NYTimes: Why Shale Gas Won't Conquer Britain

With the announcement in December of its decision to award new shale drilling licenses in 2014, the British government has made plain its enthusiasm for shale gas. This zeal stems from the belief that an increased domestic gas supply will drive down national prices, at once enhancing export competitiveness while addressing growing public concern over rising domestic energy bills. But this strategy is misguided: Unlike in the United States, a shale gas revolution will not bring down prices in Britain.

In Britain, proponents of increased drilling, including Prime Minister David Cameron, like to point to the success of expanded shale gas production in America. There, the ability to tap into vast resources of shale gas, thanks to developments in a technology called hydraulic fracturing, or fracking, has led to a significant drop in domestic gas prices, created tens of thousands of jobs and helped to move the United States away from dependence on gas imports. But America’s shale gas revolution, which was over 25 years in the making, occurred in a context that would be very difficult to replicate in today’s Britain.

A number of specific conditions helped to drive the American shale gas revolution, not least favorable geology. Much of America’s shale yields high levels of very valuable liquids, like crude oil, as well as gas. The ability to extract these liquids, produced as a byproduct of shale gas operations, has tended to make the economics of American shale operations favorable despite low domestic gas prices.  MORE