UK hopes that shale gas will ride to the economy’s rescue have been dealt a blow by the boss of British Gas.
Sam Laidlaw, chief executive of British Gas owner Centrica (LSE: CNA.L - news) , said it would be at least a decade before the UK saw any shale gas production and that, even then, it would not be “the game changer we’ve seen in North America”.
In December, the Chancellor unveiled tax breaks for shale gas exploration and ended a moratorium on the controversial fracking process used to extract the gas, imposed after the technique caused minor tremors near Blackpool in 2011.
Speaking on the fringes of an energy event at the World Economic Forum in Davos , Mr Laidlaw said shale gas would not be a miracle solution to dwindling North Sea oil “partly because of the environmental concerns and partly because we don’t have a well-developed supply chain”.
He added that other obstacles included planning regulations, the “density of the population” in potential exploration areas, and “landowners’ incentives”.
Development in the UK will be “much slower” than in the US, where shale has turned the US from a net importer of gas to a potential net exporter in just three years. So fast has the revolution been that a number of US storage plants recently built to house imported gas are now being converted into processing plants for export.
Mr Laidlaw’s comments come amid speculation that Centrica is preparing to take a stake in Cuadrilla, the private equity owned oil and gas developer. Cuadrilla has estimated that there is 200 trillion cubic feet of gas in the Bowland Shale, although it has yet to establish how much is recoverable.
Cuadrilla earlier this month revealed it is in early discussions with a number of parties about developing the project. Centrica has not confirmed its interest and Mr Laidlaw refused to comment.
Some US energy specialists at Davos have expressed doubts about whether the UK has the political will to push ahead with shale gas in the face of likely local resistance citing the same obstacles as Mr Laidlaw.
Delegates at Davos have heard the US shale gas revolution described as “the most significant global economic event of the last few years” that will reshape the geopolitical framework of the Middle East as the US becomes energy self-sufficient.
Gas prices have fallen and are increasingly replacing higher carbon coal-fired power, bringing down emissions.