Shale gas fracking ‘worth £5bn to Scotland’

SCOTLAND is sitting on up to £5 billion of natural gas reserves which could be extracted using the controversial technique known as fracking, financial experts said today.

A report from PricewaterhouseCoopers (PwC) said Scotland is in a prime position to “capitalise” on shale gas, which is produced by fracking, due to the expertise that already exists in the country’s oil and gas sector.

Reserves of the gas, which has helped transform the fortunes of the United States economy, potentially lie beneath a huge swathe of central Scotland stretching from Aberdeenshire to Dumfries and Galloway.

But fracking, which involves pumping vast quantities of water, sand and chemicals into the ground under extreme pressure to crack shale rock and release the gas, has proved controversial.

The technique was previously suspended in the UK after concern it was responsible for causing two earthquakes in Lancashire.

But the moratorium has now been lifted by the UK government, with large parts of Scotland such as Fife, Stirling and Aberdeenshire now being viewed as ripe for the dash for shale gas.

The PwC report Shale Oil – the Next Energy Revolution said fracking could boost the UK’s Gross Domestic Product (GDP) by around 2 to 3.3 per cent by 2035 – worth about £30bn to £50bn.

While there is no specific estimate in the report for how much Scotland would benefit from fracking, it is understood shale gas extraction could be worth up to £5bn north of the Border over the same period.

Fracking is credited with transforming the prospects for the US’s energy industry in the past decade, as the natural gas sector has collaborated with the government to improve drilling and extraction methods, reducing North America’s reliance on importing supplies.

Some energy analysts believe there may be up to 100 years’ supply of shale gas in the US, after the government ploughed money into research and development.

Chancellor George Osborne has said that he will announce a tax regime to support drilling for shale gas and that Britain “must do more” to tap the natural resource.

A document from the UK’s Department of Energy and Climate Change (DECC) has highlighted areas with shale gas potential, including the bulk of Scotland’s Central Belt.

The Dart energy company has already been given permission to search for gas in Scotland at a site at Canonbie in Dumfries and Galloway. The firm is also submitting a planning application to drill at Letham Moss, near Airth, Stirlingshire.

Fracking involves injecting water, sand and chemicals under high pressure into shale rock or coal beds to create tiny cracks. When the pumping stops, the sand keeps the fractures open and the trapped gas escapes and can be collected.

Environmental campaigners have claimed that hydraulic fracturing, or “fracking”, can cause earthquakes, as well as creating the risk of poisoning drinking water if it becomes contaminated with the fluids used in the process and adding to pollution.

The authors of the PwC report have said that Aberdeen’s oilfield sector “could secure a long-term future” for gas exploration by focusing more on fracking.

They insist that Scotland must “grasp the nettle and both exploit and adapt its wealth” of offshore expertise to gain a share of what it says is the multi- billion-pound shale gas sector.

The global shale oil market is predicted to generate up to 14 million barrels of oil per day by 2035, Alastair Geddes, director in the PwC’s oil and gas team in Aberdeen, claimed.

This could cut the price of oil by 25 per cent to 40 per cent – a reduction of about $33 (£21) to $50 (£32) per barrel – according to the report.

A fall in the oil price would boost people’s disposable incomes, but would also result in a reduction in North Sea oil and gas revenues.

Mr Geddes also said that shale oil and gas could also be a new source of tax revenue for the UK government and that Scotland had to “grasp the opportunity with both hands” and not be left “in the slow lane”.

He added: “For the UK government, shale oil and gas presents an opportunity to create a new growth engine for UK plc as well as a new source of tax revenue.”

Mr Geddes said that shale gas “has the potential to reshape the global economy, increasing energy security, independence and affordability in the long-term”.

Supporters of fracking claim it opens the prospect of a cheaper, cleaner and abundant form of alternative energy.

Conservative MSP Alex Johnstone, who represents North East Scotland, claimed that more fracking would create jobs, increase revenue for the oil and gas sector and reduce household energy bills.

He said: “I’m well aware of the concerns some people have about fracking with earth tremors, but the evidence suggests that its not the sort of things that destroys properties.”

The Institute of Directors previously claimed that fracking could create 35,000 jobs and supply a tenth of the UK’s energy needs for more than a century.

However, Scottish Green Party co-leader Patrick Harvie warned that it would be “wildly irresponsible” to pursue fracking, which he claimed would harm moves to reduce climate change.

Mr Harvie added: “A move towards building more fossil fuels power generation would blow Scotland’s climate-change reduction targets out of the water.”

Ed Pybus, of the Campaign Against Fracking in Scotland, claimed that the UK government was attempting to ease restrictions of fracking to pursue a US-style expansion of the process.

He added: “We need to be investing in renewable technology rather than pursuing this disastrous approach, particularly when no environmental study on it has been carried out.”

The SNP government has heavily promoted renewable energy such as wind farms rather than encouraging the use of fracking to extract gas supplies.

A Scottish Government spokesman said: “In Scotland we need a diverse and balanced energy portfolio to provide us with secure and affordable heat and electricity for decades to come and alternative energy reserves such as shale gas and coal-bed methane if sourced and produced with due regard to the environment can fit within Scotland’s energy mix.”