Energy generation in Wales: Shale Gas - Welsh Affairs Committee Contents

1  Introduction

1. With an abundance of natural resources, Wales can play an important role in the United Kingdom's future energy supply. Energy policy has been retained as a 'UK function' although responsibility for planning policy has been devolved to the Welsh Government.

2. Shale gas is natural gas (predominately methane) found in shale rocks. Shale gas is often referred to as an 'unconventional' gas because of the methods used to extract it from rock beds. Advances in technology—notably hydraulic fracturing or 'fracking'—over the last decade have made shale gas development economically viable. Fracking is a process whereby water, containing sand, is pumped at high pressure into the rock. The sand keeps the small fractures in the rock open while the gas is extracted. Chemicals are also added to improve the efficiency of the fracking operation.[1]

3. The rapid development of shale gas resources in North America has transformed the global gas market. Shale gas is making a significant contribution to US gas production—it increased from only 2% of US production in 2000 to 14% in 2009, and is forecast to continue to increase to more than 30% by 2020.

4. Unconventional gas development in the UK is at an early stage. As in England, planning permission has been given at a number of sites in Wales for exploratory drilling for shale gas. Industry estimates of shale gas resources in the UK as a whole have increased markedly over the last few years. Estimates vary considerably, but one report has estimated that huge shale gas resources in South Wales could be worth up to £70 billion at current market prices.[2]

Our inquiry

5. Given the possible development of a shale gas industry in Wales, we launched an inquiry in July 2013 to examine the potential economic and environmental impact of exploration and commercial extraction of shale gas in Wales. Shale gas has been examined by various other bodies in recent years, including the House of Commons Energy and Climate Change Committee and the House of Lords Economic Affairs Committee, but our focus in this Report is specifically on Wales.

6. We took oral evidence from academics, environmental organisations, industry representatives, regulatory and monitoring authorities, the Welsh Government and the UK Department of Energy and Climate Change (DECC). A full list of witnesses can be found at the end of this Report. For this inquiry we also undertook two visits. In October 2013 we visited Dragon LNG and Milford Haven port to discuss the role of LNG (Liquefied Natural Gas) within the UK's long-term energy strategy. We also visited Cuadrilla's shale gas site at Elswick, near Blackpool, in February 2014. We are extremely grateful to those who provided oral and written evidence and for those we met during our visits.

1   British Geological Survey, Shale Gas: BGS Research, 2013 Back

2   Eden Energy, UK gas resources, 2012 Back

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Prepared 16 June 2014