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Energy: Shale Gas

Volume 726: debated on Monday 28 March 2011


Asked by

To ask Her Majesty’s Government what are the likely implications of the discovery of shale gas on United Kingdom energy policy.

My Lords, exploration for shale gas has only recently commenced in the UK and no commercial production has yet been proven. In a recent study for DECC, the British Geological Survey estimated that there could be worthwhile shale gas resources in the UK. However, on current knowledge, it is not possible to estimate the recoverable reserves and therefore it is too early to assess how shale gas in the UK might impact our energy policy.

My Lords, I thank my noble friend for that reply. However, are the discoveries so far not sufficiently encouraging to provide at least the potential for future energy policy? Will he take that potential into account in making his future plans?

That is a very topical question. We hope that fracking—I use the word, which you might think has come from “Call My Bluff”, advisedly—is about to start in Blackpool. We should have the results of that this week. It is being observed. Once we have the results, we will have further study and a greater awareness of what is potentially there.

My Lords, is the Minister satisfied that fracking is environmentally safe? It has been suggested in parts of the United States that it can cause water pollution. Is my noble friend happy that that is not the case, certainly for the immediate Blackpool operation?

I have just been asked by those on my own Benches what fracking is, so I will further the “Call My Bluff” scheme, if I may. It is hydraulic fracturing—sending in water and chemicals to discover whether there is shale gas there. My noble friend’s question refers to whether the water comes out polluted. It is therefore very important that the Environment Agency is on hand to establish whether it does.

Is the Minister satisfied that the announcement in the Budget of a floor price for carbon, to be introduced from 2013, will not discourage investment in this extremely promising source of abundant and cheap energy?

My Lords, it is abundant and cheap in America, where a great amount of it has been found—three times the supply, in fact. However, we have different problems here in the UK. We have a high population density and are unsure of the reserves. There are all the planning issues that go with high population density. Therefore, it will not necessarily at this point mean a huge surge in the gas supply in this country. However, the point that my noble friend makes about taxation and the carbon floor price will be taken into account with this technology.

My Lords, the noble Lord, Lord Teverson, rightly mentioned water pollution. Is one of the problems of exploiting shale gas in a country such as ours not that it requires huge quantities of water? When we are likely to face water shortages in the near future, would that not seem to be rather an unwise thing to do? Is it not clear that the biggest consequence of shale gas will be the exploitation of the enormous American supplies, which are already having an impact on the global gas price?

My noble friend makes a point about the competition that American shale gas has brought to the gas supply. That is very valuable to us now that we are net importers of gas. We hope that it will compress the price of gas. As to water, it has been pointed out that we are an island and there is a lot of water around us. I do not think we will end up with a huge water shortage, provided that we use the right water.

Can my noble friend indicate what other parts of the United Kingdom are undertaking exploratory work in shale gas?

My Lords, they are largely in the area around Blackpool. I understand that there will be some investigation in Southport and on that coastline. I am not a geologist but it presumably links in some form to Morecambe Bay. That is largely the area that is being investigated.

I know the Minister is aware that there are concerns, as we have already heard, that there might be risks associated with obtaining shale gas. Why then have the Government not waited for the Select Committee in the other place to report fully on the inquiry that it is undertaking at present, or for the report from the US Environmental Protection Agency on the risk to humans and the environment? That information would have been very helpful to the Government before proceeding. To reassure people who have those concerns, what evidence does the Minister have that it is safe to proceed?

We have evidence in the United States, as has been referenced. This has been going on for some time, so it is a proven technology. As I mentioned, the Environment Agency is on site to ensure that the process is taking place properly, so I am very comfortable with that. This is not a new technology. We have been using the fracking process in gas development for a very long time, so we have the safeguards in place.

Does the Minister agree that some of the difficulties with shale gas exploitation in North America and elsewhere have arisen because of an unsatisfactory regulatory regime or through regimes being put into place too late? Is he satisfied that the existing regulatory regime that would cover shale gas exploitation in this country is adequate and derives full benefit from the experience of shale gas exploitation elsewhere?

The noble Lord is a great expert in this field. However, we have been exploring gas in this country for many years and have a very long knowledge of it. We have extremely sound regulation, but that does not mean that we are complacent about it. We have a very sound industry structure that has stood the test of time, and a great deal of knowledge.