Report reveals 'huge prize' for shale exploitation

Published on Thursday, 24 April 2014 11:32
Written by Govtoday staff

A shale gas supply chain report showing huge potential economic benefits to the UK economy and measures to minimise the environmental impacts of shale gas have been announced by the government.

Business and energy minister Michael Fallon has today:

  • Welcomed an EY shale gas supply chain report that estimates a potential £33bn benefit to the UK economy and over 64,000 jobs.
  • Fully accepted the recommendations of the MacKay/Stone report to monitor the carbon footprint of domestic shale gas.
  • Announced £2m competition by the Technology Strategy Board to support innovative ideas to produce or explore for shale gas, particularly focused on projects reducing environmental impact.

Shale gas could create a new onshore supply chain market for equipment, services and skills across a number of industry sectors worth up to £33bn by 2032, creating over 64,000 jobs, according to the EY report published today by trade body United Kingdom Onshore Operators Group (UKOOG).

The UK could also lead the way in technology and skills across Europe, a significant and untapped market, adds the report, commissioned by UKOOG and part funded by the Department for Business Innovation and Skills.

The report sets out UK industry sectors that could benefit from UK shale development include:

  • Specialised equipment and skills for hydraulic fracturing operations worth £17bn.
  • Waste management, storage and transportation requirement of £4.1bn.
  • Steel requirement of £2.3bn.
  • New rig manufacturing industry worth £1.6bn.

The report projects that a flourishing shale gas industry in the UK would lead to the employment of over 64,000 people at peak employment, most of them in the supply chain.

A key part of the government's long-term economic plan to secure Britain's future is to back businesses with better infrastructure. That's why the government is committed to shale - it will mean more jobs and opportunities for people, and economic security for our country.

Business and energy minister Michael Fallon said: "This report shows the huge prize at stake for the UK in terms of jobs and manufacturing in the supply chain for our onshore oil and gas industry.

"Shale gas has the potential to kickstart a whole new industry, building on the world leading expertise the UK already has in the energy sector. There will be significant opportunities across the steel, manufacturing and engineering industries as shale develops.

"This government is fully committed to ensuring the UK not only benefits from the energy security shale gas could provide but also maximising the economic benefit across the country. It's time to get ready for shale."

The government has also accepted all the recommendations in the report that assesses the potential greenhouse gas (GHG) emissions from production of shale gas in the UK by Professor David Mackay, DECC chief scientific advisor, and Dr Timothy Stone CBE, the former senior advisor to the secretary of state for energy and climate change.

The government has committed to:

  • Pursue a detailed scientific research programme to monitor emissions relating to shale gas exploration and production, to increase the evidence base and inform regulatory monitoring.
  • Require shale firms to use the best technologies available to capture emissions from operations.
  • Research with industry new techniques to minimise GHG emissions, water demand and vehicle movements.

DECC and the Technology Strategy Board are providing £2m funding for projects run by firms with innovative ideas for improved or new techniques to produce or explore for shale gas, including environmental management and reservoir monitoring.

These projects can attract up to 75% of public funding. This will open up opportunities for UK business to show their innovation and lead the way in producing green technologies.

Energy and climate change secretary Ed Davey said: "We must explore the benefits and investment shale gas may bring but that should not come at the expense of the environment.

"Over the past year the scientific evidence has allowed us to conclude that shale production can be managed effectively as long as best practices are implemented and enforced.

"Today, by fully accepting the recommendations of the Stone/MacKay report, we are setting out how we will regulate and monitor shale gas keeping our carbon emissions to a minimum.

"This £2m funding we have announced shows our continuing commitment to remain at the forefront of new technology and techniques to efficiently and cleanly explore and produce shale gas."

Last week's publication of the 5th assessment by the UN Intergovernmental Panel on Climate Change highlighted that gas has a role to play in cutting carbon emissions to fight the effects of climate change. Co-chair of the report's working group Ottmar Edenhofer said it was "quite clear that shale gas can be very consistent with low carbon development and decarbonisation".

Mr Edenhofer stressed that the shale gas revolution could be "very helpful" but only if the world committed to tackling climate change and did not simply burn more gas as well as coal.

DECC are requiring firms to assess the potential environmental risks from their projects at an early stage so that these can be addressed and communities can engage early, as recommended to us by the Royal Society and Royal Academy of Engineering. Today we launch guidance to industry on the Environmental Risk Assessment.

Source: Decc

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