New report: British shale gas could create 35,000 jobs, reduce carbon emissions and lower energy prices

21 September 2012

A new report from the Institute of Directors (IoD) reveals the huge potential of Britain’s shale gas reserves, calculating the job creation, decarbonisation and economic benefits of exploiting the shale gas on our doorstep.

Britain’s Shale Gas Potential, the latest report in the IoD’s Infrastructure for Business series, explores the extent of UK shale gas, the practical and policy implications of fracking and the lessons that can be learned from the US’s experience opening up their reserves. New polling of IoD members shows that British business leaders support developing a UK shale gas industry.

Key findings

The potential reserves

  • British onshore shale gas reserves, estimated at 5.3 trillion cubic feet (tcf) in 2010, are now believed to be much larger – with the British Geological Survey estimate expected to be revised upward later this year, possibly to as much as 200 tcf. Exploration companies themselves have identified resources of nearly 300 tcf so far. Offshore reserves – which are harder to extract – are estimated to be 5-10 times larger than those onshore

The American experience

  • In the US, shale gas now accounts for 23% of domestic gas production and 22% of domestic consumption, helping to contribute to a drastic fall in energy prices for industry and householders. Notably, US natural gas prices have now decoupled from oil prices, continuing to fall even when oil prices rise
  • By 2020, America’s shale gas boom is expected to create 3.6 million US jobs both directly and through the benefits of cheaper energy to the wider economy – particularly manufacturing
  • As natural gas and renewables increasingly replace coal burning, the US has been able to cut carbon emissions by 450 million tonnes – more than any other country in the world

Benefits for the UK

The report uses a conservative estimate of UK production, assuming we would be half as successful as the Americans – if that was the case then the benefits to the UK could include:

  • 35,000 extra jobs, helping to offset the ongoing decline in the North Sea oil and gas industries
  • Enough onshore supply to meet 10% of the UK’s gas demand for the next 103 years, preventing the expected rise in costly gas imports
  • Environmental benefits from shifting from coal-burning electricity generation to shale gas, due to the lower carbon emissions and particulates produced by natural gas. Gas emits half as much CO2 as coal – using gas as a larger part of the energy mix, rather than coal, would help to save up to 45 million tonnes of CO2, 8% of the UK’s annual carbon emissions. Such a shift would also help to reduce the 29,000 annual deaths from poor air quality in the UK

The impact of fracking

The environmental and policy implications of “fracking”, the hydraulic fracturing method used to extract shale gas, are also studied. The report’s findings include that:

  • Reports of earthquakes caused by fracking must be taken in proper context. In the last 50 days, the UK experienced three earthquakes as large or larger than the bigger of the two earthquakes caused by Cuadrilla in 2011. None of them caused any damage
  • With a proper regulatory structure, fracking is no more risky than other hydrocarbon extraction, and should be allowed to proceed in the UK. Regulatory authorities should study closely the experience of the US, where more than 20,000 wells have now been drilled

New poll findings

A survey of 1,095 IoD members also reveals that British business is supportive of developing shale gas:

  • 58% think that extensive development of the UK’s shale reserves would have a positive impact on British businesses, compared to just 7% believing that it would have a negative impact
  • Almost half (48%) agree that the benefits outweigh the risks, compared to 18% who think that the risks outweigh the benefits

Click here to download the full report.

Dan Lewis, Energy Policy Adviser at the IoD and co-author of the report, said:

“Shale gas has huge potential benefits for the UK, both economically and environmentally. We have a massive reserve of shale gas sitting right beneath our feet, and we must take advantage of it. Shale isn’t the answer to all our problems, but it would be a really beneficial part of the energy mix – creating jobs, driving decarbonisation and helping to prevent constant rises in energy prices. We cannot afford to pass up this opportunity when there are so many upsides. Fracking has been controversial, but the reality is that with proper regulation it is no more risky than any kind of hydrocarbon extraction – if we overplay the risks, we would miss out on the very real benefits.”

Corin Taylor, Senior Economic Adviser at the IoD and co-author of the report, said:

“Renewables and gas will go hand in hand as the major growth areas in global energy supply over the next ten years. When the sun doesn’t shine and the wind doesn’t blow, we need a back-up power source – natural gas is a far cleaner way to provide that than coal. British shale gas has the potential to help decarbonise our power supply, support renewables and boost the economy.”

ENDS

Contacts for further comments or to arrange interviews:

Mark Wallace
Head of Media Relations

Institute of Directors, 116 Pall Mall, London SW1Y 5ED
+44 (0)20 7451 3263
+44 (0)7764 883 417
mark.wallace@iod.com

Edwin Morgan
Media Relations Manager

Institute of Directors, 116 Pall Mall, London SW1Y 5ED
+44 (0)20 7451 3392
+44 (0)7814 386 243
edwin.morgan@iod.com

Notes to editors

  • If the links above do not work paste the following URL into your browser: http://www.iod.com/~/media/Documents/PDFs/Influencing/Infrastructure/2012/IoD_Britains_shale_gas_potential
  • The IoD’s Infrastructure for Business series has also run reports on Britain's space industry and the future of nuclear energy.
  • The Institute of Directors (IoD) was founded in 1903 and obtained a Royal Charter in 1906. The IoD is a non-party political organisation with approximately 38,000 members in the United Kingdom and overseas. Membership includes directors from right across the business spectrum – from media to manufacturing, e-business to the public and voluntary sectors. Members include CEOs of large corporations as well as entrepreneurial directors of start-up companies.
  • The IoD provides an effective voice to represent the interests of its members to key opinion-formers at the highest levels. These include Government ministers and their shadows, parliamentary committee members, senior civil servants and think-tanks. IoD policies and views are actively promoted to the national, regional and trade media. Follow us on Twitter to get the IoD’s reaction on business and public policy issues.
  • The IoD offers a wide range of business services which include business centre facilities, with ten UK centres (three in London, one each in Reading, Birmingham, Cardiff, Manchester, Nottingham, Norwich, Edinburgh, Glasgow and Belfast) and one in Paris, conferences, networking events, virtual offices, issues-led guides and literature, as well as free access to business information and advisory services. The IoD places great emphasis on director development and has established a certified qualification for directors – Chartered Director – as well as running specific board and director-level training and individual career mentoring programmes.

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