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House of Lords Economic Affairs Committee Inquiry: Impact of Shale Gas

The House of Lords Economic Affairs Committee has launched an inquiry into the Impact of Shale Gas. The submission produced jointly by the Geological Society and the Petroleum Exploration Society of Great Britiain can be found below.

You can read the terms of reference and associated documents on the committee website.

Submitted 27 September 2013

1. This submission has been produced jointly by the Geological Society of London and the Petroleum Exploration Society of Great Britain:

i. The Geological Society of London (GSL) is the UK’s learned and professional body for geoscience, with more than 11,000 Fellows (members) worldwide. The Fellowship encompasses those working in industry, academia and government with a broad range of perspectives on policy-relevant science, and the Society is a leading communicator of this science to government bodies and other non-specialist audiences.

ii. The Petroleum Exploration Society of Great Britain (PESGB) represents the national community of Earth scientists working in the oil and gas industry, with over 5,000 members worldwide. The objective of the Society is to promote, for the public benefit, education in the scientific and technical aspects of petroleum exploration. To achieve this objective the PESGB makes regular charitable disbursements, holds monthly lecture meetings in London and Aberdeen and both organises and sponsors other conferences, seminars, workshops, field trips and publications.

2. Between September 2012 and April 2013, the House of Commons Energy and Climate Change (ECC) Select Committee held an inquiry into ‘The Impact of Shale Gas on Energy Markets’. Although some of the detailed questions it addressed differed from those set out in the terms of reference for the present inquiry, its focus was similar. It investigated the widely differing estimates which have been made of the amount of shale gas resource under the ground in the UK, how much of this might constitute reserves (i.e. the amount which can be economically recovered), and the possible implications for UK energy markets1. It reviewed similarities and differences between prospects in the UK and the US experience, and considered possible impacts on climate change and on investment in renewable/low-carbon energy technologies. The report of the ECC Committee inquiry was widely regarded as an authoritative and realistically comprehensive assessment of the policy environment and economic factors relating to shale gas development in the UK. The Geological Society responded to that inquiry and we subsequently identified a witness to appear in an oral evidence session, Professor Richard Davies (Durham University). Following the evidence session, we provided supplementary written evidence at the request of the committee. It is not clear to us why the present inquiry is being held on a very similar topic so soon after that of the ECC Committee. With this in mind, we believe that the initial and supplementary written evidence we provided to that committee last year is relevant to the present inquiry, and they are attached below.

3. As recognised in the terms of reference for this inquiry, the British Geological Survey (BGS) released updated estimates of shale gas resources in the Bowland Shale in Northern England in June 2013. Its report gives a central estimate of the gas resource in place in the Bowland Shale of 1329 trillion cubic feet (tcf), a considerable increase on the previous 2010 estimate of 4.7tcf (though this was in respect of the Upper Bowland-Hodder unit only). The report also notes that the revised estimate remains highly uncertain. The extent of reserves which can be extracted economically is even more difficult to quantify. The reasons for this uncertainty are discussed in our submissions to the earlier inquiry (attached – see paragraphs 4-12 of our October 2012 original submission and paragraphs 2-4 of our December 2012 supplementary memorandum). The revised BGS estimate represents an important step in developing understanding of the shale gas resources of the UK. However, it does not in itself significantly change the economic basis for decision-making about shale gas exploration, regulation or production from that which pertained when the report of the ECC Committee inquiry was published in April 2013, particularly as it was already widely anticipated at that time that the new BGS estimate would be much higher than the earlier figure.

4. We would be pleased to discuss or provide further information on any of the issues raised in this document and the attached earlier documents, or any other matters relevant to the present inquiry which the Committee does not consider are adequately addressed here.

1 Resource is the amount of gas underground. Reserve is the amount of gas which can be produced economically – that is, which we can realistically expect to extract from the ground given current technological, economic and social/regulatory constraints. Another term which is sometimes used is ‘technically recoverable’ resource – this is the amount which could be extracted given current technology, but without reference to economics (cost of extraction and price) or social acceptability.