Bloomberg New Energy Finance’s evidence to House of Lords Committee points to significant potential for UK shale gas, but at a cost 50% to 100% higher than in the US
London 2 October 2013 – Evidence submitted by Bloomberg New Energy Finance to the House of Lords Economic Affairs Committee shows that investment in UK shale may provide a valuable new source of natural gas as UK Continental Shelf production declines – but it will not be a panacea for bringing down gas and electricity bills.
The research company’s submission shows that the costs of shale gas extraction in UK fields such as Bowland in Lancashire are likely to be between $7.10 and $12.20 per MMBtu, compared to figures of $5-6 per MMBtu for large US fields such as Marcellus and Barnett in the US.
The difference between those cost estimates for the two countries reflects a list of factors including limited availability of drilling service providers in the UK, higher land acquisition costs and the lack of gas infrastructure.
Mike Lawn, head of gas and power for Bloomberg New Energy Finance, said: “The US shale boom has widened the gap between energy costs in that country and those in Europe, giving the US a competitive advantage in attracting industry. Unfortunately, the UK is highly unlikely to benefit in the same way.”
Bloomberg New Energy Finance’s evidence says: “Our conclusion is that even under the most favourable case for shale gas production, with production reaching 4.5bn cubic feet per day in the mid-2020s, and low demand driven by a power sector emissions target of 50gCO2/kWh, the UK will not be self-sufficient in gas. The reliance on continued imports will ensure that UK gas prices remain tied to European and world markets and so the direct impact of shale on the cost of electricity in the UK will be limited.”
To request a full version of the company’s submission this week to the House of Lords Select Committee’s Call for Evidence on “The Economic Impact on UK Energy Policy of Shale Gas and Oil”, please contact email@example.com.