Memorandum submitted by Scotia Gas Networks |
1. SCOTIA GAS
NETWORKS (SGN) RESPONSE
1.1. SGN would like to thank the Energy and Climate
Change Committee for the opportunity to respond to the inquiry
into shale gas. Scotia Gas Networks is the UK's 2nd largest gas
distribution company providing a safe and secure supply of natural
gas to 5.7 million customers through 74,000km of gas mains and
services. SGN own and operate two gas distribution networks, one
covers the whole of Scotland whilst the other network covers the
South East stretching from Milton Keynes to Dover in the east
and Lyme Regis in the west, including London Boroughs south of
the River Thames.
1.2. As the UK's second largest gas distribution
company, SGN is extremely interested in the prospects for future
gas reserves in the UK. As a distributed source of gas, shale
wells are likely to need large numbers of smaller scale connections
to gas distribution networks than typical conventional gas wells
which require larger connections to the national gas transmission
system; in our licensed area, it is likely that SGN will be the
provider of many of these connections and all of these connections
will need to join our network.
1.3. Last year, work commissioned by the Energy
Networks Association and carried out by Redpoint showed that in
2050, gas could still be supplying a significant proportion of
the UK's total energy demand through both heating and electricity
generation whilst ensuring that carbon targets were met.
Further still, this work showed that by utilising the existing
asset base, ie the gas networks, the costs of meeting carbon targets
and supplying clean energy were significantly reduced. If gas
used in the UK's energy mix is sourced domestically and is not
imported, this also has clear benefits for energy security and
the UK economy along with the carbon benefits associated with
the reduced greenhouse gas emissions from reduced use of Liquefied
Natural Gas (LNG).
2. What are the prospects for shale gas in
the UK, and what are the risks of rapid depletion of shale gas
2.1. As with the rest of Western Europe, it appears
that the geology of the UK could provide significant volumes of
shale gas. It is however access to these sources of gas that may
reduce total availability. The UK has a much higher population
density than the US where levels of shale gas production have
been very high. In the US, a more favourable geology with higher
concentrations of shale rocks combined with free or easy access
to much of the land allowed this rapid expansion.
In the UK, the availability of shale gas is likely to be less
due to this major human constraint. However, the large scale and
wide coverage of the UK gas distribution network could, by providing
easy and quick connections to the networks, increase the speed
at which shale wells can connect to the system and increase the
availability of the gas.
2.2. It is very likely that gas prices will affect
the rate at which shale gas is developed in the UK and if wholesale
prices increase as they are expected to do, the viability of domestically
produced shale gas is also likely to increase. In this situation,
it is therefore likely that the most readily accessible shale
wells will be used first and then, if wholesale prices increase
further, more expensive wells will be developed.
2.3. The rapid depletion of shale gas resources
does not appear to be a problem. The reserves of shale gas worldwide
are extremely large and it is likely that a long way into the
future, shale gas will be available even if significant volume
of gas has been used. In Western Europe for example, reserves
of shale gas are predicted to be larger that known reserves of
conventional gas2. Although the actual wells may deplete
much more quickly than conventional gas reserves, the wells are
likely to keep producing gas for a number of years.
3. What are the implications of large discoveries
of shale gas around the world for UK energy and climate change
3.1. Gas is generally considered a "clean
fuel" as a result of having lower carbon emissions than other
solid and liquid fuels when combusted. Its use, particularly in
the domestic arena, is almost always associated with being more
energy efficient and also more cost effective than equivalent
electric or oil fired systems. It could therefore be suggested
that if the availability of the gas resource increases through
the production of shale gas, wholesale prices could be reduced
and this will result in the increased use of gas and in many instances,
this could result in lower greenhouse gas emissions.
3.2. The SGN "Assisted Connections"
programme focuses on helping the fuel poor connect to the gas
network as installing gas heating can remove a significant proportion
of households from fuel poverty.
Increasing the availability and therefore reducing the wholesale
cost of gas could therefore not only reduce consumer's bills,
but would also ensure that gas is still a fuel that can assist
with the issue of fuel poverty.
3.3. Even though shale gas is not likely to provide
as high a percentage of total gas demand as it does in the US,
if it can supply only a few percent of total demand, this will
have significant implications for energy security as this source
of gas will not be affected by any geopolitical or international
4. What are the risks and hazards associated
with drilling for shale gas?
4.1. The main hazards associated with the use
of shale gas result directly from the process of extracting the
gas. The process requires large volumes of water combined with
chemicals and sand to fracture rock and thus release the gas.
In the US, there have been some issues associated with the leaking
of chemicals and methane gas into the domestic water system. When
this has occurred, this is likely to have been due to poor management
and low project standards. The release of a documentary/film in
the US appears to have increased media coverage of the shale gas
issue which often focuses on the negative aspects of the industry.
Work currently underway by the Environmental Protection Agency
in the US will hopefully shed some objective light on the real
risks associated with shale gas. It is however very likely that
investment in innovative approaches will reduce the risks associated
with shale gas extraction in the future.
5. How does the carbon footprint of shale
gas compare to other fossil fuels?
5.1. At the point of use, because of the composition
of shale gas, the carbon footprint will be the same as conventional
gas however, because of the way shale gas is extracted, it is
likely that life-cycle emissions for shale gas will be slightly
higher than for conventional gas. However, it must be considered
that LNG, which requires compression into liquid, storage at very
cold temperatures and high pressures and transportation by boat
across very large distances will also have associated lifecycle
emissions. We are not aware of the existence of exact numbers
on the lifecycle emissions of shale gas however this is an area
where perhaps further work is required.
6.1. Any increase in the use of shale gas in
the UK and also across the world is likely to increase the availability
of natural gas both reducing the costs of gas (relative to if
there was no shale gas) and increasing supply margins. This could
in the short term, result in the increased use of gas and reductions
in carbon emissions.
6.2. However, the government needs to consider
long term energy strategy to plan for a low-carbon future. The
Gas Future Scenarios Project carried out by Redpoint1
shows how gas can fit into a low carbon future helping to meet
2050 carbon targets. Although the development of biogas is key
to the future use of gas in these scenarios, biogas will need
to be used in conjunction with some other sources of gas and in
fact, as the UK continental shelf gas supplies decrease further,
nationally sourced shale gas may be a very valuable resource if
global gas prices rise as predicted. Shale gas may also help to
increase the security of the gas supply.
6.3. Most importantly, the analysis by Redpoint
showed that a future energy mix that included gas resulted in
a lower system costs than scenarios in which more heat was provided
by electric heating systems. In the period from 2010-50, the analysis
showed that by using gas, total system costs were reduced by £10,000
per person on a net present value basis. This is simply due to
the fact that reduced investment is required in infrastructure
as the capacity to transport gas already exists whereas, for increases
in electric heating, greater electricity generating capacity is
required and significant investment in electricity infrastructure
is also required to carry the greater electric load. SGN therefore
believes that shale gas could make an important contribution to
national energy policy goals.
8 Redpoint 2010, Gas Future Scenarios Project, Available
from: http://energynetworks.squarespace.com/storage/ena_publications/ena_gas_future_scenarios_report.pdf. Back
Stevens, P, (2010), The "Shale Gas Revolution": Hype
and Reality, Chatham House. Back
DECC, (2010), Fuel Poverty 2008-Detailed Tables, Available from: