Fallon says ‘get ready for shale’ but warns of wind cuts

The UK‘s Energy and Business Minister Michael Fallon today said it was time for Britain “to get ready for shale” after a report said a shale gas supply chain could boost the economy by à‚£33bn and create more than 64,000 jobs.

But Fallon has also sparked fury among green groups after announcing that the Conservative Party would end subsidies for onshore wind farms if it won next year’s general election.

The shale gas report was produced by EY for the United Kingdom Onshore Operators Group (UKOOG).Michael Fallon

The study stated that à‚£33bn could be added to the UK economy by 2032 if it drilled 4000 horizontal wells between now and then. But is stressed that action needs to be taken soon to capitalise on these potential gains.

Fallon said that the report showed “the huge prize at stake for the UK in terms of jobs and manufacturing in the supply chain for our onshore oil and gas industry”.

He said shale gas had the potential to “kickstart a whole new industry, building on the world leading expertise the UK already has in the energy sector. There will be significant opportunities across the steel, manufacturing and engineering industries as shale develops.”

“This government is fully committed to ensuring the UK not only benefits from the energy security shale gas could provide but also maximising the economic benefit across the country. It’s time to get ready for shale.”

UK Energy Secretary Ed Davey has always been cautious over the exploration for shale gas, and he was less enthusiastic today than his energy minister: “We must explore the benefits and investment shale gas may bring but that should not come at the expense of the environment.

“Over the past year the scientific evidence has allowed us to conclude that shale production can be managed effectively as long as best practices are implemented and enforced.”

Chris Lewis, partner in advisory services at EY and the author of the report, said the study showed that the opportunity from shale gas was at an “impressive scale”. à‚ 

“This is a unique opportunity to secure the future of next generations of energy users, but industry and government need to take action now for the necessary infrastructure, supply chain standards and skills to be ready in time.”

He added that the “current lack of a clear framework standardising the approach towards shale gas exploration, as well as the lack of relevant skills, need to be addressed to unlock further investment”.

“Putting a good launch pad in place so we are ready to push the green button and start exploring the UK’s reserves should be on top of our to-do list. This is how we will ensure that the UK can turn billions of pounds currently spent on gas imports into revenues for local communities. “

Ken Cronin, chief executive of UKOOG, said: “We are building an industry in this country which will not only potentially give the UK energy security and make a big contribution in tax revenues but will also bring immense benefits to other industries and create sustainable, well-paid jobs.”

He said the energy industry and the government “will need to work together in order that the recommendations of this report are fulfilled.à‚  If the UK takes advantage of this opportunity, many of its companies will be in a favourable position as other countries in Europe develop their own shale gas industry.”à‚ 

The conclusions of the report have also won praise from some major businesses, including Tata Steel. Its director of strategic business development Deirdre Fox said the report was “an excellent eye-opener as to how big an opportunity the responsible development of a shale gas industry is for the UK economy”.

“The report provides valuable insight into the potential of unconventional gas for some of the UK’s foundation industries like steel and what is likely to be required in terms of UK supply chain development for the full value of this new industry to be captured here in the UK.”

Meanwhile, Michael Fallon’s office today released comments on onshore wind subsidies. Fallon said: “We now have enough bill payer-funded onshore wind in the pipeline to meet our renewable energy commitments and there’s no requirement for any more.

“That’s why the next Conservative government will end any additional bill payer subsidy for onshore wind, and give local councils the decisive say on any new wind farms.”

The comments immediately drew fire from Britain’s two biggest renewable trade bodies, RenewableUK and the Renewable Energy Association.

RenewableUK chief executive Maria McCaffery said: “Onshore wind is the lowest cost form of renewable energy we have, and cheaper than new nuclear. The industry has already seen a reduction in financial support, and a trajectory for further reduction is clearly laid out.”

She said “cutting all support overnight” was “bad news for jobs and energy bill payers… and also a bad move electorally. Two thirds of voters back onshore wind and voters of all parties prefer it as a neighbour to fossil fuel technologies like shale gas.”

She urged the Conservative Party to “work with the industry on cost reduction, and stop making arbitrary comments which threaten investment in all energy types”.

“When it comes to something as important as guaranteeing the security of the UK’s future energy supply, the British public deserve better than ill-considered, short-term policy making on the hoof like this.”

The REA’s head of public affairs James Court said Fallon’s comments on onshore wind compared to his views on shale gas “undermines all the positive work this government has put into renewables”.

“The shale gas industry has the government’s unwavering support, and yet according to its own figures its potential for jobs is less than the renewables industry already achieves in the UK.

“Renewables are delivering today, while any potential benefits from shale gas are still some way off. Renewable energy is attracting investment, creating jobs, cutting costs, improving our energy security and preserving our environment. We urge the pragmatic wing of the Conservative Party to resist this political game-playing and make their voices heard in the debate.”

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