Politicization of Energy Debate in UK to Continue Till Elections, Says MP Dan Byles
The increased politicisation of the energy debate is more related to political campaigns than it is to divergent positions of British political parties, said Dan Byles on Tuesday, adding that the possible political wobble linked to the 14th licensing round will be temporary. According to the MP for North Warwickshire and Bedworth and chairman of the all-party parliamentary group for unconventional oil and gas, the debate will continue for another year till the general election in 2015. A convergence is expected afterwards, as all the British political parties are said to equally believe that shale gas is the way forward.
“The problem that we have in the United Kingdom is the increased politicisation of the energy policies in the last 12 to 20 months,” Byles said during the first day of the Unconventional Gas & Oil Summit taking place on Tuesday and Wednesday.
In this sense, Byles hinted at a year of political instability that would come to an end in May 2015. After the elections, political parties are expected to further support shale gas exploration. These declarations are particularly relevant in a moment shale gas explorations are increasingly seen by the British government as an efficient way to compensate for the decrease in offshore gas production, despite growing public opposition.
Many analysts also expect a change in the trespass law to be announced by the Queen during her Speech on Wednesday.
“We have a pretty strong political consensus in the UK on this strategic direction in the energy policies,” Byles argued, explaining that the current government’s energy policies are pretty much the continuation of the Labour’s strategy. In this context, he also said that the 14th licensing round all but decided, despite some doubts raised by other panellists.
“I would be surprise if it did not go ahead,” he explained.
The chairman of the all-party parliamentary group for unconventional oil and gas also said that the only significant argument against shale gas in the UK stems from the fact that indigenous gas production would not decrease the amount of gas or coal produced and consumed in other countries, therefore not contributing to a global effort to decarbonize the economy. However, he claimed that the UK has to look after its own interests, not paying too much attention to global trends.
“It is not up to us to control the LNG markets or other countries’ energy policy,” Byles said.
During the first day of the conference, nobody spoke out against shale gas and experts focused their attention on the future of shale gas and on other measures the UK could take in the near future. Some made the case for a change in the offshore regulatory regime, some others pointed at complementary investments in the energy sector. The UK industry was said to be intentioned to step up its efforts to promote indigenous energy-related activities.
“We are trying to build a rig industry in the country,” Ken Cronin, United Kingdom Onshore Operators Group’s CEO, said during his intervention.
According to Cronin, the UK is potentially able to beef up investments to produce rigs locally, decreasing its reliance on Italy and South Korea for its drilling machineries.
NOT EVERYBODY WOULD AGREE ON SUCH AN OPTIMISM
Despite acknowledging that North Sea production is set to decrease and meet national needs by 2030 by less than one third, some panellists questioned shale gas' relevance, suggesting it is not a game changer. In a broader context, European shale gas was said to have little potential if compared to African and South American reserves and geology. At the same time, the British unconventional industry would have a small impact in comparison to other European countries.
“Different price elasticities of natural gas explain Polish enthusiasm and French disinterest, but not Bulgarian and Czech moratoria and British interest,” said Aviezer Tucker, Assistant Director at the Energy Institute, University of Texas.
According to Tucker, Eastern European countries are the ones really needing shale gas, as Western countries like France and the United Kingdom are already well diversified. On the other hand, Bulgaria, Czech Republic, Hungary and Poland would really take advantage of even modest shale gas production, as it would impact on their ability to get lower gas prices from Russia and to promote diversification. In this sense, British shale gas has been confirmed as a mainly domestic issue.
Nonetheless, British shale gas would potentially have a significant impact on Europe. According to panelists, a kick-off of shale gas in Great Britain would be replicated by other European countries. In particular, France is expected to rush to replicate eventual successes in Europe.
“A successful European country would be more of an example than United States,” Tucker concluded.
Sergio Matalucci