It may seem like a lot of money, but for the UK's only active shale gas driller to be valued at £160m does not give a positive indication that there is a gas bonanza in them there hills.
Speculation over the worth of the UK's shale gas industry has veered between the enormous – enough to fuel the entire country for decades to come according to estimates from the British Geological Survey – and the negligible: several big gas players, including BP, Shell and Centrica, have said the amount of shale gas likely to come from the UK was nowhere near enough to trouble investors. Potential supply appears to currently sit at 10-15% potential of UK market, IF potential manifests itself in acutual gas.
Centrica will pay £40m for a 25% stake in Cuadrilla, giving the shale gas driller a presumed value of £160m.
With not a penny yet to show in gas production, and with many setbacks. The amount Centrica is prepared to pay reveals the appetite – or lack of it – for investors in the UK's putative shale gas fields.
That low valuation should cause serious worry on the right wing of the Tory party, many of whom have been advocating a "dash for gas" as a cure for the UK's energy woes.
But fracking is no easy solution. As the International Energy Agency
warned this week, the UK is not like the US
, where extensive fracking in the last five years has sent the price of gas plummeting. Population density is much higher here, and the geology is much less propitious. Shale gas fracking involves blasting dense rocks apart under immense pressure, using water and chemicals, and regulations in the UK are much tighter than they are in the US.
Gas is not a low-carbon fuel, whatever its proponents may claim. It is a fossil fuel, and greenhouse gas emissions from fracking are higher than from conventional gas. If it is not carried out properly - ensuring no methane leaks out - they can even be higher than the emissions from burning coal.
Thursday's leap by Centrica into the shale gas market reveals what few in the fracking fraternity have been willing to admit – that the value of the UK's fracked gas market is low
, and that the probability of the UK becoming a global centre for shale gas production is slight.
The government should not be pinning its hopes on shale gas for the UK's homegrown energy future.