Shale gas becomes an even more compelling opportunity – we must seize it

By Mark Wallace 
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A few weeks ago, I wrote here about the potential benefits of UK shale gas in terms of new engineering jobs, reduced reliance on expensive imports and an opportunity to address the energy gap which is fast approaching.

Today, there is yet more good news on the shale gas front.

As recently as 2010, the best estimate of British shale gas reserves was 5.3 trillion cubic feet (tcf) - a valuable resource but less of a game-changer than the shale revolution in the US. After the Government lifted the moratorium on exploration, licensed companies have raised their estimates based on new data.

Now we learn that IGas and Cuadrilla, who have exploration rights in Cheshire and Lancashire respectively, have found far more than expected. They now estimate that the Bowland Shale deposit in the North West alone may contain as much as 500 tcf of shale gas.

Now that's a game-changer.

All underground deposits can be difficult to access, so the amount that can be extracted affordably will be less than that. At a conservative estimate of a 10% extraction rate, which would be rather lower than the success rate in America, that would mean the North West of England is sitting on 50 trillion cubic feet of a valuable resource.

To put that into context, the FT reports that national gas consumption is just over 3tcf per annum, and is expected to stay at that level for the next couple of decades. So the Bowland Shale could supply Britain's gas demand for more than 15 years - a staggering, positive economic impact which would benefit domestic consumers as well as making manufacturing more viable through lower energy bills and cheaper raw materials.

Now that the opportunity turns out to be even greater than previously thought, it is all the more important that it is seized properly. A recent report from my former colleagues at the Institute of Directors lays out a clear, politically feasible path to doing so.

The Government took the right decision when Ed Davey was persuaded to lift the exploration moratorium. David Cameron reportedly spoke in glowing terms of the US shale revolution at a recent event in New York, and both he and the Chancellor are keen that the UK should get a slice of the pie. Dan Byles, the North Warwickshire MP, is doing important work rallying parliamentary support for the development of a new shale industry, too.

The experience of the American shale boom and the development of the North Sea oil fields has a lot to teach us about how to go about building a new industry from scratch. Ensuring ease of access to the wider gas grid, training young people in the skills which will allow them to take up the new jobs and winning over local communities are all crucial steps.

In the short term, the approval of county councils will be required. A little-noticed outcome of the local elections was Lancashire County Council falling to No Overall Control, with Labour as the largest party. A key question for the future of the county is whether they will allow fracking to take place or not - something made more difficult with a hung council chamber.

The IoD's report contains a cautionary tale Lancashire's County Councillors might wish to bear in mind.

When North Sea oil was first discovered, Aberdeen raced to make itself the home of the new industry. Today it seems obvious that Aberdeen is an oil city, but at the time it was far from certain - other towns and cities on the East coast of Scotland could easily have been picked. Political and business support, combined with the right infrastructure, ensured they made the most compelling pitch. The city now enjoys wealth far beyond many of its 1970s rivals. Lancashire might kick itself in years to come if the County Council turns down this huge shale gas opportunity.