The UK needs to allow more shale gas exploration wells nation-wide before a reliable picture of the effect of a shale industry on the country can be properly formulated, the Task Force on Shale Gas said late Monday.
The Task Force on Shale Gas -- launched in September 2014 to provide an impartial, transparent and evidence-based assessment of a potential UK shale gas industry -- said in a report that a UK shale gas industry could create 74,000 jobs and attract investment of GBP3.7 billion ($5.6 billion) each year, but would impact both private property values and the availability of living spaces.
"Before the costs and amounts of gas in place that can be recovered can be reliably estimated, it is essential to accumulate information and experience by drilling and testing many exploration wells in many places," the report recommended.
"Without such information, operators cannot make the economic decisions that might lead to the development of a viable industry." The UK is estimated to hold between 23.3 Tcm and 64.6 Tcm of shale gas reserves, with a central estimate of 37.6 Tcm, according to a report published by the British Geological Survey in July 2013 on behalf of the UK Department of Energy and Climate Change.
Recent planning applications for shale gas exploration wells have been mixed, with Cuadrilla being refused permission to drill at two sites in Lancashire in June and Nottinghamshire County Council validating an application for IGas to drill two wells 70 kilometers (43 miles) east of Manchester in late October.
UK SHALE GAS ALONE 'NOT SUFFICIENT TO REDUCE PRICES'
The effect on wholesale natural gas prices in the UK based on potential shale gas production is expected to be limited, with the UK's shale gas output expected to be "small in comparison to the size of the European market."
Moreover, a European-wide shale gas industry is also unlikely to have a large impact, with US LNG set to have a larger medium-term price impact in Europe and forecasts of relatively small production rates from European shale gas wells due to stricter environmental regulations and smaller shale gas reserves.
DOMESTIC ECONOMIC EFFECTS
The estimated number of jobs created by a potential UK shale gas industry could be as high as 74,000, with as much as GBP3.7 billion of annual investment possible.
"Several industries have the potential to benefit from a successful shale industry, as has happened in the US," the report said, noting that cheap natural gas and natural gas liquids have "revived" the US chemicals industry. The UK's fertilizer industry and steel industry -- in the news recently due to job losses in the Northeast -- could also benefit from cheaper raw material costs, the report said.
However, residents with the potential to be located near shale gas operations have concerns over "a perceived negative impact on property values" due to risks of earthquakes and water contamination, as well as a fall in available living space due to an increased number of shale pads, it said.
