Shale Gas

Roger Gale Excerpts

Thursday 3rd November 2011 Westminster Hall

[Mr Roger Gale (in the Chair)]

I will explain the process for the debate this afternoon, which is slightly unusual because we have two reports. We have agreed—I hope that Members present will approve—to split the debate in two, although not necessarily into two equal halves. I understand that the first report may attract more comment than the second, and on that basis I am prepared to let the first debate run for slightly longer than might otherwise have been the case. The second debate will therefore be slightly shorter; I hope that is okay. In such cases, the convention that a Member may speak only once falls by the wayside. As we will treat our proceedings as two debates, I am perfectly content for Members who have participated in the first debate to contribute also to the second, should they choose to do so. I trust that whoever takes the Chair at 4 o’clock will feel the same. If that is not clear, hon. Members should ask and I will clarify the matter further.

[Mr Tim Yeo (South Suffolk) (Con)]

Thank you for that clarification, Mr Gale. I know that it will be welcome to members of the Energy and Climate Change Committee, who regard the reports as separate and would prefer to have two separate debates, and it is helpful of you to accommodate us. I shall begin by drawing attention to my entry in the Register of Members’ Financial Interests regarding a number of businesses that relate to the energy and transport industries.

I am pleased to have this debate; its timing could hardly be better and it is almost prescient in its choice of subject. Since the Committee published its report on shale gas last May, the subject has become even more topical. Potential UK reserves now appear to be much larger than first thought, and the conclusions of the team that investigated the seismic events—what I would think of as earth tremors—were also published this week. This debate gives us the chance to address concerns about the potential impact of shale gas development, and to consider those concerns in the context of the fact that enough shale gas reserves may exist in the UK to make the country self-sufficient in gas supplies once again, possibly for a long time.

Like conventional natural gas, shale gas is mostly methane. In conventional gas exploration, when a well is drilled into the formation in which the gas is held, the gas comes to the surface under pressure. In the case of an unconventional gas such as shale gas, the gas remains trapped in the pores of the rocks. To create a pathway for the gas, the rock is fractured by injecting large volumes of high-pressure fluid—mostly water but with sand to keep the fractures open—and chemicals to reduce the friction of the fluid in the well pipe, and prevent anything from growing in the well. That process is known as hydraulic fracturing and has been going on for many decades, particularly in the United States. There are, however, concerns that the chemicals used in hydraulic fracturing, and the methane released from the shale formation, could get into underground water aquifers—those concerns have been well publicised. The Committee’s report addressed that and other issues directly, and made several recommendations.

In particular, we noted that,

“hydraulic fracturing itself does not pose a direct risk to water aquifers, provided that the well-casing is intact before this commences. Rather, any risks that do arise are related to the integrity of the well, and are no different to issues encountered when exploring for hydrocarbons in conventional geological formations. We recommend that the Health and Safety Executive test the integrity of wells before allowing the licensing of drilling activity.”

We also recommended that,

“the Environment Agency should insist that all companies involved in hydraulic fracturing should declare the type, concentration and volume of all chemicals they are using.”

That practice is not universally followed in the United States.

The report continued:

“We recommend that before the Environment Agency permits any chemicals to be used in hydraulic fracturing fluid, they must ensure that they have the capabilities to monitor for, and potentially detect, these chemicals in local water supplies.”

Finally, we recommended that both the Department of Energy and Climate Change and the Department for Environment, Food and Rural Affairs,

“ensure that the Environment Agency monitors randomly the flowback and produced water from unconventional gas operations for potentially hazardous material that has been released from the shale formation. In order to maintain public confidence in the regulators—and in the shale gas industry—we recommend that both water and air be checked for contamination both before and during shale gas operations.”

Yesterday the Environment Agency published a follow-up to its evidence to my Committee, which included data from samples of flowback fluid—the fluid that returns to the surface through the drilled well—that the agency has taken over the past six months at the Preese Hall site operated by Cuadrilla. It stated: “We have found that the flowback fluid contained high levels of substances dissolved from the rocks such as chloride, sodium, iron and dissolved materials. They also contain very low levels of naturally occurring radioactive minerals, principally radium-226, at levels similar to those found in granite rock. At the levels found, we would not anticipate any threat to human health or the environment. The results of this analysis have to be viewed with caution; they are only indicative of the radioactivity present.”

Maintaining the confidence of the public—again, something that has not been universally achieved in the United States—is absolutely essential if UK shale gas reserves are to be exploited. Cuadrilla is sensitive to that, and I urge it to continue its policy of engagement with the local community, and to be as open as it can about its activities, the materials it uses, the practices it follows and so on. Such an approach is even more necessary in light of the seismic events that have occurred since the Committee visited the site earlier this year.

In connection with those seismic events, members of the Committee also visited Texas and had discussions in Washington DC with regulators, legislators, industry representatives and environmental groups. We discussed the induced seismic events that occurred in Arkansas, which related to the underground injection of waste water generated from shale gas exploration and production elsewhere, rather than from a process of fracking. In evidence from the Geological Society, the Committee was told that induced seismicity is not thought to be a significant risk in the UK. During oral evidence from Professor Richard Selley, a petroleum geologist at Imperial college, we asked whether there is evidence to suggest that mini-earthquakes could happen as a result of fracking. He told us that individual claims often produced what is called the Francis Drake effect; they show something that was already there but the oil company gets the blame.

The tremors near Blackpool on 27 May had a magnitude of 1.5, and those on 1 April a magnitude of 2.3. Cuadrilla responded by postponing any further fracking operations while the British Geological Survey shared seismic data on the events with Keele university and DECC. The British Geological Survey issued a press release and stated that fracking may have been the cause, although it added:

“It is well established that fluid injection can induce small earthquakes…We would not expect earthquakes of these relatively small magnitudes to cause any damage.”

To put that into context, the European microseismic standard classifies a magnitude 1 earthquake as one that is not felt, a magnitude 2 earthquake as scarcely felt, and a magnitude 3 earthquake as weak. A quick inspection of the British Geological Survey’s seismology webpage shows that, in the past month, the following earthquakes have taken place in the United Kingdom: Caernarfon, magnitude 1.2 on 24 October; Shrewsbury, magnitude 1.1 on 22 October; the northern North sea, magnitude 3.5 on 21 October; and Glen Sheil, Highland, magnitude 2.4 on 20 October. There were several others, the details of which I will not bother to read out to the Chamber, but that shows that a range of such events is occurring almost every week.

Small-magnitude earthquakes are by no means uncommon in the British isles. Nevertheless, any potential correlation between one of these events and hydraulic fracturing activity must, of course, be examined carefully. The report published yesterday concluded that Cuadrilla’s activity triggered—the word used was “triggered” rather than “caused”—very low level seismic activity and that that posed no identifiable threat to people or property in the nearby area. The report concluded that it was a unique series of events and circumstances; 850,000 wells have been explored around the world with virtually no similar events recorded.

The seismic activity was caused by a very unusual combination of factors, including the specific geology of the well site, coupled with the pressure exerted by the injection of the hydraulic fracturing fluid. The Preese Hall-1 well encountered a critically stressed fault, requiring just a small energy input to initiate seismic activity. The fault was sufficiently porous to accept a large volume of fluid and brittle enough to be prone to failing seismically. Those conditions existed before the hydraulic fracturing. That combination of factors was rare and is therefore unlikely to be repeated. Cuadrilla’s hydraulic fracturing events take place far below the earth’s surface, reducing the likelihood of a seismic event of less than 3 on the Richter scale having any impact on the surface. The report also concluded that the fluid used in the fracking process cannot escape the rock that is deep underground and therefore cannot contaminate the local environment.

The findings of the study have enabled scientists to establish a system to monitor seismic activity at Cuadrilla’s site, and facilitate the creation of an early-warning system that would allow Cuadrilla to detect the first signs of any seismic activity and to take steps to limit its escalation. The study concludes that even without the early-warning system, the largest seismic event that experts suggest is possible is one of magnitude 3, which is unlikely to be noticeable on the surface if it occurs at a depth of 3 km, where the fracking takes place. The proposed system already operates successfully in Germany and in the Netherlands.

Cuadrilla is, of course, in close contact with the Department, the local council and representatives of the local communities. I realise that my hon. Friend the Minister may want a little more time before deciding what the Department’s view is about continuing drilling on the site. For what it’s worth, my judgment is that on the information available at present, there is no need to impose a moratorium. Any decision about a moratorium must recognise that a degree of risk exists in all operations to explore for and exploit mineral resources, whether that is oil, gas or coal. The judgment for Ministers must be whether that risk is acceptable in the light of each set of circumstances. I believe that the regulatory regime in Britain is robust and effective at assessing risks and enforcing any necessary safety measures.

In this context, it is also important to assess potential benefits to the UK of exploiting our shale gas reserves. On that subject, matters have moved on significantly since our report was published in the spring. In our report, we concluded that

“shale gas resources in the UK could be considerable. However, while they could be sufficient to help the UK increase its security of supply, it is unlikely shale gas will be a ‘game changer’ in the UK to the same extent as it has been in the US.”

During our inquiry, the only calculations available were based on analogies to similar shales in the US. The British Geological Survey’s estimate that UK shale gas reserve potential could be as large as 150 billion cubic metres was the most up to date at that time. For comparison purposes, in 2009, UK total demand for natural gas was approximately 100 billion cubic metres and we imported about 10 billion cubic metres of liquefied natural gas.

On 21 September this year, Cuadrilla released its estimates, based on samples from exploratory drilling, of the gas in place in its area of operations in Lancashire. “Gas in place” refers to the estimated total amount of shale gas in the formation. It is not the same as reserves. The actual amount recoverable depends on a range of factors. Cuadrilla’s results from the first two wells suggest that the gas in place equates to 200 trillion cubic feet. That does not translate directly into 56 years-worth of gas for the UK, because it will not be able to recover all that, but it does mean that a significant amount of gas will be recoverable and it will alter the picture.

During our inquiry, the British Geological Survey told us that the Bowland formation was only part of one of four good plays in the UK, encompassing many areas of the country. On that basis, it seems clear that shale gas has the potential to be a game changer for the UK and to restore the self-sufficiency in gas supplies that we enjoyed in the heyday of the North sea. Of course, the existence of those reserves does not automatically mean that they should be exploited. As our report pointed out,

“in planning to decarbonise the energy sector DECC should generally be cautious in its approach to natural gas”.

That of course includes unconventional gases such as shale. The report continued:

“Although gas emissions are less than coal they are higher than many lower carbon technologies.”

There are five main studies on the greenhouse gas emissions of shale gas. Two say that shale gas emissions could be higher than those of coal, while the three others debunk that analysis and conclude that shale gas is only slightly worse than conventional gas. Either way, the strong probability is that if UK shale gas reserves are exploited, significant new investment in gas-fired power stations will occur. Our report therefore concluded:

“The emergence of shale gas increases the urgency of making carbon capture and storage (CCS) technology work for gas as well as coal.”

Now that negotiations for the first proposed CCS demonstration project at Longannet have failed to reach agreement, the £1 billion set aside in the comprehensive spending review for CCS is available for other projects to be pursued. I strongly urge the Government to apply that to developing CCS for gas.

The decisions taken during this Parliament about energy policy will shape the UK’s energy infrastructure, especially its electricity generating capacity, for decades. The drivers of the policy remain security and independence, lower emissions, and price. Shale gas could help significantly by contributing both to improving our security and independence and to keeping prices down. In the short term, if gas replaced coal, it could also help to lower emissions, although without CCS, gas by itself cannot remain a large component of our energy mix beyond 2030 if we are to achieve the aim set out by the Committee on Climate Change of largely decarbonising the electricity generation industry by then.

I am increasingly sympathetic to the views of Dieter Helm, who suggested that the cost and security advantages, in the short and medium term, of using more gas over the next 15 years are considerable. During that period, the cost of some renewables, such as solar photovoltaics, energy from waste and others, may fall substantially. There is a possibility that new nuclear may also start to make a significant contribution. At a time when consumers are understandably concerned about rising bills, the wisdom of betting the farm on the more expensive and intermittent renewables, such as offshore wind, is increasingly questionable.

It is against that background that decisions about shale gas must be taken. I urge the Government to consider the potential benefits to Britain. There are legitimate concerns, of course, about the environmental impact, and those concerns must not be ignored. However, those who call for fracking to stop completely must produce scientific evidence to justify their demands, and I do not believe that at present such evidence exists.

--- Later in debate ---

[John Pugh (Southport) (LD)]

My constituency is right on the edge of the latest find. I have to declare a sort of interest, because when I originally bought my house, under a 999-year lease, I found the local feudal landlords had mineral rights over my front garden. When I bought the freehold, I obviously took over those rights. My house suffers from tremors, but that is only because eight trains an hour from the Northern line go past my front door. None the less, there is a genuine concern in the area about the exploitation and extraction of shale gas. I will be visiting Cuadrilla tomorrow, coincidentally, to put to it some of the questions that will no doubt come up in this debate.

When I read the report, I was delighted by its excellence and balance. It may surprise you to hear this, Mr Gale, but I do not know much about geology and oil exploration. I was extraordinarily well educated by the report. What I understand, however, is politics, which I have been in for a long time. The two motives that move people in politics are greed and fear, and both greed and fear are in play in this particular issue.

On one side, pictures are sketched of a shale bonanza. The Lancashire find is put at 200 trillion cubic feet. I am reliably informed—well, informed—by a Cabinet Minister that that is almost equivalent to half the entire reserves in the USA. One ponders, I guess, why that has not dramatically affected the share value of Cuadrilla in the way that one might expect, but, none the less, it is by all acknowledgment an appreciable find. That offers the possibilities of making the UK energy-secure, of lowering energy prices and of generating wealth, although there could be an argument about how that wealth will be spread and who will benefit the most. There is no doubt that with energy comes wealth. The people buying up our premier league football teams, by and large, tend to be energy barons. That is one side of the equation.

On the other side, there is not the hype, but the fear. There is the fear of environmental destruction, the fear of wells being aborted over a period of time or rather more rapidly and there is the fear of poisoned water supplies. [Interruption.] I am sure that hon. Members have seen the flaming house taps in the USA, although I wonder what the American water authorities are doing in allowing gas to contaminate—

[Mr Roger Gale (in the Chair)]

Order. I am sorry to interrupt the hon. Gentleman, but someone’s mobile phone is switched on. Can everyone check their phone, including those sitting in the Public Gallery?

[John Pugh]

I suspect that it was my phone, unfortunately. I am interrupting myself.

There are also arguments about water depletion, tremors, geological instability and so on. Given the degree of hype on one side and of panic on the other, the report is most timely and helpful. I genuinely think it is a good report, which enables us to form a judgment about how and whether to extract. There is, however, one view that the report perhaps does not deal with sufficiently. It is at one extreme of the debate and it goes something like this: even if extraction is safe and profitable, it should not be done, either because it produces a carbon fuel, and we should not get more carbon fuels out of the ground, or because it augments and influences the use of carbon fuels and the carbon fuel market elsewhere. Organisations such as the Tyndall Centre have put that argument very seriously and would still oppose the extraction of shale gas in the UK for the same reasons, even if they found out tomorrow that it was perfectly safe.

People who argue like that believe a range of different things. They might believe that renewables can plug the UK energy gap quickly, that the British public will dramatically and quickly reduce their energy consumption through energy conservation or energy efficiency or that nuclear energy can easily plug the gap and step up to the plate. When we go through those alternative assumptions and the general argument for doing nothing about shale gas, however, it becomes clear that none of them has general support from informed opinion, and I share none of them myself. I do not think renewables will plug the energy gap as quickly as we would like, that the British public will dramatically or rapidly alter their behaviour in the next decade or that nuclear energy can easily fill the gap.

Given that most people believe and accept that gas is part of the mix, the debate can then centre on whether we should have UK gas or imported gas. People can be against natural gas extraction full stop or shale gas extraction full stop, or they can simply be against shale gas extraction in the UK. As I understand it, most people’s anxieties are not about shale gas per se, but about particular propositions in the UK and about whether the process followed here might emulate bad practice elsewhere in the world. Most people are concerned about safety, either because they are not convinced that shale gas extraction is safe or because they are not convinced that all companies can be trusted to make it safe—even where it has the potential to be safe, they think one should be suspicious of oil companies.

--- Later in debate ---

[Ian Lavery]

I think that the hon. Gentleman is right, which is why it is imperative that we try, at all stages, to take the general public in the areas affected along with us.

I think that it was the hon. Member for Southport who said that, whatever new types of energy we come up with, people will automatically oppose them. It does not help when certain people say that they are in love with these new wind turbines and that they are beautiful to watch. Wind turbines are probably beautiful to watch from somebody’s back garden but perhaps not from other people’s back gardens.

The hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) is right that these industries are not labour-intensive. Local people think that there is employment coming to the area with the new energy industries, but it does not really happen, and it has not happened so far. Generally, these new technologies do not create much new employment, but people can see them and wonder why they are being developed. I agree with that point.

The fracking process has been the focus of much consternation. Could the gas from fracking make its way into the general water supply? Could the fracking fluids leak into the shallow water aquifers, an issue which we have already discussed? What type of fluids would be used? The Tyndall Centre has said that, of the 260 substances used in fracking, 58 could be carcinogenic or mutagenic, while other organisations have suggested that all the substances used in fracking are also used in everyday household goods. Those are the varied views that the Committee heard from industry experts, some of whom said that the fluids are carcinogenic, and some of whom said that they are just fluids used in ordinary household goods. We must get much more detail on that subject. Also, could fracking lead to the groundwater contamination that has been experienced elsewhere?

The Energy and Climate Change Committee report tackles all those issues, as has been outlined already this afternoon. However, the World Wide Fund for Nature has clearly stated that shale gas is a fossil fuel and that

“world fossil fuels should stay in the ground and shale gas is likely to increase the net carbon emissions.”

The Campaign to Protect Rural England has drawn on evidence from Canada, which shows that the majority of wells in Quebec leak large doses of methane.

Another issue is the carbon footprint of shale gas production, which is very much unknown, although there are some very interesting and varied views about it. The British Geological Survey has stated:

“The overall greenhouse footprint of shale gas, including direct and indirect emissions of both CO₂ and methane is not yet fully understood.”

Representatives from the Select Committee visited Texas in the United States at the end of last year, or possibly at the beginning of this year. One of the first presentations that they saw began by noting that, over a 20-year period, the global warming potential, or GWP, of methane is 72 times that of carbon dioxide, while over a 100-year period the GWP of methane is 21 to 25 times that of CO₂. That is because methane and CO₂ have different lifetimes in the atmosphere. If the short-term GWP measure of methane, which is 72 times that of CO₂, is used, coal emissions would come to 1,154 kg of CO₂ per megawatt-hour, while gas emissions would come to 781 kg of CO₂ per megawatt-hour. The figure that is usually bandied around as being accurate in most cases is that gas production produces 50% fewer CO₂ emissions than coal production, but these figures that I have just cited take the figure for CO₂ emissions from gas production up to something like 70% of the figure for CO₂ emissions from coal production. Again, we need to consider gas production in terms of the environment.

There is also carbon capture and storage, which has been mentioned. If we are to succeed with shale gas production, because of the problems with the environment and the emission levels, CCS must be pushed forward. We have a massive problem after the cancellation of the Longannet plant just two weeks ago. It has taken about six or seven years for that project to be ready to be signed, but it was cancelled at the eleventh hour. It is important that CCS is put back on the table. We have had excellent discussions with the Minister about CCS, and those discussions are continuing. In addition, experts say that the way in which shale gas is extracted largely depends on the emission levels. We did not get into too much detail on what that actually means, but it was certainly something that the experts said to the Committee.

The report clearly outlines that there are now extensive explorations for shale gas taking place in Poland and it recommends that the UK closely monitors the progress of those explorations, which is the right course of action.

In conclusion, shale gas might be the partial answer to future energy supply problems in the UK, but there are so many imponderables at this point that I think that time will tell. Shale gas production has huge potential, and future development and exploration are imperative. We need to continue with that development and exploration, albeit in an extremely safe fashion, stage by stage, and taking the public with us. However, before the UK ploughs ahead with shale gas production, much more clarification is required, particularly in respect of the fracking issue and of the environmental issues.

[Mr Roger Gale (in the Chair)]

Order. I propose to call Mr Mowat next. I shall then call the two Front-Bench spokesmen. If other Members wish to participate in the debate after that, there will be an opportunity for them to do so.