27 Jun 2013

Shale gas report beefs up Osborne’s infrastructure plans

The publication of the British Geological Survey (BGS) on shale gas today has George Osborne‘s fingerprints all over it.

Earlier this week a source close to the Energy Minister Michael Fallon told me not to expect the report for several weeks. But that same source yesterday now says the chancellor has ordered its publication today “to beef up the infrastructure announcements”.

You can see why. For all his talk about infrastructure spending, the numbers tell the true story.

That is that public sector gross investment is actually falling, according to the Office for Budget Responsibility: by 21.9 per cent from the years 2010/11 to 2017/18 – with a drop of 1.7 per cent in the financial year 2015/16 alone.

In that context it’s no wonder the chancellor wants some good news today. And by all accounts the BGS survey has provided it.

The amount of gas trapped under the Bowland shale formation in Lancashire is a huge sum – trillions upon trillions of cubic feet of gas. It’s a game changer in energy terms, shifting the UK’s dependency on foreign imported gas for years to come, if – and it’s a big if – we can get at it. Because don’t forget, shale gas is trapped miles under ground in tiny crevices embedded deep inside the bedrock.

Environment concerns

To extract the gas is a time-consuming, complex and not least controversial process. Controversial because of evidence from the US where the discovery of shale has transformed America’s energy market during the extraction process, known as fracking – the term for when millions of litres of water, sand and chemicals are pumped miles underground to blast the rock open and force the shale gas out and up to the surface.

The worry is that the process can cause earth tremors – as we’ve already seen on a small scale in Lancashire – and pollute the water table.

Pictures from the anti-shale documentary Gaslands famously show water from domestic taps being set on fire and people with burn marks from using their showers in contaminated areas.

So the fact that shale is in large quantities in the north of England is, on the face of it, good news.

But as quickly as Mr Osborne gets this survey data out today, he needs to commission another study to ensure we fully understand the potential environmental and human impact of the gas before the champagne corks start popping.

It’s worth noting too that the real game changer for Britain’s energy industry – economically and jobs wise – is nuclear and offshore wind.

And on this, today, the chancellor has nothing to say.

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