The current low oil price has led some to question whether UK shale development is economically viable. This concern would appear unjustified, considering investment decisions will be based on gas prices in the 2020s by which time prices are likely to rise. Moreover, the cost of transporting gas by LNG tanker can add up to 50% to the cost, offering a further reason for promoting UK shale gas development.
The Government must continue to prepare the ground for UK shale development in the 2020s by ensuring that exploratory drilling takes place by the end of this year. More than 80% of UK homes are heated by gas and modelling by the Department for Energy and Climate Change suggests that the UK will need 26GW of new gas capacity by 2030. Without indigenous shale production, around 75% of the UK’s gas will need to be imported.
99p petrol will not last forever
