:00:05. > :00:10.stood up population problems tomorrow.
:00:10. > :00:16.-- store up. Tonight and Newsnight Scotland,
:00:16. > :00:21.once upon a time, we feared peak oil. Well, a new generation of
:00:21. > :00:26.cheap oil and generation put an end to that nightmare, but also destroy
:00:26. > :00:30.dreams of a future for renewables? Good evening. The search for an
:00:30. > :00:35.alternative to fossil fuels could face a long delayed. The reason is
:00:35. > :00:39.shale gas is now being recovered on a vast scale from under the United
:00:40. > :00:46.States. It is arguably cleaner than coal and cheaper than Russian gas.
:00:47. > :00:51.So, on America, it is attractive. Here, too, efforts to recover shale
:00:51. > :00:55.gas are gathering pace. What will that mean for the UK's climate
:00:55. > :01:00.change targets or the drive to develop renewable energy? Business
:01:00. > :01:04.editor, Douglas Fraser, is with the night. You have looked at some
:01:04. > :01:10.unconventional ways to extract oil and gas. Engineers have been
:01:10. > :01:16.ingenious. Yes. To start with, we used to talk about peak oil, the
:01:16. > :01:20.point at which a man keeps going up, because of rising prosperity, then
:01:20. > :01:24.demand falls away, because you cannot replace depleting reserves.
:01:24. > :01:28.We are talking about this less because of this ingenuity.
:01:28. > :01:34.Engineers are digging older oil fields and extracting more than was
:01:34. > :01:39.expected, using text -- using enhanced recovery, ingenious ways
:01:39. > :01:45.of doing that. And taking some old coal minds, and Promethean that
:01:45. > :01:50.used to kill miners can be extracted and burn safely. -- and
:01:50. > :01:59.the gas that used to kill miners. There is some controversial work in
:01:59. > :02:05.Canada, some new methods of tight Rock, using intense pressure. That
:02:05. > :02:10.is done with hydraulic fracturing. That releases gas. That is in Bath
:02:10. > :02:17.quantities. It is particularly in the United States. What impact is
:02:17. > :02:22.thus having on the markets? It is led by North America. The oil and
:02:22. > :02:26.gas coming from the fracturing netted in the United States. All
:02:26. > :02:31.for a while and gas within that market are cheaper than the rest of
:02:31. > :02:36.the world. Gas is very cheap. And signs of conversion from coal-
:02:36. > :02:42.burning, particularly for electricity, and oil towards gas.
:02:42. > :02:46.It is a slow process, but in the space of four or five years, this
:02:46. > :02:49.revolution is underway and becoming evident. In Britain, the Institute
:02:49. > :02:54.of Directors, responding to a lot of environmentalist concerns,
:02:54. > :02:59.saying this could produce 10% of Britain's energy needs for decades
:02:59. > :03:03.to come, producing jobs in the process, if we have a go with using
:03:03. > :03:08.the fracturing record in Britain. We are already importing liquid
:03:08. > :03:14.natural gas into the UK to meet needs. It could be possible because
:03:14. > :03:19.that doing that, maybe from Texas? The knock on effects is, if you get
:03:19. > :03:23.cheap and relatively clean burn fuel, particularly with growing
:03:23. > :03:28.problems with the renewal of Britain's nuclear power stations,
:03:28. > :03:33.you can change the economics of oil and gas. And the economics and
:03:33. > :03:37.attractiveness of renewable power. Solar power and much of the world,
:03:37. > :03:41.went closer to home, and the economics of trying to drill and
:03:41. > :03:45.extract relatively expensive offshore oil and gas. I have been
:03:45. > :03:52.finding out more about this, hearing from a Scot who is in
:03:52. > :03:56.charge of about Scottish company at the heart of this revolution.
:03:56. > :04:02.The threat of oil and gas running out has receded and by a long way.
:04:02. > :04:07.The prospect now, or is it a threat? Gas so pled double it times
:04:07. > :04:11.the energy economy on its head. is still dependent on Middle-East
:04:11. > :04:17.oil. But there is a change happening, Beauly in North America.
:04:17. > :04:22.It is quite possible, even likely, that North America, particularly
:04:22. > :04:27.the US, could be self-sufficient and energy by the end of the decade.
:04:27. > :04:31.Scotland can claim to be at the root of this revolution. It was
:04:31. > :04:40.here in West Lothian that the crashed ice oil and gas from the
:04:40. > :04:43.shield Rock, remnants left in these, this was the starting place for
:04:43. > :04:46.today's global oil and gas industry. While this rock is history here, it
:04:47. > :04:53.is seen as a future in many other parts of the world. In America, of
:04:53. > :04:58.course, the future has already arrived. Texas oil fields are
:04:58. > :05:03.producing vast quantities of gas from horizontally drilled wells,
:05:03. > :05:07.along with chemicals a pump that high pressure. Up to 30 times that
:05:07. > :05:11.of a car tyre for up to ten days. That fractures the rock, releasing
:05:11. > :05:17.gas. That is captured at ground level for up to two years after the
:05:17. > :05:21.initial work. Closer to home, it has also been tried with rocks
:05:21. > :05:28.under Blackpool. The viewer is it creates minor earthquakes and could
:05:28. > :05:30.damage the water table. It is far from a proven technology. What is
:05:30. > :05:36.clear is there are serious environmental risks associated with
:05:36. > :05:41.it. You may get the gas out, but at what cost? And we know renewables a
:05:41. > :05:46.clean, safe and reliable and we have had independently commissioned,
:05:46. > :05:52.sorry, independently done research that shows court -- that shows got
:05:52. > :05:58.and can read all energy needs from renewables. -- that shows Scotland.
:05:58. > :06:03.Weir Group, based in Glasgow, is big in Texas. They are exploiting
:06:03. > :06:08.unconventional gas supplies. It has created 600,000 jobs. The boss says
:06:08. > :06:12.what happens then America is forcing a rethink. It is a
:06:12. > :06:18.fundamental game changer. If you look at it simply, it is estimated
:06:18. > :06:22.that, within three or four years, 50% of US natural gas production
:06:22. > :06:28.will come from unconventional sources. Some commentators now
:06:28. > :06:32.suggest that, as we look out over a horizon of seven years, the US
:06:33. > :06:40.could in fact be energy Independent by 2020, which is a staggering
:06:40. > :06:50.thought. In the past few years, since the fracturing began to
:06:50. > :06:50.
:06:50. > :06:58.deliver gas to homes and industry, look how the price has plummeted.
:06:58. > :07:03.As a result, there is a big shift. Coal burning is down. Natural gas
:07:03. > :07:09.is up by more than renewables. countries that we see at the top of
:07:09. > :07:13.the less that China, Argentina and Australia. There are substantial
:07:13. > :07:18.reserves there. There is a willingness and a desire to move
:07:18. > :07:24.forward, perhaps the biggest challenge in terms of translating
:07:24. > :07:28.that into reality will be the availability of equipment, the
:07:28. > :07:33.infrastructure requirements, because it is all very well
:07:33. > :07:38.fracturing a well, and sourcing gas oil, what you then do with that?
:07:38. > :07:44.You need to get it to market. Having the piping and support
:07:44. > :07:49.infrastructure to enable development is unnecessary must.
:07:49. > :07:56.What about Europe? There are strong press but -- there are strong
:07:56. > :08:01.prospects and Poland and France. Unlike West Lothian. Think back
:08:01. > :08:07.several decades ago. The UK was able to take the lead in the
:08:07. > :08:12.development of off-shore deep-sea technology. It has now been able to
:08:12. > :08:18.export its skills and capabilities right around the world. I genuinely
:08:18. > :08:21.believe we have a similar opportunity here in terms of shale
:08:21. > :08:28.gas and becoming the European hub and platform for the development of
:08:28. > :08:34.the injury. -- industry. In West Lothian, developments can only be
:08:34. > :08:38.slight. But there are plans for extraction of dance -- gas to the
:08:38. > :08:42.north of here near Stirling. But that does not mean it will not be
:08:42. > :08:46.affected here. Energy prices following is good for consumers,
:08:46. > :08:51.not so good for the Environment, and there are wider concerns for
:08:51. > :08:55.the established oil and gas industries.
:08:55. > :08:59.If energy gets cheaper, there is the big question of whether it is
:08:59. > :09:03.attractive to go after more attractive deals, such as in the
:09:03. > :09:06.North Sea. And if America is no longer looking to secure its energy
:09:06. > :09:11.supplies from around the world, because of plenty at home, there is
:09:11. > :09:15.the question about global politics. Energy independence is already at
:09:16. > :09:21.Leigh in the presidential campaign. Does the US need to act as world
:09:21. > :09:26.policeman. If it does not, who will do that?
:09:26. > :09:31.I am joined now by the oil economist, Professor Alex Kemp from
:09:31. > :09:34.Aberdeen University, and from Birmingham, by Professor Michael
:09:34. > :09:38.Bradshaw from the University of Leicester. Thank you both for
:09:38. > :09:43.joining us. Alex Kemp, you have watched the oil and gas industry
:09:43. > :09:49.smoke and develop. How much development or potential do you
:09:49. > :09:53.think shale gas has? It will be bigger in America than it already
:09:53. > :10:02.is. I would expect that that expansion will continue for quite
:10:02. > :10:06.some years ahead. For other parts of the world, as your introduction
:10:06. > :10:13.mention, there are good prospects on China. And in Russia. In
:10:13. > :10:18.Australia. In Europe, Poland, particularly. Some in the UK and
:10:19. > :10:23.some in France. I can see that, because the technology is now well
:10:23. > :10:29.proven and developed, that their shale gas will continue to grow for
:10:29. > :10:33.quite a number of years ahead. Michael Bradshaw, Barack Obama says
:10:33. > :10:38.there is potentially 100 years of shale gas under America's feet. Do
:10:38. > :10:43.you think that is wishful thinking? I think there is still quite a lot
:10:43. > :10:47.of uncertainty about the potential for shale gas was there. There is
:10:47. > :10:51.uncertainty about how much there is anywhere in the world. There is
:10:51. > :10:55.some of the United States and technology is improving. I guess I
:10:55. > :10:59.am a bit more guarded to be believing that this vital source of
:10:59. > :11:06.cheap energy is going to be freely available around the planet. Why is
:11:06. > :11:09.that? There a real logistical issues, which were touched on by
:11:09. > :11:14.one of the early speakers about increasing the scale of drilling
:11:14. > :11:19.activity very rapidly. But also specific circumstances in the
:11:19. > :11:24.United States to do with tax and legislation and so for, existence
:11:24. > :11:28.of a national gas grid, all of these things. The existence of
:11:28. > :11:32.March drilling rigs allowed the rapid development of shale gas in
:11:32. > :11:36.the United States, which will be difficult to replicate anywhere. We
:11:36. > :11:40.need to be guarded. Under more densely populated areas, like
:11:40. > :11:45.Europe, with environmental concerns, there are factors that will
:11:45. > :11:53.slowdown development. It will not stop it, but it will develop more
:11:53. > :11:58.Do you think we will see large amounts of shale gas extracted from
:11:58. > :12:03.under the UK? In terms of the UK, the reserve position is still
:12:03. > :12:09.uncertain. There have been differing views on the extent of
:12:09. > :12:14.the reserves in Lancashire and the South of England. I think it is an
:12:14. > :12:23.open question about whether we will be a big producer in the UK. I also
:12:23. > :12:28.agree that, for onshore gas with shale, the environmental issue will
:12:28. > :12:34.loom large and it will be very difficult to get concentrations of
:12:34. > :12:39.drilling rigs such as is generally allowed in America to take place in
:12:39. > :12:45.urban areas in the UK. Mike Bradshaw, the potential problems of
:12:45. > :12:51.quite large? Earthquakes, pollution to groundwater, these are bad
:12:51. > :12:55.headlines. Many of these issues are shared by conventional gas
:12:55. > :13:00.production and forms of mining. It is a combination of factors to do
:13:00. > :13:04.with the fracking technology. The creation of waste water, the issue
:13:04. > :13:10.of seismic risk and the wider issue as to how much carbon dioxide is
:13:10. > :13:14.produced from shale gas rather than conventional gas. This is why the
:13:14. > :13:18.Environmental Agency is mounting a campaign against shale, but at the
:13:18. > :13:22.bottom line, we don't know the full scale of environmental impacts nor
:13:22. > :13:27.do we have the regulations to handle them. Potentially the
:13:27. > :13:34.possibility is that this shale gas could be used to replace Kohl,
:13:34. > :13:37.which its critics would refer to as a very dirty fuel source. That is
:13:37. > :13:45.true and it is the case that in different parts of the world, shale
:13:45. > :13:48.play different roles. In the United States, shale gas production is
:13:48. > :13:53.replacing coal in power generation. We have a different situation in
:13:53. > :14:00.Europe in the way we view gas. We have quite rigid carbon dioxide
:14:00. > :14:05.reduction targets which means that even though replacing gas, coal
:14:05. > :14:11.with gas reduces carbon emissions, if it also reduces other carbon
:14:11. > :14:15.sources it has the opposite effect. Indeed. Alex Kemp, you can see the
:14:15. > :14:21.dilemma facing the Chancellor and we know that he is mulling over
:14:21. > :14:26.this issue, whether to back gas and potentially shale gas, or whether
:14:26. > :14:33.to back renewables. Which lined you think he will go down? Well, it
:14:33. > :14:38.appears that we are going to have eight - strategy announcement in
:14:38. > :14:45.the near future which will emphasise the usefulness of gas to
:14:45. > :14:51.the UK economy. There is, of course, in this present Conservative
:14:51. > :15:00.government, growing scepticism about the subsidies given to
:15:00. > :15:09.renewable energy. I foresee that gas, even gas imports, will still
:15:09. > :15:15.play a substantial role in the UK economy. So they will replace Cole,
:15:15. > :15:20.more for power generation. The pressure to reduce subsidies on
:15:20. > :15:24.renewables will probably continue for at least a few years. Mike
:15:24. > :15:29.Bradshaw, what do you think ultimately the Chancellor might
:15:29. > :15:33.decide on this point? Because when there is lots of cheap gas around
:15:33. > :15:37.it makes renewables less attractive. A I'm not sure there is an awful
:15:38. > :15:43.lot of cheap gas at the moment. One of the consequences of events in
:15:43. > :15:48.Japan is that Japan is buying a lot more liquified natural gas than it
:15:48. > :15:52.expected to. As mentioned, they pay a lot more for their gas. The idea
:15:52. > :15:56.that we will have an abundance of cheap gas in the UK any time soon,
:15:56. > :16:01.I don't think that is the case. Domestic shale gas production is a
:16:01. > :16:04.longer term issues. We are increasing the amount of gas we
:16:05. > :16:09.import year on year as our own production falls. I don't think it
:16:09. > :16:13.is an either or because natural gas has a key role to play backing up
:16:13. > :16:18.the intermittency of renewable electricity generation. Providing a
:16:18. > :16:24.base load, but it also, when the wind doesn't blow, we have to rely
:16:24. > :16:28.on gas-powered generation. Gas has a role to play, how big a role is a
:16:28. > :16:32.question. An increasing amount of that gas will have to be imported.
:16:32. > :16:36.One of the things that has happened with the United States and shale
:16:36. > :16:40.gas is it is asking difficult questions about the logic of
:16:40. > :16:49.linking gas prices to oil prices, which is one reason why gas prices
:16:49. > :16:54.are five. Thank you both very much. Well, just before we go, time for a
:16:54. > :17:00.quick look at tomorrow morning's papers. The Independent's lead,
:17:00. > :17:04.double poll blow cast shadow over Miliband's big day. Only one in
:17:04. > :17:09.five think Ed Miliband has what it takes to be Prime Minister. That is
:17:09. > :17:14.what it says. The Telegraph focusing on the death