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UK shale gas could be a new North Sea

Lobbyists have stepped up the campaign on both sides as a new report says the production of shale gas could help boost the UK's energy industry and economy

Shale-gas production could revive the UK's flagging oil and gas output and provide the country with an economic boost, the Institute Of Directors (IOD) says in a new report, Getting shale gas working.

The report is the latest addition to a growing stack of studies on the prospects for UK shale gas as the government considers what role, if any, it will play in the future of the country's energy mix. Supporters and opponents have both stepped up their lobbying efforts in recent months.

"Shale gas could be a new North Sea for Britain, creating tens of thousands of jobs, supporting our manufacturers and reducing gas imports," said Corin Taylor, senior economic adviser at the IOD and author of the report.

The IOD said investment in shale gas could peak at £3.7 billion a year ($5.6bn), creating 74,000 jobs. These would include roles for geologists, drilling specialists, construction workers, truck drivers, cement manufacturers, water treatment experts, and people working in local retail and service industries.

The report was sponsored by Cuadrilla Resources, the leading shale-gas explorer in the UK, but the IOD says it "represents the independent assessment" of the institute.

The IOD said that despite the lack of clear information on the UK's shale-gas resources "the prospects look very promising indeed". DECC is expected to release an updated estimate of the UK's shale-gas resources soon.

In 2010 the British Geological Survey said the UK could have 5.3 trillion cubic feet (cf). Cuadrilla Resources however said in 2011 that it has 200 trillion cf of gas in place in its license areas alone in northern England. Other companies, including Dart Energy and IGas, have indicated there could be a further 90 trillion cf of shale gas within their acreage. The UK's offshore shale gas reserves could be higher still.

The UK's conventional gas reserves are 7.1 trillion cf, according to Cedigaz. With UK gas consumption at around 3 trillion cf per year, if just 10% of these estimated in-place shale resources were recoverable it could provide the UK with gas for a century, the IOD said.

The report also outlines potential barriers to the industry developing, such as unclear guidance for planning and permitting.

The IOD said that the UK's planning and permitting regime, which involves four agencies and two public consultations for permission to drill and frack just one well, is too complex and would slow development. The IOD also said regulations for operators should be clarified.

The UK Onshore Operators Group, (UKOOG), the UK onshore oil and gas industry body, welcomed the report. "Shale oil and gas reserves are essential to increase the UK's energy security and the IOD is right to point out that planning and grid connections are potential barriers to gaining the maximum economic benefits," said UKOOG chief executive Ken Cronin.

Last week the UK government called on prospective shale-gas operators to step forward and apply for licenses.

Environmental groups, such as Greenpeace, remain unconvinced shale gas will be beneficial to the UK. "Despite cheerleading for the industry, the report still avoids the issue of whether fracking will bring down bills. With experts from Deutche Bank to BP to the energy secretary Ed Davey agreeing UK shale gas will not reduce gas prices for consumers, fracking across England seems like a lot of pain for very little gain."

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