Shale Gas

David Mowat Excerpts

Tuesday 30th June 2015 Westminster Hall

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I congratulate the hon. Member for Thirsk and Malton (Kevin Hollinrake) on obtaining this debate. It is important because it goes to the heart of the distinction between what it is to drill an exploratory well and what it is to have a fracking industry in any particular part of the country. He clearly set out the safeguards that are needed as an absolute baseline for any fracking at all to take place, as well as the cumulative effects of fracking and the extraction of shale gas on particular areas and what impact that has on the community in the longer term, as well as the impact on the consequential things needed to keep that industry in place—whether that is the disposal of wastewater, consideration of the intensity of various fracking pads, or a range of other issues.

I shall concentrate for a moment on thinking about what fracking as an industry might look like in this country, as opposed to what an occasional exploratory well might look like. The proposition in front of us is not for occasional bits of exploration; it is “Go for it. Let’s have a substantial fracking industry. Let’s change the nature of how we obtain our gas supplies.” The argument in favour of fracking is that it is a substantial addition to our national security. Some of the further reaches of the argument relate to bringing prices down, but that is quite wrong and misunderstands the nature of gas trading in Europe. There would not actually be any great difference in gas prices unless the whole of Europe decided that it would frack everywhere in Europe.

The argument that a substantial fracking industry might be good for national security is the main argument put forward for it.

[David Mowat (Warrington South) (Con)]

It is true that there is no reason to believe that prices in Europe will come down by a factor of four, as they have in the United States, but it is also true that if we have more of something, the price is likely to come down. Increasingly, our strategy is to buy gas from Russia and liquefied natural gas from Qatar. That is not a viable way forward.

[Dr Whitehead]

The hon. Gentleman is right to say that we buy some LNG from Qatar, but only about 0.5% of the UK supply comes directly from Russia. Buying gas from Russia is really not an issue for this country, although it is for some other parts of Europe. My point was that the international trading arrangements for gas have three nodes across the world—the far east node, the north American node and the European node—and gas is traded and pipelined within those nodes. The product of shale gas in this country would simply go into one of those nodes and be traded across them, and the price would even out. That is my point about whether a shale gas industry would mean a substantial reduction in price.

I want to concentrate on what a shale gas industry in this country would look like. We have only one serious document sponsored by the Department of Energy and Climate Change that looks at the consequences of a serious industry. My concern is that that document, a strategic assessment produced by AMEC a little while ago, estimates the output from shale gas wells to be 3.2 billion cubic feet per well over 20 years. As an average output for wells in the UK, that would equate to the best level ever obtained in any well in north America. Conditions for shale gas in the UK are very different from those in the United States, and the likelihood is that the output per well would be far lower than the very best output in the US. On top of that, the current average US well output is about 0.8 billion cubic feet—far lower than the best ever output—and, more to the point, there is a rapid rate of depletion per well.

In fact, a shale gas industry in the UK would see relatively low gas output per well, with a fairly rapid depletion rate and the necessity for re-fracking, probably once every seven or eight years, were the well to be retained in production over 20 years. It is not a question of a well pad being drilled and then the equivalent of “nodding donkeys”, such as we have at Wytch Farm, nodding away quietly in the countryside. The process of trucks, waste water and re-fracking would have to be repeated every few years on that well pad in order to keep it going. Even then, the depletion rate is more rapid after the second re-fracking, after which the well goes out of business.

[Dr Whitehead]

The hon. Gentleman is absolutely right: the location of various wells would require either that the gas was stored in tanks near the well and then transported or that new pipelines be constructed to take it away. A pipeline could not be organised in the same way as for the North sea.

On the basis of the scenario I have outlined for what a shale gas industry would look like in this country, the estimates are that, in order to divert, let us say, 10% of our gas supply from conventional gas into shale gas and remove part of the need to have gas from Qatar or Russia—10% is a modest diversion—we would need to drill somewhere between 10,000 and 18,000 wells, and they would have to be re-drilled over a period. Of course, those wells would not be evenly distributed throughout the country—Members would not have around two wells per constituency; wells would be concentrated in the two areas of the UK where there are reasonable shale plays. Those shale plays are geologically faulted and difficult to get at; nevertheless, they are the main areas: Bowland shale in the north-east of England and across the weald in the south.

We are looking at 10,000 to 18,000 wells concentrated in two parts of the country. As the hon. Member for Thirsk and Malton said, that would probably result in the very intensive geographical concentration of fracking in those areas, with a substantial geographical concentration of take-off facilities and of the need to remove waste water, 7 million gallons of which per well will have to be removed and disposed of fairly safely as hazardous waste. We do not currently have the ability to do that in this country. We can do it for the occasional well, but we would not be able to do it very easily without substantial new facilities for such a concentration of hazardous waste, which would be repeated as the wells were re-fracked.

We need to ask whether all that is a realistic prospect compared with the gain that might come from extracting the additional gas. It seems to me that, if that is what we want for our energy strategy, there will be a very high price to pay throughout the country for a marginal gain. Are we really, seriously committing ourselves to that? Recent events in Lancashire demonstrate that it is rather difficult to get two wells into the ground, let alone 18,000 over a longer period. I am worried that we are setting ourselves up by assuming that some of our future energy supplies are going to be pencilled in for this particular route, when either there are unacceptable costs to reaching that goal or, to make the industry work, we will have to build a whole lot of infrastructure on the back of what we already have.

Having considered at how a UK shale gas industry might look, it might be interesting to look briefly at an alternative industry: green gas, which is the production of gas by anaerobic digestion plants and associated methods. It has been projected that, by using most of the available feedstock that could go into anaerobic digestion plants, we could probably divert between 5% and 10% of our domestic gas supply requirements. When I say “divert”, I mean literally divert, because green gas AD plants can now inject gas directly into the mains.

There are eight green gas plants currently operating in the UK. I recently visited one in Poundbury, which, at certain times of the year, injects gas into the mains grid. People living between, roughly speaking, Lyndhurst and Weymouth will receive green gas from the Poundbury anaerobic digestion plant at various times of the year. There is direct substitution of the existing gas going into the mains. An AD plant would probably produce some 6 million cubic metres over 20 years. A well could produce rather more at some 20 million cubic metres, but it would have to be re-fracked several times. After that, the well would be capped and the operators would walk away. Because plants and animals continue to produce feedstock, AD green gas plants would simply continue. If we are considering changing from gas imports to domestic production for national security purposes, it might be a better idea to build a large number of AD plants and have one at the end of every lane.

[David Mowat]

I support green gas and anaerobic digestion. The hon. Gentleman said that the gas could be injected directly into the mains gas system. Is he implying that the characteristics of shale gas or other unconventional gas mean that they cannot be put directly into the grid? I do not follow.

[Dr Whitehead]

I am sorry if I unintentionally misled the hon. Gentleman. Shale gas can of course be injected directly into the grid. AD-produced gas has a slightly different calorific value, but with minimal treatment it can actually go directly into the grid in the same way as shale gas, so there is a direct comparison in production and in end use between the two processes. I suggest that if we want an industry that diverts substantial amounts of gas from import, building up AD plants and injecting green gas into the system might be a more environmentally sound and less intrusive way of doing so which might be more acceptable to the communities affected by any potential intensive fracking.

I appreciate that a farm AD plant at the end of a lane is not exactly the prettiest sight in the world, but it produces gas at a near zero overall net carbon cost, because it simply recycles what has captured carbon in the first place, and produces a different pattern of use. In the long term, it is potentially—

--- Later in debate ---

[David Mowat (Warrington South) (Con)]

In my three minutes, I shall make just a couple of quick points.

Although I support fracking, I agree with the three points made by the hon. Member for Fermanagh and South Tyrone (Tom Elliott): there can be no issue with public health, we should have done more to bring local benefits to the fore, and the environment cannot, of course, be damaged. In the end, those things will have to be assessed by people who are independent and have the confidence of the local community. As my hon. Friend the Member for Tiverton and Honiton (Neil Parish) said, it is clear that, whatever else we take from the debate, we must accept that we have not brought local people with us on fracking. However, every form of energy has issues, whether it is solar, wind or nuclear, which is still by far and away the dominant form of decarbonised energy in the world. Fracking also has issues, and we have to work through that to decide whether fracking is worth it. Members have said that fracking may not be cost-effective, and if it is not, it will not be done, so that problem goes away.

I want to talk a little about the three elements of UK energy policy: low-cost energy, sustainable energy and energy security. Gas has a major role to play in all those, but the fact is that our own gas is running out. Output from the North sea is 70% of what it was 10 years ago. Some 85% of the energy used in this country still comes from fossil fuels, with coal and oil making up by far and away the majority. If we could replace all the coal being used in the world with gas, that would reduce global carbon emissions by the same amount as a fivefold increase in renewables. That is something we should be going after, and parties that believe in a low-carbon future should embrace it. There are, therefore, environmental advantages to fracking.

We have talked about cost, and it has been said that fracking in the UK may not transform the economy, as it has in America. In the United States, there is massively lower fuel poverty—I have not heard those words today. We may well not succeed in reducing our gas bills by a factor of four, with the same transformative impact that has been seen in American manufacturing. Manufacturing is relocating from parts of the UK.

[Peter Grant (Glenrothes) (SNP)]

Does the hon. Gentleman not accept that the reduction in gas prices in the United States of America simply will not happen in the United Kingdom, so it is not appropriate to talk about fracking being a game changer in terms of reducing fuel poverty?

[David Mowat]

In an intervention I said I thought it unlikely that gas prices would be reduced by a factor of four. I also think it unlikely that if we have more gas in Europe there will not be a reduction in gas prices, with a knock-on impact on fuel poverty and on the competitiveness of our chemicals industry, what is left of our steel industry, and our aluminium industry. Those industries have to a large extent left our country, not only for south-east Asia but for other parts of Europe with lower energy prices than ours where coal continues to be burned.

The issue before us is the fact that we produce roughly 80 GW of electricity in this country, and 24 of them will be turned off by the end of the decade. We already have a 2% capacity margin for 2017. Members in this Chamber—not just those on the Front Benches—must be accountable on the question of the lights going out. Shale gas is not a panacea and I do not argue that it is, but we should explore it responsibly and take into account the environmental issues raised today. However, we should not fail to understand that our country is not infinitely rich. The resources in the North Sea that kept large parts of our country going for a long time are running out. We import more and more of our gas from Qatar and increasingly, potentially, from Russia. Parliamentarians all have a role, and a responsibility for the UK as a whole to take those issues seriously.