An open letter to Henry Smith MP following his piece in today's Telegraph
28 October 2019
I am writing to you having read with interest your piece in today's Telegraph, 'Fracking's time has passed already – Britain should be focused on clean energy'. We are UK Onshore Oil and Gas, the trade association for the onshore oil and gas operators and wider supply chain that every year that has helped contribute the energy that keeps the UK moving.
Part of this, as our name suggests, means assisting in the development of a domestic shale gas industry, a project that has already contributed millions of pounds to communities across the North of England through local jobs and local supply chain contracts.
We have also started to prove that we are sitting on top of a world-class resource that could meet our national gas demand for fifty years without having to rely on costly, high carbon imports of gas from countries such as Qatar, Peru or Russia.
That is therefore why we feel we need to clarify some of the assertions made in your article, which unfortunately paints a bleak, and inaccurate, view of this exciting industry.
Firstly, your claim that the UK would need over 6,000 new shale gas wells to replace just half of our gas demand is incorrect. That figure comes from a thoroughly debunked report that uses significantly outdated EUR (estimated ultimate recovery) rates to reach its conclusion.
Our exploration to date has shown that the shales of the carboniferous Bowland-Hodder formation (the major shale gas basin we operate in) are exceptionally similar to those of the US, and our wells would achieve comparable EURs – much higher than those assumed in the report.
The potential per well recovery rate put aside, the sheer scale of the UK's shale gas resource is immense. The British Geological Survey's mid-case scenario estimates that we have 1,329 trillion cubic feet's (tcf) worth of gas lying a mile underneath Northern and central England. As a nation we use 2.75 tcf a year, meaning that if we extract just 10% of the shale gas we have, we could meet our UK demand for half a century. That's the needs of homes, businesses and British industry covered – all using an indigenously produced product that has created community benefits, local supply chain opportunities and new skilled jobs.
Many comparisons in your piece are made between the resource in the United States and that of the UK. Part of the exploratory work in England done to-date has been geared to finding out just how good the geology is – after all, this is an industry that has, and plans, to invest millions of pounds into UK plc - we need to assess whether our product is viable at scale.
So far, based on the core testing done in both Lancashire and North Nottinghamshire, we know that we have a world-class resource. To put it more technically, the total organic content of the rock is high, the shales are brittle and highly suited for hydraulic fracturing, and the gas in place is made up of over 90% methane, meaning it will require little to no processing before entering the gas grid.
For some it may seem odd to be talking about developing a fossil fuel industry in 2019, but as the experts will tell you, meeting our 2050 net zero target without gas is nigh on impossible. That's because, as the Committee on Climate Change acknowledge, lower carbon gas will play a major role in the production of hydrogen. Indeed, their recent Net Zero report estimated that we'll still require 600 TWh per year of natural gas in 2050 to meet the target. That amounts to 70% of our current annual consumption.
Unfortunately, if we do nothing, 86% of that 600 TWh demand will have to be imported from other countries. That means relying on others to give us the fuel that not only produces our electricity and heats our homes, but acts as a vital feedstock for industry, whether it be the kilns of Stoke-on-Trent or the vegetable farms of Kent.
Relying on other countries for goods may not sound too problematic in the globalised economy that we have, but often the devil is in the detail. We already have issues with tankers traversing the Strait of Hormuz, the narrow waterway through which Qatar, our largest supplier of liquified natural gas (LNG), must send our supply.
Further north, Russia, which in 2017 provided just 1% of our total gas import supply, works furiously in the Yamal Peninsula to produce the 5% of the UK import supply they can now, in 2019, claim. This is a trend that will continue as the UK North Sea and Norwegian assets continue to decline. Imports up, energy security down.
This is where UK homegrown shale gas comes in, and it's not just for reasons of security of supply. We will still need gas in 2050, this is a fact. So why then would we import higher emission gas from overseas at no economic advantage to UK plc, when we can produce lower emission indigenous gas that has already shown it can have a significant economic benefit to the communities that host its production?
Indeed, imports of natural gas to the UK have up to twice the carbon impact of domestically produced shale. That's because the energy required to produce, process and transport gas thousands of miles across oceans and continents to its final destination of the UK is significant.
Indigenous gas has a huge role to play as we transition to net zero. Both onshore and offshore, it is paramount that we source the gas we need in the most environmentally and economically sensible way possible. But ultimately, if we don't take advantage of the immense domestic shale gas opportunity there is, we are offshoring our environmental responsibilities, jobs and community investment to the likes of Qatar and Russia. The stark reality of this is that the failure to develop our onshore oil and gas resource means the UK will import half a trillion pounds worth of the fuels by 2050 – and that's a conservative estimate.
We very much agree that renewable electricity will have a much larger place in our energy mix in the coming years, but as part of a balanced low carbon future that places salience on genuinely reducing our emissions while putting the UK's economic needs first.
With kind regards,
UK Onshore Oil and Gas