Belfast Telegraph

US gas producer scales back fracking operations by 80% as prices plunge

By Tom Bawden

Bg Group is dramatically scaling back plans to employ the controversial practice of "fracking" for shale gas in the US.

The oil and gas producer, which was created by a demerger from British Gas, will cut its shale gas drilling activity by almost 80% because weak gas prices in the US are making it far less profitable.

Shale gas is extracted from rocks using a controversial technique known as hydraulic fracturing, or fracking.

This involves blasting a mixture of sand, water and chemicals into the shale at high pressure to split the rock and release the gas. However, the practice has been linked to water pollution and earthquakes.

Yet the so-called shale revolution has heralded a brave new world in the US, which boasts huge reserves and where the process is most advanced.

As a result, domestic gas bills in the US have tumbled, squeezing the profits of the producers.

BG's decision to scale back its fracking activity comes after US gas futures prices fell 39% in the past year, as a result of greater gas production and a milder winter.

The group said it expects to produce the equivalent of 80,000 barrels a day of gas from US shale fields in 2015, well under half its previous target of 190,000 barrels.

Sir Frank Chapman, BG's chief executive, said the gas price fall was the main reason for its decision to cut its production target.