Centrica talks down shale gas but may still invest

Centrica boss's comments disappoint Davos leaders desperate to find the equivalent of a new internet during recession

Sam Laidlaw did his bit to rain on the Davos parade when he dissed the prospects for shale gas as the game-changer that will shake countries out of their economic torpor. Yes, said the Centrica boss, shale had produced astonishing changes in the price of natural gas in America, but it was unrealistic to imagine this could be replicated – at least in Britain.

That is not what those on the Alpine jaunt want to hear. Global political and business leaders are desperate to find the equivalent of a new internet during a period of debt and recession gloom.

Peter Voser, the Shell boss, is expected to strike a more upbeat tone when he signs a gas deal with Ukraine claimed to be worth $10bn (£6bn) and could be worth as much as $50bn.

But in fact Laidlaw is not as negative as he is pretending: the owner of British Gas is one of a number of major energy players considering whether to invest in British shale trailblazer, Cuadrilla Resources.

David Cameron's old Etonian buddy may also feel he needs to explain to shareholders – though not to environmentalists – why he has not jumped on the carbon-producing energy bandwagon earlier. His arguments against quick development of shale in Britain were largely built around civic opposition to the "fracking" needed to exploit reserves and population density, which makes it difficult to drill the many wells needed.

Laidlaw again refused to comment on any prospective interest in Cuadrilla, whose existing shareholders, Riverstone Holdings and AJ Lucas, would like to bring in a larger partner to give clout to the schemes off Blackpool and elsewhere.

Shell has an easier ride in Ukraine because the government there is desperate to find indigenous shale reserves so that it can escape its dependence on Russia.

German environment minister: 'we want to limit fracking'

Conservative politician Peter Altmaier says rules for the new drilling technique will likely be tightened in Germany

'I don’t see in the foreseeable future that fracking will be employed' ... German environment minister Peter Altmaier. Photograph: Gon Alo Silva/Demotix/Corbis

Germany's environment minister said on Monday he did not want to make it easy for companies to "frack" for shale gas and could not see the practice happening in his country in the "forseeable future".

Pending rules for the drilling techniques would likely be tightened, said Peter Altmaier, a conservative politician in chancellor Angela Merkel's government.

"The message is we want to limit fracking, we don't want to facilitate it," he told Deutschlandfunk radio. "And anyway I don't see in the foreseeable future that fracking will be employed anywhere within Germany."

Fracking, or hydraulic fracturing, involves pumping vast quantities of water and chemicals at high pressure through vertically or horizontally drilled holes to release gas trapped in shale formations.

Altmaier said he would recommend that interested parties refrain from applying for exploration licences. So far, only a few small initiatives are under way in the absence of clear-cut rules.

The upper house of parliament, where Merkel's governing coalition no longer has a majority, earlier this month passed a resolution urging the cabinet to tighten rules for fracking, which critics say may increase seismic risks and even pollute drinking water.

Companies such as ExxonMobil and BASF's oil-and-gas arm Wintershall are pushing to explore possibilities, but due to the country's federal structure, individual states can decide whether or not to issue permits.

In the US, the new drilling technique has created a shale gas boom in recent years, freeing the country of the need to import, and changing gas flows and prices in the world market.

Germany produces only 14% of the gas it consumes and imports 40% from Russia.

Industrial gas consumers say they could benefit from fracking, as they need a secure supply at reasonable prices.

But opposition to unknown technologies is growing, and with a national election scheduled for 22 September, opposition parties and government alike are seeking to avoid controversy. Rules for initiatives to try to bury captured carbon from coal-fired power stations have already been tightened so much that the technology is practically dead in Germany.

• This article was amended on 12 February 2013 to clarify that fracking can be done with vertical or horizontal drilling.

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Date: 2016-01-14; view: 745