Shale Gas

For each well drilled it would be necessary to build appropriate transport infrastructure and storage pits (discussed in our response to question 3) . Whilst the US has vast amounts of sparsely populated land, the UK by contrast is small, densely populated and has many areas of protected land. G iven the many potential negative environmental effe cts of shale gas , which are of concern to WWF, it would be reasonable to a nticipate significant re sistance from local communities.

Supply chain

According to Gény there is ‘currently close to no frac k ing expertise nor manufacturing capacity in Europe ...relying on international service providers will likely be the solution of choice’ [13] . Therefore , it seems likely that any shale gas production in the UK will rely on importing both labour and equipment from overseas, probably the US , given its position as market leader. This is in stark contrast with the potential economic and job creation benefits , which low-carbon technologies such as marine renewable s could bring to the UK as highlighted by the Committee on Climate Change (CCC) in its Building a Low Carbon Economy report [14] . We discuss this point further in our response to question 1 of the ECC enquiry on the Electricity market reform.

To conclude, as the CEO of Cuadrilla Resources admitted in a recent ENDs report [15] article ‘there is no chance of a shale gas rush in Europe over the next few years’. Gény adds in the conclusion to her report that ‘ Europe cannot replicate much of the American model’ [16] . This casts strong doubt on any speculation that shale gas may increase UK energy security or may play a ‘bridging’ role as the in the decarbonisation of the UK and EU power sector s .

Question 2: What are the implications of large discoveries of shale gas around the world for UK energy and climate change policy?

Overview

For there to be a reasonable chance of global temperature increases not exceeding 2 degrees Celsius and some possibility that they may remain below 1.5 degrees , global greenhouse gas (GHG) emissions need to fall by 80% relative to 1990 levels by 2050 . From a climate change perspective whilst it makes sense to burn lower carbon fuels su ch as gas, rather than coal, this argument is only valid where there is evidence that gas is being used as a direct substitution , not in addition , to coal and also as part of a clear plan to substantially reduce the power sector’s overall dependence on fossil fuels . There is a risk that the lower emissions argument is used to mask the fact that increased supplies of gas from shale result in a net increase in global emissions and serve to undermine the much needed transition to renewables. The m ajority of the world’s fossil fuel reserves need to stay in the ground if we are to avoid catastrophic climate change.

In the UK context, t he 2008 Climate Change Act commits the UK to at least an 80% reduction in domes tic GHG emissions by 2050. The CCC , tasked with setting out recommendations on carbon budgets, recommends in its 4 th budget report that the UK power sector should be close to decarbonised by 2030 with an average carbon intensity of 50gC O2/kWh compared to approximately 50 0gCO2/kwh today . [17] The same report also advises that to be on track to meet the 2050 target, GHG emissions should be 60% below 1990 levels by 2030. To achieve its targets, the UK needs to reduce its dependence on both gas and coal and move towards rapid decarbonisation of the power sector.

Shale gas, prices and global markets

A key focus for UK energy policy should be to deliver a near-decarbonised power sector over the next 20 years, whilst ensuring continued security of supply in a way that minimises increases to consumer bills. There is strong evidence, which we outline below, that uncertainty over the future contribution of shale to global gas supplies may threaten UK security of supply and lead to significantly higher and fluctuating gas prices.

There has recently been speculation that the world may be entering a new era of cheap gas due to the US ‘shale’ revolution. We have seen a delinking of oil and gas prices for the first time in decades. Gas prices are therefore currently relatively low due to a combination of unforeseen rapid expansion in US shale gas production and overinvestment in Liquid Natural Gas (LNG) and other conventional gas capacity.

There is however, strong evidence that current low gas prices may be temporary and therefore any second ‘dash for gas’ could harm not only the UK’s prospects for meeting climate change targets but also affordability and potentially security of supply. For example, i n a 2010 Chatham House report, Paul Stevens notes that ‘given investor uncertainty, investment in future gas supplies will be lower than would have been required had the shale gas revolution not happened…if it fails to deliver on current expectations…in ten years or so gas supplies will face serious constraints’ [18] . Stevens then expresses doubt over whether the shale gas ‘revolution’ can spread beyond the US , or even be maintained within it.

Furthermore, even if shale gas production does expand it is highly unlikely that gas prices will remain low. Frank Harris of Wood Mackenzie is recently quoted in The Economist [19] saying that some of the downward pressure on price will ease. ‘Despite sedate growth, the LNG glut should dissipate, probably by 2014, says Mr Harris; and low prices will kill more projects, clearing the inventory’. This is echoed in Gény’s report where she says that ‘we believe it is only a question of time before costs drive up prices or drilling slows down significantly and production falls’ [20] . Gas prices therefore appear to be low, because the increase in shale gas production has surprised investors and led to an oversupply of gas. Therefore as the market corrects itself prices are likely to rise , possibly leading to a shortage of gas.

Policy implications and recommendations

Given the impacts of shale on gas markets described above, and the doubts raised in our response to the previous question regarding limited prospects for shale gas in the UK, it is clear that any expectation that shale gas will necessarily enhance UK security of gas supply or guarantee lower prices for consumers is seriously flawed.

As highlighted throughout this paper any change to UK energy policy due to either temporary low gas prices or future shale gas production in the UK would be extremely risky and probably delay investment in low carbon technologies . This could risk damag ing the UK ’s ability to meet its climate change and energy security targets . The UK government has recognised that the current structure of the UK ’s energy market is not fit for purpose if the UK is to substantially decarbonise its power sector, which has led to the current Electricity Market Reform (EMR) consultation . WWF-UK is strongly of the view that the principal purpose of the EMR should be to deliver a near-decarbonised power sector by 2030. The EMR should aim to deliver this objective in the most environmentally sustainable way possible, by relying as much as possible on sources of energy that have the fewest environmental side effects, such as renewables.

Whilst the CO2 emissions from burning natural gas from shale are almost certainly [21] lower than those from coal, the average emissions from a new gas CCGT power station are around eight times higher than the CCC’s recommended target of 50gCO2/kWh by 2030 [22] . Any new gas power stations built today will continue to run for around 25-30 years . Whilst WWF accepts that some gas generation will be required as flexible back up to the UK’s power system in the future and that some gas with CCS may be part of the supply mix, we are concerned that future large discoveries of shale gas could have the impact of delaying investment in areas where it is really needed, in particular marine renewables, co-ordinated grid, energy efficiency and interconnection infrastructure.

Question 3: What are the risks and hazards associated with drilling for shale gas?

There are many negative environmental impacts and serious health and safety concerns associated with shale gas production. Due to the rapid expansion of the shale gas industry in the US and Canada , against a backdrop of weak environmental regulation, many implications are currently poorly understood, carry huge risk and require significant further investigation.

Contamination

There is strong evidence that shale gas production can cause contamination of water sources such as aquifers. Aquifers provide 30% of the UK ’s water and significantly more than this in the south east [23] . This contamination is mainly from methane but there are also serious concerns about the other substances and chemicals (inclu ding known carcinogens such as b enzene [24] ) used in the fracking process. Some in i ndustry claim that contamination is not possible because shale gas drilling takes place beneath the deepest fresh water zones and special casing in the drill hole is used to isolate fresh water zones from contamination [25] . However, there is a substantial and growing body of evidence to indicate that contamination is occurring and that it is caused by the drilling and fracking processes. According to Abrahm Lustgarten of ProPublica ‘more than 1,000 cases of contamination have been documented by courts and state and local governments in Colorado , New Mexico , Alabama , Ohio and Pennsylvania ’ [26] . These are only five of the many states where shale gas production is currently underway.

There are several ways in which it is thought that contamination may occur. Whilst it is not possible to go into much detail here, there is evidence that the drilling process itself, inadequate casing of drill holes, unintended ‘communication’ between separate wells (where fracking fluids from one well have shown up in another up to 715m away [27] ) and pathways opened up through the fracking process which join up with natural cracks in the rock are all potential sources of contamination. Anthony Ingraffea, a professor of civil and environmental engineering at Cornell University and a member of the Cornell Fracture Group, is quoted in a paper by Ben Parfitt saying that ‘ it is possible that the fracking process could open up a pathway upwards to freshwater...it is not right to say that thousands of feet of impermeable rock between where the shale formation is fracked and points higher up prevents such an occurrence’ [28] .

As a result of growing concern about contamination and public opposition to shale gas, the US Environmental Protection Agency is currently investigating the links between hydraulic fracturing, drinking water quality and potential impacts on public health to inform potential new regulations. The results of this study are due in 2012. In addition , draft legislation called the FRAC act has been proposed to congress.

Well Blowouts

According to Gé ny [29] , there have been two recent consecutive well blowouts in the Marcellus shale area in the US . One such incident occurred in Clearfield County , Pennsylvania at a well operated by EOG Resources Inc where natural gas and drilling fluids were shot 23 metres into the air [30] .

Water Consumption

Shale gas production is known to be very water intensive. Estimates for the volume of water required from start to finish of the fracking operation vary significantly probably due to lack of reliable data and differences in depth and geology of shale plays . For example an estimate in Parfitt’s paper states that hydraulic frac turing of 10 shale gas wells require s circa 910,00 0 cubic metres of water which equates to 91 , 000m³ per well [31] . However, according to the recent Tyndall Centre report ‘the entire multi-stage fracturing operation for a single well requires around 9,000-29,000m³’ [32] . More research is needed on the actual quantities required and the impact of site specific variables on final water requirement.

According to the Environment Agency’s Catchment Abstraction Management Strategies (CAMS) ‘there are considerable pressures on water resources throughout England and Wales’ [33] .

Disposal and Treatment of fracture fluids

Of the large volume of water used in the fracking process around 60% ‘flows-back’ (although flow back rates appear to vary significantly) as contaminated wastewater which must be disposed of. This wastewater is highly saline with a high mineral content and is contaminated with chemicals used in the fracking process , including known carcinogens in the US context, and heavy metals [34] . Assuming Gé ny’s figure that c91,000 cubic metres of water are required for each well this equates to around 54, 600 cubic metres of wastewater per well. It is possible to recycle wastewater and should shale gas production take place in the UK this should be mandatory.

Like the actual dri lling and fracking process, wastewater has been linked to incidents of water contamination [35] . The treatment and disposal of this contaminated wastewater is a contentious issue. Wastewater is usually stored in open pits or tanks prior to treatment. Gény states that ‘Because of the large quantities of waste to be handled, the risks of contaminating surface water and soil during storage, transport and disposal are very high [36] ’. Concerns have also been expressed in the US over contaminated wastewater being sent to municipal facilities.

According to the website for the shale gas documentary Gaslands, whilst the wastewater is being stored in pits or tanks, Volatile Organic Compounds (VOCs), a known health risk, are ‘evaporated’. ‘As the VOCs are evaporated and come into contact with diesel exhaust from trucks and generators at the well site, ground level ozone is produced. Ozone plumes can travel up to 250 miles [37] ’. The transportation of such large volumes of water requiring treatment also puts additional strain on local infrastructure.

Infrastructure and impacts on local communities

The drilling process requires large volumes of water, sand and chemicals as well as heavy industrial equipment to be transported to the site. Waste products such as drilling mud and wastewater much of which is likely to be classed as hazardous waste [38] will then need to be removed. Wells are often arranged in ‘pads’ of 6 wells grouped together. Each well will therefore require access roads to be built placing unforeseen demands on local transport infrastructure. The Tyndall Centre’s report demonstrates that 4,315-6,590 truck journeys to each well pad will be required in the pre-production phase, of which 90% are associated with the fracking process [39] .

Noise pollution is also likely to be an issue both from trucks travelling to and from the site and pre-production activities, which the Tyndall Centre report indicates could be expected to last 500-1500 days, including several weeks of 24 hour drilling per well, for each 6 well pad [40] .

The UK is far more densely populated than North America. Even without taking into account possible contamination issues, shale gas production is clearly likely to be highly disruptive to local communities and have a negative impact on local roads, buildings adjacent to access roads, noise levels and air quality.

Regulation

UK and EU regulation of the oil and gas industries is more stringent than that of the US . However, according to a recent ENDS report article fracking is not mentioned in UK regulations. A spokesperson from the Environment Agency told WWF that ‘the Environment Agency is currently developing policy at the national level on shale gas permitting’ and that ‘fracking ’ will probably not be able to go ahead without a permit’.

It is clear that there are significant risks associated with allowing any shale gas production to take place in the UK . L arge scale shale gas production has been allowed to take place in the US prior to any impartial research over its impacts on human health and the surround ing environment being conducted. New York State has recently imposed a moratorium on any new drilling of shale gas wells pending the outcome of the current US EPA investigation. T here is therefore considerable uncertainty as to the full extent of the environmental impact of shale gas exploration in the US .

Conclusion

Taking into account all the environmental impacts described above WWF does not believe that shale gas production should be allowed to take place in the UK . At the very least, WWF considers that no per mits should be granted for shale gas activity in the UK u ntil there is a robust scientific consensus demonstrating exactly what the risks are and what, if any, practices may be adopted to minimise hazards associated with shale gas, drilling and hydraulic fracturing .

Question 4: How does the carbon footprint of shale gas compare to other fossil fuels?

There is very limited publicly available information on the carbon footprint of shale gas in relation to other fossil fuels. Emissions may be higher than those associated with conventional gas due to methane leakage or the additional energy requirements of unconventional sources of gas such as shale. It is therefore important to take into account the full lifecycle emissions of the use of shale gas before drawing any conclusions as to its carbon intensity.

The Tyndall report estimates additional carbon footprint of shale gas and production and draws the conclusion that additional emissions would be around 0.2-2.9% higher than those associated with gas from conventional sources. However, it is highlighted that the impact of fugitive emissions, for example leakage of methane gas during production, were not taken into account in this estimate [41] . This is significant because these emissions are cited in a preliminary review paper by Robert Howarth which suggests that there is approximately a 1.5% methane leakage rate for the oil and gas industry and that therefore emissions from coal may be similar to those from natural gas [42] .

Howarth’s is only a preliminary paper which has not been peer reviewed but it highlights the urgent need for a comprehensive assessment of the full range of emissions of greenhouse gases from using natural gas obtained by ‘hydrofracking’. Clearly, this information must be independent and subject to unbiased peer review.

January 2011