Caspian Report - Issue: 07 - Spring 2014

Frank Umbach
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are considerably higher than previously
estimated (in fact, almost 20
times higher). Around 10-20% is estimated
as economically recoverable.
These new figures were confirmed in
a report by the Institute of Directors
in September 2012 (a non-party political
organization of British industry
with approximately 38,000 members
in the UK and overseas). The
report estimated that around 35,000
jobs can be created and that onshore
shale gas production in Britain could
produce enough gas to meet 10% of
the UK’s gas needs for the next 103
years, while decreasing carbon emissions
by 45 million tonnes of CO 2
.
Even if Britain only gets 10% of this
gas-in-place produced, it will supply
the UK for 25-50 years. The most optimistic
scenario has estimated the
future shale gas production at up to
122-255 bcm per year – more than
twice the present annual consumption
of almost 100 bcm.
In November 2013, the new grand coalition
government agreed on a “temporarily
fracking ban”, until environmental
issues like the use of toxic chemicals are
resolved.
Unconventional gas reserves provide
the foundation for the government’s
newly released “Gas Generation
Strategy” in December 2012, which
envisages the construction of 20 new
gas-fired power plants, with 9 gigawatts
(GW) by 2020 and 26 GW by
2030.
The Royal Society and Royal Academy
of Engineering reviewed the
scientific and engineering as well as
related environmental risks associated
with hydrofracking. The report
concluded that those environmental
risks can be managed effectively
and enforced through strong
regulation. It also sees fracking as
an unlikely cause of ground water
contamination.
Energy companies expect that it will
take as long as five years for production
to reach a commercial scale.
Like in other EU countries, public
fears in regard to potential environmental
risks have also increased and
thus slowed down the planning and
permissions processes for shale gas
projects at the local level. An engineering
consultancy advising the
Department of Energy and Climate
Change (DECC) has reduced the figure
of jobs that could be created by
the shale gas industry from 74,000
(as Prime Minister Cameron was
speculating) to 15,900-24,300. But
the UK water and fossil-fuel industry
lobbies have agreed to work together
to minimize the environmental harm
of the shale gas projects for the country’s
water supply.
The UK government is currently
seeking new ways to simplify the
permissions process for British shale
gas projects. This process has been
widely criticized as too complex for
prospective investors. In December
2013, the British government unveiled
its plans to reduce the tax payable
on a proportion of profits from
62% to 30% in order to encourage
investment in the shale gas industry.
But more than half of Britain’s
cabinet ministers may experience
shale gas projects in their constituencies,
which may further deepen