Cuadrilla has announced it
will appeal Lancashire County Council’s decision to refuse planning permission
for both its shale sites in the Fylde. The decision is widely regarded as
a defining moment for the industry on British shores, but a fact being
overlooked is that the UK is likely to be consuming shale gas as soon as the
end of 2015.
As National Grid issues
increasing concerns over capacity margins this winter, advanced plans to
transport US shale to the UK are already underway. The first cargo of the
USA resource may reach Milford Haven or the Isle of Grain Liquefied Natural Gas
(LNG) terminals once the Sabine Pass terminal in Louisiana is completed, which
will turn shale gas into a transportable liquid form.
BG Group, Total and Centrica
have all booked firm capacity rights in the Sabine Pass project and will be
able to bring liquefied shale gas to European – including British –
The move is seemingly proof
of the oft-touted ‘shale gas revolution’ in action. Only a decade ago the
USA had over 50 applications for LNG import terminals to feed its spiralling
energy requirements. Now, with development of numerous shale gas basins,
the US is able to confidently export gas globally, driven by higher global gas
prices than in the USA (around half those in Europe and a quarter of some Asian
These latest developments
will see the USA reap the rewards of unprecedented LNG investment. Having
satisfied domestic demand, the federal authorities have approved export through
six terminals under construction and a further eight facilities in the planning
and approval stages.
So what does this mean for
the UK? One thing is for sure, the British will be heating their homes
and cooking their meals using shale gas. Consumers will also be relying
on electricity generated using such imported methane via combined cycle turbine
Grangemouth will also be
accepting liquefied ethane in 2016 as INEOS unveils its fleet of transatlantic
‘dragon’ ships (imports to the company’s Norwegian facilities will happen in
2015). Ethane is the primary component for the production of many
chemicals including plastics, pharmaceuticals and construction materials.
So for Britain, it’s not a
question of if we should consume shale gas as part of our energy mix, but
whether the UK can and should produce its own. Of course, UK production
delivers greater rewards. The UK would derive benefits from tax receipts
to the Treasury; increase energy security and stability; and create and
safeguard a significant number of jobs.
Many across the industry
often point out that there are no sensible scenarios for the UK’s energy supply
that do not feature gas as a bridging fuel to a decarbonised future. Of
the four scenarios produced by National Grid, all put gas as a major primary energy
source to 2035 and beyond – including the ‘Gone Green’ option. This
coincides with warnings that spare electricity capacity is likely to be just
1.2% this winter – the worst for a decade.
The question therefore is not
‘if gas’, but ‘which gas’? Whilst imported shale gas may contribute to
our energy supply very soon, it’s unfortunate that the financial benefits of
this will mostly be reaped across the pond until such time as UK shale gas
exploration can determine potential benefit to the UK.