A QUIET SENSE OF URGENCY...

There is an increasingly desperate search for secure energy supplies, which is one of the reasons why George Osborne jumped in with both feet in relation to exploitation of Shale Gas reserves, hence the creation of the Office for Unconventional Gas and Oil. Just exactly how that fits in with the concept of Devolution in Wales is open to question? The chancellor also started the ball rolling on yet another Conservative driven dash for gas by approving the construction of potentially up to 30 new gas-fired power stations, to be built over the next two decades.

The UK Westminster government wants up to 26 GW of new gas generating capacity by 2030 much of which may come from the potentially environmentally questionable process known as fracking. Back in March 2011 the House of Commons Energy Select Committee came out in favour of fracking as an option for ‘secure energy’ simply stating that any environmental problems associated with fracking in the US would be overcome by tight regulation and good industry practice.

Options for energy exploitation (South Wales)

I am a big believer in developing Wales’s secure energy potential; unlike the Chancellor and the Con Dems I actually believe that we should have secure sustainable energy supplies. I also think that they should be community beneficial and just happen to think that we in Wales should have control of them. One inescapable part of the problem is that we (the population of the planet) are running out of easily (relatively) accessible hydrocarbons (oil, gas, etc) no matter how you spin it they are a finite resource.

The search for conventional hydrocarbons (oil) is becoming increasingly costly. Work on the Kashagan oil island in the Caspian Sea, off Kazakhstan has cost $46 billion dollars or around £ 28.8 billion pounds to develop. It is one of Kazakhstan's most ambitious project and just happens to be the world's largest oil find in the past 40 years. Kashagan may be as good as it can get for the Kazakhs and the Oil companies, but, one inescapable fact is that the field holds approximately 13 billion barrels worth of recoverable oil or around enough oil to fuel the world for nearly five months.

At the moment much of the UK’s gas supplies come from Qatar (in the Persian Gulf) which while being relatively stable has some Human Rights issues. As stable as it is, the problem is that the Middle East and the Gulf region are unstable. If some of Qatar’s despotic and repressive neighbouring rulers (run out of rubber bullets, tear gas and live rounds) and fall to popular unrest (at some point the repressed will lose patience and then it comes down to a simple if bloody numbers game) then we could be talking about lights out in the UK and flickering lights for much of Europe.  

Options for energy exploitation (North East Wales)

Hence the Chancellor’s quiet sense of urgency surrounding exploiting the Shale gas reserves. Now there are potentially sizeable reserves of Shale gas under some parts of our country with an estimate of recoverable gas reserves, possibly worth £120bn something which have got some people and some of the energy companies salivating.  Oddly enough Gazprom, the monopolistic gas producing arm of the Russian State, with its hands tightly gripped on the gas pipe, of most of Eastern Europe, does not favour Shale Gas production.

Now this all sounds good, but, the potential impact of the hydraulic fracturing technique (fracking) on people's health and environment is potentially pretty grim. The process can use a combination of water, sand and chemicals which are pumped into rock formations under high pressure. Something which has led to a sizeable number of environmentalists to raise real concerns about the fracking method could which can contaminate drinking water supplies.

Something else that is worth thinking about is that to make the extraction process work economically there is a requirement to drill lots of wells in close proximity to each other to aid extraction. Something that might lead to a far more significant environmental footprint during and after the gas is gone. In parts of south and north east Wales, whether with deep mined or open cast coal mining we have seen how the post mineral extraction clean up works.

One unanswered question is what will happen to any tax revenues, drilling permit fees, etc from Shale gas extraction. The Labour Party in the late 1970’s and the Conservatives through the 1980’s failed to pump revenues into an oil and gas fuelled sovereignty fund (like Norway did) choosing to blow the lot on subsidies for inefficient nationalised industries and tax cuts for the rich.

Ultimately Shale gas is also a one off, literally a one hit wonder, once gone it’s gone for goods. UK reserves, even if 50% was extracted might last 10 years, and then what? Over the last 15 years successive UK governments should have been working hard to develop non hydro carbon dependent sustainable energy supplies. Rather than do something they simply left energy planning and energy development to the whims of a cartel dominated nominal free energy market.

The main beneficiaries at the moment for Shale exploitation would by the UK Treasury (tax) and the Crown Estates which with its urban, rural and marine holdings across the UK, including the seabed and large areas of land, stands to profit from renewable energy developments and off-shore dredging. Any shale gas extraction should be regulated, supervised and approved (but only after a full and comprehensive environmental assessment) here in Wales, not in Westminster.

Any tax or licence revenues raised should go into a ring fenced all Wales sovereign energy fund which the National Assembly should avoid plundering for short term financial fixes. As we in Wales will have to live with any consequences (both long and short term) of an environmental disaster it is only reasonable that our natural resources should be controlled by and developed for the benefit of the Welsh people.