In May 2011, the Committee published a Report on Shale Gas. Since the Committee’s inquiry, there have been further estimates of the amount of shale gas in both the UK and Europe, but these have fluctuated significantly.
Gas has traditionally been a high-volume, low-value commodity, that has been expensive to transport (as LNG). Trade has largely been restricted to specific regions, which has led to regional markets with regional prices. The Committee previously concluded that, while UK shale gas resources could be considerable, they were unlikely to be a “game changer”. But there was evidence that offshore unconventional gas resources could be substantial, and that there was uncertainty in the extent to which a glut in shale gas production could drive down the price of conventional gas.
Large volumes of shale gas being discovered could lead to a global market in gas, as more opportunities for trade arise and the costs of LNG fall. The first LNG export facility in the lower 48 states has recently acquired federal approval in the US, with a post-Fukushima Japan being its initial market.
This inquiry will follow up on the Committee’s previous report and investigate the different estimates made for recoverable shale gas reserves in the UK (on and offshore), Europe, and the rest of the world and the implications of the “shale gas revolution” for energy markets around the world.