Shale gas to be “irrelevant” to UK energy mix – analyst

13 December 2012 17:34  [Source: ICIS news]

LONDON (ICIS)--The UK government’s decision to allow the resumption of shale gas extraction in the country is likely to be “irrelevant” to the country's energy market, according to analyst firm GlobalData.

Hopes that shale gas extraction in the UK could cut natural gas prices to the extent seen in the US are unlikely, according to GlobalData’s head of consulting for power and utilities, Jonathan Lane.

Uncertainty over the exact size of the UK’s shale gas reserves and over the costs of production in the UK, coupled to a much higher reliance on natural gas than in the US, are all factors weighing on the potential of shale gas to transform the UK’s energy landscape, Lane said.

“This means that for shale gas to have a significant impact on gas prices, it will take much more gas to be produced in the UK compared to its consumption of conventional natural gas. Lastly, the UK is part of a wider north European gas market, which will further mitigate the potential impact that shale gas would have on natural gas prices,” he added.

UK industry body the Chemical Industries Association (CIA) disagreed with Lane’s verdict, claiming in a note on Thursday that shale gas would be essential to the UK in the next decade.

“The dual opportunity presented by shale gas can make an essential contribution to our energy and feedstock requirements within the next 7 to 10 years and would offer valuable employment solutions and enable us to compete on the world stage,” said CIA CEO Steve Elliott.

By: Tom Brown
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