Bloomberg: U.K.'s Shale-Gas Costs Seen Limiting Price Curbs

Costs for producing shale gas in the U.K. are double that of the U.S., limiting any price reduction for consumers, according to Bloomberg New Energy Finance.

Extracting gas from shale in areas such as the Bowland basin in northern England would cost $7.10 to $12.20 per million British thermal units compared with $5 to $6 in the U.S., BNEF wrote in evidence to a House of Lords committee. The greater cost, because of higher land prices and lack of rigs and infrastructure, is close to the $8-to-$11 range in which U.K. spot prices have traded in the last two years, it said.

Exploitation of shale resources in the U.S. has seen it overtake Russia as the world’s biggest gas producer in 2009, slashing prices to a low of $1.80 per million Btu in March last year. The U.K. government, hoping to counter declining reserves from the North Sea and cut imports, has promised tax breaks to encourage drilling.  MORE