New BGS shale gas estimates leaked: and there's a lot of it!

Breaking news from the Times this weekend. I should add as a caveat that I have no idea how they got hold of the figures, as they haven't been officially released by the BGS yet. However, several sources seem to have confirmed the numbers.

The UK is sitting on 1,300 - 1,700 TCF (trillion cubic feet) of shale gas. For those who don't know how much a TCF is, a useful comparison is the since we started producing gas from the North Sea, we have produced 83TCF, while the Norwegians have produced 57TCF. So 1,300TCF is A LOT.

At this point it is necessary to point out that this figure is the resource. Only a portion of this will be economically extractable - say 10% as a ball-park figure. But even 10% of 1,300 TCF is 130TCF, which is approximately the amount extracted from the North Sea over the last 40 years.

The main article is hidden behind the Times paywall, and I have no desire to put any more money into Mr Murdoch's pocket. However, I've picked up a little more of the article via the No Hot Air website:

Britain could have enough shale gas to heat every home for 1,500 years, according to new estimates that suggest reserves are 200 times greater than experts previously believed. The British Geological Survey is understood to have increased dramatically its official estimate of the amount of shale gas to between 1,300 trillion and 1,700 trillion cubic feet, dwarfing its previous estimate of 5.3 trillion cubic feet.

According to industry sources, the revised estimates will be published by the Government next month, fueling hopes that new “fracking” techniques to capture trapped resources will result in cheaper energy bills.

It is thought that it will be technically possible to recover up to a fifth of this gas, making Britain’s shale rocks potentially as bountiful as those in the US. Experts stressed that it was still much too early to say how much of the gas it would be economic to get out of the ground to heat homes and help to generate electricity.

However, in the interests of balance, I must take the Times to task for their headline. Claiming that we have enough gas for 1,500 years is inaccurate, as only a small amount of the BGS resource estimate will be extractable. Moreover, if we are still relying on gas as the dominant fuel in 1,500 years time then  I would be extremely surprised!

As for the influence of this find on domestic gas bills, I think that is still anyone's guess. Increasing supply will reduce prices - that much is basic economics. But it may not reduce them by much, unless other countries also develop shale gas, as demand is also likely to be high. But it's worth bearing in mind that if global gas prices do remain high, then we as a country can make lots of money producing and selling the gas, while if they drop, we as consumers benefit from cheaper energy. Regardless of what gas prices do, a find this large is a win-win situation. The question now is whether the BGS will confirm these numbers?