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Large parts of the UK could be fracked to yield gas reserves

Fracking: The UK needs to drill more holes

Last week Minister for Energy Michael Fallon told the House of Lords Select Committee on Economic Affairs that the UK needs to "get on and encourage the industry to drill".

Fallen's comments were related to exploratory wells for hydraulic fracturing of the Bowland-Hodder shale basin which spans the north of the UK which is potentially the first site for Britain to extract gas from shale rock.

This is the only basin that has been geologically surveyed by the British Geological Survey to date, and its findings, released in mid 2013 revealed a larger potential resource than originally expected. Their gas in place estimate in a medium case scenario is 1329 trillion cubic feet (TCF) or 37.6 trillion cubic metres (TCM). Considering that the UK uses approximately 3 TCF of gas per annum the impact of this resource could be huge.

 Of course the BGS figures are for gas in place. How much of that is recoverable and at what cost is the billion dollar question.   "If we can bring this stuff to market at $8 MMBTU it is a very commercially viable industry. If it is going to take $15 then it is not viable until the world gas price goes to $20. We could do that within three years if we had the willpower," says Peter Atherton, head of equity research for utilities at investment firm Liberium Capital.

Not surprisingly energy companies too want to "get on and drill" and estimate that 20-40 test wells would be enough to give a clear picture on recovery potential.

Not surprisingly energy companies too want to "get on and drill" and estimate that 20-40 test wells would be enough to give a clear picture on recovery potential.

But it is not that simple.  Early drilling attempts were disastrous with operations by energy firm Cuadrilla in April and May 2011 near Blackpool causing earth tremors and leading to a moratorium on drilling which was only lifted in December 2012. Since then only 6 wells have been drilled and just one planning application has been made.  Energy firms say that the planning and permitting process is causing delays and used the Lord’s select committee hearing to urge regulators such as the Environment Agency to play a more active role in the early stages of consultation. Negative public opinion has also deterred firms from applying for planning permission.

If only 10 percent of the Bowland proves to be extractable the UK has enough gas for current demand for 50 years but the only way to determine if this is viable is to drill more wells.

For its part DECC in December 2013 published a new Regulatory Roadmap for onshore oil and gas exploration aimed at clarifying the regulatory process. Fallon also told the House of Lords that he wants to reduce the permitting approvals process down to 2 weeks from the current 13. A new round of exploration licensing is set to be awarded in the summer.

From a technical perspective the Royal Academy of Engineering, Public Health England and the Chartered Institute of Water and Environmental Management (CIWEM) have all published reports that explore the perceived risks from hydraulic fracturing including water pollution, methane leakage and earthquake risks. Engineers quite rightly explain that the process can be done safely without polluting the environment provided well integrity is ensured and proper precautions followed.

Despite the global hydraulic fracturing industry being in its infancy the US experience is giving countries with shale resources reasons to be financially optimistic. Renowned economist Professor Dieter Helm of Oxford University told the committee that major industries would be pursuing their investments in the US rather than Europe thanks to the lower gas price, and said that the US has about the fastest falling carbon emissions of anywhere in the developed world as it moves from coal to gas. The UK however has been increasing its coal use. With a predicted capacity crunch from 2015 onwards the UK faces a huge challenge if it is to keep the lights on and reduce carbon emissions.  It is therefore little wonder that the potential for more local gas generation is attractive.

If only 10 percent of the Bowland proves to be extractable the UK has enough gas for current demand for 50 years but the only way to determine if this is viable is to drill more wells.

 

More resources

  • The British Geological Survey’s Bowland Shale Study

https://www.gov.uk/government/publications/bowland-shale-gas-study

  • Map of the Bowland-Hodder basin

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/226875/BGS_DECC_BowlandShaleGasReport_HI_RES_FIGURES_01to18.pdf

  • Regulatory Roadmap-DECC

https://www.gov.uk/government/publications/regulatory-roadmap-onshore-oil-and-gas-exploration-in-the-uk-regulation-and-best-practice

  • ICE Shale

http://www.ice.org.uk/Information-resources/Document-Library/Energy-Briefing-Sheet---Shale-Gas

  • CIWEM shale report

http://www.ciwem.org/media/1021835/Shale%20Gas%20and%20Water%20WEB.pdf

If you would like to contact Bernadette Ballantyne about this, or any other story, please email bernadette.ballantyne@infrastructure-intelligence.com:2016-1.