Energy and Climate Change CommitteeWritten evidence submitted by North West France Branch of Labour International (ISG 03)

1. The purpose of this submission is to draw attention to the Committee of the potential impact on the environment and the climate, not just of shale gas per se, but also the extraction process currently being used onshore—Hydraulic Fracturing (Fracking) and the need for close monitoring of licence conditions.

2. The committee’s attention is drawn to the report by the Tyndall Centre at Manchester University—“Shale Gas: a provisional assessment of climate change and environmental impacts” Tyndall Centre for Climate Change Research (2011)

3. There seems to be no accurate figure for the amount of shale gas available to the UK either onshore or offshore. Most figures currently being used are “best estimates” by interested parties. At best the British Geological Survey has identified “potential areas” for exploration. Furthermore, the percentage of gas occurring in the shale which can be technically and economically extracted is not known. In the oldest and most productive of the shale gas plays, the Barnett Shale in Texas, wells decline at an annualized rate of 44%, with a steep decline rate of 65% in the first year and 53% in the next, falling gradually thereafter to around 20% per year. Shale gas wells typically pay out over half their total lifetime production in the first year (Berman et al).

“U.S. Shale Gas: Less Abundance, Higher Cost”. Berman, Pittinger, and Hansen (2011)

“The UK has abundant shales at depth, although their distribution is not well known”.
British Geological Survey (BGS) 2010.

4. The environmental risks associated with the fracking process, although mainly anecdotal, have been shown in the USA to be real and, both there and in European states, have led to bans or suspensions of the process. The US Environmental Protection Agency (EPA) has found benzene contamination in groundwater near fracked wells and a Duke University study found Methane contamination in groundwater. These arise principally from cracked well casings, excess cracking of the shale and pollution arising from blow-outs at the well head. The use of radio-active products plus the naturally occurring gamma radiation in the shale risks toxic contamination over a wide area around the well.

5. A recent report by the Department of Energy and Climate Change (DECC) claims that the risks of “earthquakes” are relatively small. These earthquakes are induced by the prospecting company for the purpose of imaging and estimation of gas quantities. The fracking process itself may induce earth tremors which can reach the surface. Re-fracturing of wells at intervals of four—five years is required to keep the wells in production.

“The report, that includes a BGS co-author, concludes that the earthquakes near Blackpool in April and May 2011 were induced by hydraulic fracture treatments at the Preese Hall well. The report also concludes that further small earthquakes cannot be ruled out, however the risk from these earthquakes is low, and structural damage is extremely unlikely”. (DECC 2011)

That is what the Japanese said about the Tsunami risk to their nuclear installations.

6. The DECC report also states:

“Shale gas production in the US has become controversial because of reports of environmental problems, particularly contamination of drinking water.

Water use and disposal of recovered fluids are also of concern. Re-fracturing might be expected to be repeated every 4–5 years in successful wells. About a third of the water is returned to the surface. It might be possible to re-use produced water by a recycling process or to reduce the potential environmental impact by changing the chemicals added, but at the moment freshwater is needed for the fracturing”.

“The Unconventional Hydrocarbon Resources of Britain’s Onshore Basins- Shale Gas” DECC (2011)

7. The report by the Tyndall Centre sets out the risk to the environment and to climate change of shale gas.

“Without a meaningful cap on carbon emissions the utilisation of shale gas will increase carbon emissions by potentially considerable amounts.

Shale gas exploitation could lead to an increase in atmospheric concentration of CO2 of 3 to11ppmv

Shale gas exploitation could increase the difficulty of attaining set targets for carbon reductions through, for example, substituting for renewable energy.

There is a clear risk of contamination of groundwater from shale gas extraction.”

The US EPA estimates that shale gas emits larger amounts of methane, a potent greenhouse gas, than conventional gas. The U.N. Intergovernmental Panel on Climate Change (IPCC), a pre-eminent authority on this issue, ascribes the Global Warming Potential of methane at 72 times that of carbon di-oxide over a 20-year period.

8. It appears to us that there is a huge conundrum in the argument about the extraction of Shale gas. The cost of extraction onshore is sufficiently high that an increase in the wholesale price of the gas is required to make it an economical prospect. However, the experience in the USA is that where large quantities of Shale Gas are extracted the wholesale price falls suggesting that it would become uneconomical to extract. The costs involved in environmental safeguarding would need to be added. The conclusion therefore is that the price of gas to the consumer would have to rise substantially in order to make the prospect viable. Gloyston et al estimate the cost of extracting gas using current technology at $200 per barrel. Berman et al estimate the cost of shale gas extraction by fracking to be in the region of $8 per thousand cubic feet but the current spot price is around $4.

“Facts indicate that most wells are not commercial at current gas prices and require prices at least in the range of $8.00 to $9.00/mcf to break even on full-cycle prices, and $5.00 to $6.00/mcf on point-forward prices. Our price forecasts ($4.00–4.55/mcf average through 2012) are below $8.00/mcf for the next 18 months” (Berman).

(Gloyston, Henning and Johnstone, Christopher (2012))
(“U.S. Shale Gas: Less Abundance, Higher Cost”. Berman, Pittinger, and Hansen (2011))

9. In view of the potential environmental risks and associated costs, a fully monitored licencing system is required to ensure compliance with imposed conditions. It is reported that fracking has been taking place in Lancashire for two years with any monitoring whatsoever. The potential environmental damage is assessed as sufficiently high a risk in France and Poland that fracking has been banned. Until a safer method of exploration and extraction is devised the potential costs to the country must be included in any calculation of economic advantage.

September 2012