Bloomberg: fracking unlikely to bring down UK energy bills
Last updated on 3 October 2013, 5:27 pm
Submission to UK Parliament suggests shale gas could cost 50% to 100% more in UK than USA
Bloomberg New Energy Finance (BNEF) has submitted evidence to the UK Parliament showing fracking will not bring down gas and electricity bills.
It says there is “significant potential” for shale gas in the country, but is likely to cost between 50-100% more to extract than in the USA.
The research company’s submission shows that the costs of shale gas extraction in the UK are likely to be between $7.10 and $12.20 per MMBtu (million metric British thermal units), compared to figures of $5-6 per MMBtu for large fields in the USA.
“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,” said Mike Lawn, head of gas and power for BNEF.
“Unfortunately, the UK is highly unlikely to benefit in the same way.”
The figures are likely to be picked up by opponents of fracking in the UK, who argue it has been over-hyped and could have serious environmental implications.
A UK Government report published last month warned that drilling for shale gas was likely to increase greenhouse gas emissions without strong global policies to fight climate change.
Prime Minister David Cameron has been a vocal backer of the technique, arguing it will bring down energy bills, create jobs, and bring money to local neighbourhoods.
The USA’s spectacular finds of shale gas over the past two decades have seen it steadily replace coal as a primary fuel to generate electricity, and enabled the country to stay on target to cut emissions 17% on 2005 levels by 2020.
The difference between cost estimates in the UK and USA reflects factors including limited availability of drilling service providers in the UK, higher land acquisition costs and the lack of gas infrastructure.
But the BNEF evidence is very clear when it says that even under the most favourable conditions, 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,” the report says.