The Independent: Viability of shale gas power source in doubt due to cost
George Osborne's hope for a shale gas revolution in the UK has been dealt a serious blow after a leading authority on the energy industry predicted that it would not be commercially viable to extract the gas.
The consultancy, Wood Mackenzie, also cast doubt on suggestions that the UK contained vast reservoirs of shale gas, with the analyst Niall Rowantree arguing that "it is not possible to accurately predict the ultimate recoverable volume of shale gas in the UK and therefore any estimates of the ultimate impact on UK gas supply are premature".
Wood Mackenzie estimates that in order to develop UK shale reserves, potential operators would need a gas price of $9.68 per million British thermal units (mbtu) for the project to make economic sense. This is considerably more than this year's average UK spot price of $8.69 per mbtu and the $8 per mbtu that Bloomberg forecasts it will hover around between 2015 and 2020.
Jamie Spiers, a researcher at Imperial College, said: "These figures suggest that the cost of extracting UK shale gas reserves will exceed the price. This is a big issue that hasn't been addressed very much." MORE