From: Time For Britain To Get Fracking, Standpoint, April 2012, Patrick Heren
The economy of the United States is rebounding on the back of a manufacturing-led boom fuelled by cheap gas.
The American revival is in its early stages, but already manufacturing is being repatriated from China: an astonishing development after decades of offshoring.
In recent years the gulf between open market gas prices in North America and the rest of the world has widened dramatically.
The reason was the development in the US of massive gas reserves trapped in previously inaccessible shale rock formations.
The benchmark price at Henry Hub in Texas fell from a pre-shale peak of nearly $13 per million British thermal units (BTU) in mid-2008 to as low as $2.71 in January this year.
Since January 2011 the US price has averaged less than $4 while the British National Balancing Point (NBP) price has averaged more than $9.
In 2011 shale gas accounted for a quarter of US natural gas production.
In 2000, US dry natural gas resources were estimated by the Energy Information Administration at 1,500 trillion cubic feet, almost entirely in conventional reservoirs.
By 2012 estimated reserves had risen by 67 per cent to more than 2,500 trillion cubic feet, of which a third was accounted for by gas in shale formations.
Import terminals for liquified natural gas (LNG) are being reconfigured to handle exports. However, no gas has yet been exported.
The US has a long history of energy protectionism but even if the US refuses to licence LNG exports, Canada, whose traditional export markets have been hammered by the shale revival, will sell LNG to the world.
The technological advances that have given the US its abundant shale gas will also provide crude oil from shale.
Cheap gas will encourage the US petrochemical industry to invest $30 billion in new plant over the next five years, according to the Chevron Phillips Chemical Co.
Plastics producers will get a double boost from cheaper feedstock gas — the raw material for their product — and lower electricity costs. This will further increase the American advantage over competitors in Western Europe and Asia whose usual feedstock is oil.
Thus shale gas has provided the US with a chance to launch an economic recovery based on manufacturing and exports.
British advocates of shale gas claim that there are gigantic reserves just waiting to be tapped.
Opponents say that fracking (hydraulic fracturing) poisons the water supply and causes earthquakes.
The impact on the water supply will inevitably remain a matter for concern, because of the tiny amounts of chemicals dissolved in water injected to fracture the source rock.
The techniques themselves are constantly being refined and, compared to the early days in the US, the chemicals used now appear innocuous.
Hydraulic fracturing does, according to the US Geological Survey, cause small but harmless earthquakes, although the recycling of waste water into deep wells can cause perceptibly larger quakes.
It should be noted that most subterranean activities, such as coal mining, can cause subsidence or earthquakes.
There are several shale gas exploration sites around Britain but the most significant is Cuadrilla Resources' initiative on the Fylde coast of Lancashire.
Cuadrilla announced that it had identified reserves in place of 200 trillion cubic feet — roughly 20 times the proven reserves of conventional natural gas in the North Sea.
Even assuming only a 10% recovery rate this one find potentially trebles Britain's gas reserves.
The BBC reported the story as an environmental disaster in the making.