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Environmental opposition ‘likely to hinder UK shale-gas sector’

Shale-gas production in the UK could account for just 2% of the country’s natural gas demand by 2030, experts said, claiming environmental opposition could hinder development

Tim Fox, the head of the Institute of Mechanical Engineers’ energy and environment department, told PEU that the UK was likely to produce just 2 billion-3 billion cubic metres (cm) of shale gas per year by 2030, which would meet just 2.5% of the country’s estimated gas demand.

The UK’s natural gas demand in 2030 is expected to be around 79 billion cm per year (cm/y), according to the Department of Energy and Climate Change (DECC), up from 72 billion cm/y in 2012.

Fox told PEU: “We’re much more conservative in terms of the estimates we think shale gas can bring to the UK energy sector, purely because of the (public) resistance it will ultimately meet.”

He added: “The UK landscape is very different to the US. Although the drilling period is only six to nine months and the production period has a relatively benign impact on the landscape, it is the drilling stage that the public are likely to focus on.”

According to DECC estimates, the UK’s conventional natural-gas production is expected to decline at 5% a year from 2017, as North Sea output flags, while consumption will continue to increase.

Indigenous natural gas production in 2030 is forecast to be just under 19 billion cm/y, down from just under 38 billion cm/y in 2012, according to DECC.

The UK’s shale-gas reserves could, potentially, help make up this shortfall. Cuadrilla Resources, a company hoping to exploit shale gas in northern England, estimates the Bowland basin alone could hold 5.6 trillion cm, dwarfing the UK’s 200 billion cm of conventional gas resources.

Other studies have been more bearish. The US Energy Information Administration pegged the UK’s resources at 566 billion cm of technically recoverable reserves, while a recent study by the British Geological Survey claimed there could be 150 billion cm available. DECC is expected to release an updated report on the UK’s shale gas resources in December.

Although there is currently no shale-gas production in the UK, the government has signalled it may give the green light to further exploration. The government placed a moratorium on hydraulic fracturing in May 2011 after Cuadrilla’s drilling operations caused two tremors near the city of Blackpool, northern England. The moratorium was formally lifted earlier this year and last month the government signalled it encourage shale gas development by creating what it called “a generous new tax regime” as an incentive for producers.

Even with government backing , Fox said, there is no guarantee production will be able to ramp up if public acceptance remains an issue.

“We’re likely to see a move to promote wider use of this unconventional resource in the UK but even in the last few weeks, we’ve seen a tremendous backlash from the public about what is perceived to be (UK Chancellor) George Osborne’s dash for gas,” Fox said. “'There is an intrinsic (public) discomfort with having an over-reliance on one particular energy source. But we do see an opportunity to use some (unconventional) exploitation to build an expertise base that provides us with an export potential for unconventional gas to other parts of the world.”

The Institute of Mechanical Engineers said total European shale-gas output would be “a moderate” 30 billion cm/y by 2025, with Poland likely to be the continent’s largest producer. Europe’s total natural gas demand will reach 666 billion cm/y by 2030, according to the International Energy Agency, up from 537 billion cm/y in 2009.

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