Engineering news
A US expert on the shale gas boom has backed Lord Deben's support for the nascent British fracking industry.
Earlier this week, Lord Deben – who as John Gummer served as environment secretary in John Major's government – said ministers should press ahead with fracking, which could provide a secure source of energy for decades. Lord Deben is the chairman of the government's official advisory body on climate change.
John Gilmore, director of upstream oil and gas at engineering giant Invensys, said the peer was right to dismiss the concerns of environmental groups about the controversial process. He told PE: “Just as with the US Environmental Protection Agency, there are a lot of people objecting about fracking – but it's not so clear what the grounds for those objections are.”
He argued that claims that fracking had damaged the environment in the US were being overturned and attributed to other causes. “Of course, it is perfectly possible to contaminate water supply with a poorly drilled well. You can screw a well up, and contaminate the watertable, but that isn't because you've fracked,” he said.
“There is no additional risk associated with fracking, compared with other processes. Properly done, fracking doesn't cause problems.”
Gilmore said the impact of the shale gas industry in the US had been remarkable. Liquefied natural gas terminals that had been underused before the recession and designed to import LNG were being converted to export gas thanks to the boom. “The US has a surplus of natural gas and is looking to export it, or drive a revival of the petrochemical business.
“Prior to the shale gas boom, there was a 5% utilisation rate for some US LNG terminals. Now those terminals are being converted for export by companies such as Exxon,” said Gilmore.
He said the impact of shale gas in the US had also allowed some energy-intensive manufacturing work to come back to the country from overseas. “Certain kinds of fabrication like mini mills that convert steel into consumables such as rebar can thrive on some of the cheapest gas supplies in the world.”
Petrochemical businesses such as the production of ammonia-based fertilisers and the manufacture of polyethylene may also benefit, he said. “All of those can take advantage of low-cost natural gas.”
The price of natural gas on the New York Mercantile Exchange is around $4.40/MMBtu (million British thermal units). In Europe, it trades at $11-12/MMBtu. In Japan, the level is higher still, at around $17.
Projects are planned to restart or upgrade mothballed facilities as a result of the gas price in the US, said Gilmore. There has also, as in the UK, been a swing in favour of gas-fired electricity generation at the expense of coal.
Liquefied natural gas was being used in the US as an alternative to diesel in commercial transport applications, where it works out at around 50p/gallon cheaper. “The impact can be dramatic. If you drive the price down that much, you get complete revisions of your whole market.” There were moves to develop a more extensive LNG refuelling network, he said.
He conceded that US reserves of shale gas were of a different order to those likely to be confirmed in Britain. “You haven't fully quantified what you've got.”
He added that the industry in North America had another advantage. “The US and Canada are the only countries in the world where a private citizen can own mineral rights.” This had meant that individual landowners were incentivised to allow companies to explore for gas on their land and grant rights to companies wishing to exploit shale gas, sometimes making huge fortunes as a result.
“There are a lot of farmers in Ohio who are going on cruises and buying second homes in Mexico,” said Gilmore.