UK should do more to speed shale gas development - MPs

LONDON Fri Apr 26, 2013 12:12am BST

1 of 2. A well is seen at a test drilling site Markowola-1 near Kozienice, central Poland, where Poland's gas monopoly PGNiG hopes to find large amounts of shale gas July 9, 2010.

Credit: Reuters/Kacper Pempel

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LONDON (Reuters) - MPs criticised the government on Friday for unnecessarily delaying development of shale gas, saying it should now encourage companies to come up with more accurate estimates of recoverable reserves.

The lack of progress over the past two years in exploration and development of UK shale gas is disappointing and needs to speed up, members of the influential cross-party Energy and Climate Change Committee in parliament said in a report.

Britain and some other countries have considered following the example of the Unites States, where development of shale gas has transformed its energy market.

"We do not believe that it was necessary to take so long to establish the safety of fracking," the report said.

Britain in the summer of 2011 temporarily banned all hydraulic fracturing (fracking) after several earth tremors were measured in an area near a shale gas exploration site in Blackpool, northwest England.

It lifted the ban in December 2012 on the condition of tighter monitoring rules after several expert reports advised a policy in favour of fracking.

The MPs urged the government to speed up policy to encourage shale gas work, which they said could help improve the security of Britain's energy supply.

Last month, Chancellor George Osborne promised generous tax breaks for shale gas developers and to help improve the industry's public image by involving local communities.

The MPs also concluded there was still too little knowledge about the amount of shale gas that can be technically recovered in Britain and that the government should encourage developers to carry out further analysis to make more comprehensive estimates.

An updated official projection of UK shale gas reserves is expected to be published before the summer, a spokesman for the Department for Energy and Climate Change said.

The committee also said that if the United States started exporting its surplus as liquefied natural gas (LNG), Britain may find it economically attractive to buy those supplies.

The substantial transportation costs mean, however, that the price for UK buyers will be significantly higher than prevailing U.S. prices.

Most estimates include onshore resources only, and committee members said in their report the government should consider giving tax breaks to offshore projects, which could hold more reserves in the medium to long term.

"This must be done before the UK's North Sea oil and gas platforms are decommissioned. Otherwise the opportunity to utilise the UK's offshore oil and gas assets may pass," they said.

(Reporting by Karolin Schaps; editing by Jane Baird)

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