In the US fracking for gas has been a highly controversial but apparently successful means of lowering the cost of natural gas. I say apparently because the rise of fracking natural gas coincided with a world surplus of gas. Terminals were built in the US to import this gas but were unused. Some terminals are being set up to export this gas to us (presumably the same ones). This surplus of gas helped in part to force down US prices. These prices proved too low to make extraction of the gas economically viable and the same drilling equipment has moved to extracting shale oil (since the oil price has remained high). Practical experience of fracking in the US has led certainly to gas contamination of water, possibly chemical contamination but also very rapid depletion of wells meaning the whole phenomenon maybe very short lived.
However, after Japan’s nuclear disaster and total nuclear shutdown in Japan and partial shutdown in Germany the surplus of gas disappeared (helped in part by rising demand in the BRIC’s. The price of natural gas has soared in the US almost doubling (although its still much cheaper than it was.
Meanwhile a variety of other countries have decided they want in on the act including my own. Attempts to frack in the UK have met with very strong protests from climate campaigners and locals. These are ongoing. One big difference with the US is that individuals here do not own the mineral rights to what is under them (with one or two exceptions such as Orkney and Shetland), the crown does. This means we don’t have the same levels of financial incentive to cooperate.
The government conveniently ignoring all the above has decided this week to back fracking in the UK (although this probably means England or maybe not) with increased bribes to cash strapped local authorities allowing them to keep all the tax revenue from drilling plus community money, plus individual payments to those directly affected. Will this be enough to overcome public opposition which according to a recent poll for the Institute of mechanical engineers is rising? I think not.
Will fracking lower emissions? BP this week said not. Very worryingly they expect carbon emissions to rise 29% by 2035. Part of the problem is that coal use is merely displaced. So the US has been exporting coal to Europe, although in recognition of rising gas prices coal emissions have recently started rising again in the US. Will fracking lower prices in the UK. Again unlikely. Unlike America we are fully plugged into the global gas network any gas produced here will be sold to the highest bidder.
Is fracking the answer to peak gas and oil. We think not.