A PR representative from the UK’s only active shale gas producer Cuadrilla – led by Chairman Lord Browne, former CEO of BP – admitted last week that there would be a ‘basically insignificant’ impact on gas prices from domestic shale gas exploitation.
At a meeting in Balcombe, West Sussex, a representative of the firm was asked to comment on whether the exploitation of shale gas in proposed sites in the home counties and the north-east of the country would drive down energy bills for customers.
‘We’ve done an analysis and it’s a very small… at the most it’s a very small percentage…basically insignificant,’ said Mark Linder, a PR executive at Bell Pottinger, who is responsible for public relations and corporate development for Cuadrilla. The comments, made in a private meeting with Greenpeace, contradict Cuadrilla’s public statements that suggest lower gas prices for consumers.
The comments deal a blow to George Osborne’s plan for ‘cheap’ energy flowing from onshore shale gas exploitation in the UK. Those in favour of shale gas exploitation in the UK often cite the US example, where gas prices have been falling. This has been counteracted by US industry players lobbying to end federal limitations on exports of gas, in order to benefit from sales to highest international bidders. Companies in the US do not want the price of gas to fall too low, as this makes wells far less profitable.
In the UK the government has promised to subsidise shale gas drilling activity through generous tax breaks in this year’s budget. MPs have also recently discussed implementing a ‘cash-for-locals’ scheme that would offer lower bills or cash payments to encourage communities to allow fracking in their local areas, whilst still acknowledging that there would be no guarantee of lower prices across the domestic sector.
Cuadrilla made statements in Parliament in 2011 suggesting that ‘has the potential to lower natural gas prices (tending to reduce electricity prices’. The company’s website also says shale has ‘the potential… to lower gas prices’.
Responding to Mr Linder’s leaked comments, a company spokesman said: ‘Cuadrilla’s never said it [shale] will bring down prices… We don’t think it will bring down prices, although it does have the potential to.
‘Security of supply is the issue. We import a large part of the gas we use at the moment. It’s also about tax revenue, we will make a massive contribution there,’ he added.
Those with an eye on the tax breaks and subsidies afforded to the gas industry indicate that Cuadrilla is unlikely to make large tax contributions. Furthermore, campaigners and researchers are concerned that the social and environmental costs of exploiting unconventional gas reserves onshore will be far higher, and much more complex to rectify.