Shale Gas

Lord Truscott Excerpts

Tuesday 7th March 2017 Lords Chamber

Asked by

[Lord Truscott]

To ask Her Majesty’s Government what are the economic and environmental benefits of shale gas development in the United Kingdom.

[Lord Truscott (Ind Lab)]

My Lords, in opening this debate, I declare a non-pecuniary interest as vice-chair of the All-Party Parliamentary Group on Shale Gas Regulation and Planning and as a former UK Energy Minister.

This is a controversial subject and, no doubt, your Lordships have heard and will hear many different views. Hydraulic fracturing—fracking—is a technological reality and cannot be uninvented. It is also clear that the Government, and Parliament as a whole, are determined to develop shale gas in the UK. The question is whether this development has been thoroughly thought through in all its ramifications, as we inexorably move towards exploration and production.

Andrea Leadsom, the Minister of State for Energy at the time, said in May 2016 that shale gas could,

“provide jobs for our people and tax revenues for our society”,

and

“help the UK to decarbonise while we move away from coal to lower-carbon energy sources”.

It could secure energy and bring economic growth and job creation.

The suggestion has been that shale gas development could create between 60,000 and 70,000 jobs, stimulate billions of pounds of investment in the UK, provide energy security and help secure “a bridge to a greener future”. On the face of it, these arguments seem compelling, except that none of them is quite as straightforward as it initially sounds.

Let me start with energy security. The assumption is that we lack it. A House of Lords Economic Affairs Committee report into shale specifically referred to the reliance on Russia, Europe’s biggest gas supplier. The only problem here is that the UK imports virtually no gas from Russia and is unlikely to import significant amounts in the future.

In a Written Answer to me last September, the Minister, the noble Baroness, Lady Neville-Rolfe, responded:

“There are no pipelines that allow Russian gas to flow from Norway (our biggest source of imports) or via shipped Liquefied Natural Gas (which comes mainly from Qatar). Some gas of Russian origin may enter via pipelines from Belgium and the Netherlands. However, Belgium has reported virtually no Russian gas imports over the past three years. The Netherlands does report some Russian imports, but we estimate Russian gas via this route would account for less than 1% of the UK’s gas imports and, therefore, much less than 1% of our total gas supply”.


In fact, the UK has now started receiving direct imports of US LNG so, unless we regard Norway and the US as unreliable partners, the energy security argument does not stack up. Of course, it is always better economically to have our own gas than to import it. There may be some environmental benefits if the amount of carbon produced is less, but that is by no means currently certain.

The billions of pounds of investment and thousands of jobs are presently speculative. Hopes of commercial-scale shale in Poland have faded and many of the majors have already pulled out. The number of licences have been halved. Those leaving include Exxon, Chevron, ConocoPhillips, Talisman and Marathon. Put simply, UK shale may or may not be commercially viable. No one will know until large-scale exploration establishes the level of exploitable reserves. This is, of course, a matter for the companies involved, but the experience in Poland shows that you should not count your chickens or your prospective tax-take.

As for the thousands of jobs, these may or may not just replace those already lost in the North Sea, partly as a result of the hydrocarbon glut and price collapse caused by the US shale revolution in the first place. Oil and Gas UK estimates that 120,000 jobs have been lost in the wider British economy due to the North Sea oil and gas downturn, with a barrel of crude falling from about $115 to around $50 since 2014, with a close correlation with gas prices. The US has also experienced the boom and ghost town experience, where some shale operators which initially did well went bust in the downturn, impacting local economies.

Significant UK shale production and downward pressure on prices could further undermine North Sea operators and squeeze margins in what is already one of the most expensive places in the world to exploit oil and gas. So what about a “bridge to a greener future” and the effect on the environment? Well, this is one of the most contentious issues of all. No doubt the Minister will repeat that the UK’s regulations are some of the strongest in the world and that we have 50 years of successful and safe onshore and offshore oil and gas extraction. Shale gas developments will be very closely monitored, shallow drilling will be banned and seismic movements monitored. That is all true, no doubt, but as Piper Alpha, Deepwater Horizon and the Exxon Valdez disasters showed, accidents do happen. No hydrocarbon explorer or producer can 100% guarantee the integrity of its wells, even if they are much deeper than aquifers. Water contamination is possible and earthquakes are inevitable. We have had several hundred already in the UK as a result of mining operations, quite apart from the notorious Cuadrilla quakes outside Blackpool. The US has had thousands of earthquakes, now indisputably linked to fracking. I am still unsure how the UK will avoid the same fate as the US. Perhaps the Minister will use this opportunity to explain that.

By the very nature of fracking and unconventional gas, where production falls off after 18 months, the UK will need to develop thousands, not hundreds, of shale gas wells. This has caused problems in the wide open spaces of the US. How will it work in this densely populated island of ours? What about the truck movements? In the US, the environmental picture has not been great. In 2014, Oklahoma experienced 585 earthquakes with a magnitude of three and over. According to the US Geological Survey, these were caused by the disposal of wastewater reinjected into the wells by the shale operators. A study by the University of Alberta, co-authored by the Geological Survey of Canada, confirmed a definitive link between fracking and almost every large earthquake recorded in Alberta and British Columbia since 1985.

The Pennsylvania Department of Environmental Protection reported that 234 private drinking water wells in Pennsylvania have been contaminated by drilling and fracking operations in the last seven years. Meanwhile, a US Environmental Protection Agency scientist identified groundwater pollution in Pavillion, Wyoming, as a result of fracking. A separate report in April 2016 concluded that there were,

“dangerous levels of chemicals in the underground water supply used by the 230 residents of Pavillion ... Levels of benzine, a flammable liquid used in fuel, were 50 times above the allowable limit, while chemicals were dumped in unlined pits and cement barriers to protect groundwater were inadequate”.

Last week, the leadership of the Pawnee Nation, a Native American tribe, filed a lawsuit against multiple Oklahoma oil companies, claiming that their operations caused a 5.8 magnitude earthquake.

Furthermore, there is serious concern about the amounts of methane released during fracking. Recent attempts in the US under President Obama to limit methane emissions look likely to be overturned by President Trump. Of course, the industry will tell us that it will all be different in the UK. It cannot happen here, the US is different and the regulations will be tighter. Perhaps the Minister would like to comment further on that. However, some states and regions think differently. Maryland in the US has put a moratorium on fracking, as have Scotland, Northern Ireland and France. Fracking was banned in New York in December 2014. What do they know that we do not, or do Her Majesty Government have a monopoly of wisdom on the subject? The UK’s Labour Party also supports banning fracking, with shadow energy Minister Barry Gardiner stating:

“The real reason to ban fracking is that it locks us into an energy infrastructure that is based on fossil fuels long after our country needs to have moved to clean energy”.


We will continue to be dependent on fossil fuels in the foreseeable future, at least up to 2040 or 2050. Her Majesty’s Government are committed to reducing our carbon emissions by at least 80% by 2050, compared to 1990 levels. Professor Kevin Anderson, former director of the Tyndall Centre for Climate Change Research, has said:

“From a climate-change perspective this stuff simply has to stay in the ground”.


The Environmental Audit Committee reported in 2015:

“Ultimately, fracking cannot be compatible with our long-term commitments to cut climate changing emissions unless full-scale carbon capture and storage technology is rolled out rapidly, which currently looks unlikely”.


The Committee on Climate Change also thought that the implications for UK shale gas exploitation for greenhouse emissions,

“are subject to considerable uncertainty”,

and are not compatible with UK carbon budgets unless strict measures are taken.

Finally, a recent survey showed that only 19% of people back shale exploration in the UK despite the various inducements offered to local communities. The Financial Secretary to the Treasury said in the other place last November that the Prime Minister has been very clear:

“Local people must come first”—[Official Report, Commons, 21/11/16; col. 727.]


Will the Minister therefore pledge that local communities will in future decide local planning issues?