Shale gas should not be seen as a silver bullet for the UK’s energy issues, a North Sea boss at oil giant Shell told business leaders in Aberdeen.
Glen Cayley, vice-president for Shell UK and Ireland, said governments too often looked for such an immediate solution, and that the supply of shale gas to meet UK energy demand was not one of them.
He said only three shale-gas wells had been drilled to date in the UK, with none so far commercial.
He also said that renewables, such as windfarms, were a long way off meeting global demand for energy.
An area the size of France would need to be covered in wind turbines to meet UK demand, he said.
Because of this, Mr Cayley said oil and gas, especially gas, would continue to play an important part in the UK’s energy supply for years to come.
But, to play its part, the UK North Sea oil and gas industry needed the support of the UK Government as platforms and rigs were having to go beyond their design lives to extract the maximum potential from the basin, from which he said less than half of the resources in place had so far been extracted.
His comments came as Ofgem warned that Britain was heading for a “horrendous energy supply crunch”.
Alistair Buchanan, its outgoing chief executive, said the UK was facing an uncomfortable squeeze in energy reserves over the next three years as ageing power plants closed to meet environmental targets and the country was forced to import gas at a time of tightening worldwide supply.
With coal and oil-fired power stations shutting early, around 10% of current generation stock will go by April. And, within three years, the reserve margin of generation will fall from around 15% to below 5%. Mr Buchanan said: “We’ve got to go shopping around the world for our gas.”
He added that with no new nuclear yet, shale unlikely to make any major impact soon and no carbon-capture plants likely this side of 2020, gas would become the dominant fuel for power stations.
The government said it was acting to prevent any possible looming energy gap through a new Energy Bill, attempting to reform the electricity market and incentivising renewables, new gas, nuclear and carbon-capture and storage.
Angela Knight, chief executive of Energy UK, the industry’s trade body, said the authorities should get on with exploring the options for UK shale-gas reserves to help energy security and focus on the affordability of energy.
RenewableUK said Mr Buchanan’s comments served to highlight the case for clearer government support for renewable energy.
IHS Energy analyst Claudia Mahn said Mr Buchanan’s remarks were “somewhat alarmist . . . given that new data showed that UK energy demand was at a 14-year low and not expected to rise dramatically over the next five years”.
But she said that, longer term, it would be difficult to get the investment needed to meet demand without burdening consumers with higher costs.