that apply in the USA are certainly different from the UK where planning and other legislation is tighter, population density is greater and the scale of the favourable geological formations is smaller. For all these reasons it is unlikely that UK shale gas will provide a cheaper source of energy. For example, according to a recent report by Bloomberg New Energy Finance ‘the cost of shale gas extraction in the UK is likely to be significantly higher than in the US’. Moreover, as the price of natural gas in UK is defined by competition within the European market place, it is unlikely that successful exploitation of shale gas in the UK would do much to reduce European gas prices.
While recognizing that, globally, there needs to be a shift away from using fossil fuels because of global warming concerns (Section 1), it has been suggested that shale gas has a smaller global warming impact, and could displace coal as a transitional fuel on the way to a low-carbon economy. Although the ‘cleanliness’ of shale gas is disputed by some, in practice the displacement argument depends on the circumstances . See 'Why the UK should not exploit shale gas'.