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Shale we or shan’t we?


Themes: Energy and environment

Shale fracking‘Fracking’ to extract shale gas can resume say UK government experts but Dr Pierre Noël warns that Europe’s overall approach to this form of gas energy needs urgent revision

As exploration of shale gas reserves resumes in Lancashire in the UK, a leading energy industry observer says EU legislation is failing to support an important nascent industry; there is no transportation infrastructure and therefore no European marketplace for it.

Dr Pierre Noël, Senior Research Associate and Director of the Energy Policy Forum at Cambridge Judge Business School, believes that European and UK energy policies should concentrate on carbon emissions with credible long term carbon pricing or taxes. If a strategy was in place, natural gas would displace coal and so reduce carbon emissions in the short and medium terms.

“In the longer term you would have competition between zero carbon technologies, renewables, nuclear and fossil fuels with carbon capture. The outcome of this competition we don’t know. It’s precisely for the market to discover and reveal.

“By choosing to push renewables very strongly up front, as we are now doing on a large scale, we are incurring huge costs and we are missing the relatively cheap carbon emission reduction that we would get by natural gas displacing coal.”

Dr Noël describes the shale gas industry as an emerging one, but one with massive reserves and resources. The largest reserves have been discovered in Poland. However, the results of exploratory drilling there have been disappointing. France has the second largest reserves but the government has banned hydraulic fracturing or ‘fracking’. The best exploration returns currently are from the UK, where ironically the reserves are smaller.

He raised two aspects around shale gas production – geology and regulation. While the former is not as good as that of North America there are large prospective, geological structures across Europe which could yield some significant shale gas.

“A lot of people miss one of the key enablers in the North American shale gas production boom, which is its very efficient gas transportation market – gas pipelines – that we don’t have in Europe. The specific rules that are in place in Europe and that are being rolled out across the EU make it very difficult to build pan-European pipelines on a commercial basis.”

Dr Noël emphasises that if shale gas exploration proves very successful in Europe it would quickly reveal a significant regulatory problem standing in the way of creating a transport infrastructure which would be needed to serve a European market, a market which currently does not exist because there is no way of moving gas around.

“Europe has bet a lot on the massive deployment of renewable energy, especially wind and solar. It creates a difficult market situation for natural gas because gas is essentially squeezed between coal and renewables. If we had proper carbon pricing or carbon taxes in place, gas would displace coal and would grow with renewables.

“Because our carbon pricing is seriously defective what we actually see is gas being displaced by coal and renewables in power generation, and that does not create market conditions which are supportive for shale gas exploration and production.”