INSIGHT: More drilling needed to test UK shale potential

01 May 2013 17:27  [Source: ICIS news]

By Nigel Davis

LONDON (ICIS)--A Department of Energy and Climate Change (DECC) report on the UK’s shale gas potential is likely to be published in a few weeks, but has understandably already generated a great deal of speculation.

Will it identify more or less shale gas potential than previous reports? How will the new assessment, which is looking in detail at the geophysical evidence, fit with the UK government’s desire to encourage responsible resource development?

In 2010, the British Geological Survey (BGS) estimated that the UK had a recoverable shale gas potential of 150 billion cubic metres (bcm) – or 5.3 tcf (trillion cubic feet) – with most of the deposit concentrated in the Upper Bowland Basin shale in central Britain.

However, there have been suggestions that the available resource is much greater – or possibly even less – than that. Currently, estimates of recoverable shale gas reserves in the UK range from 0.15tcm (trillion cubic metres) to 1.15tcm.

Technically recoverable resources in Europe have been put at 2.3tcm – a considerable but small volume compared with the global estimate of 108-208tcm.

One trillion cubic metres (1,000bn cubic metres) would fuel the UK’s gas demands at current levels for about 10 years, according to a UK parliamentary committee report.

The UK government is keen to see the potential new source of gas and a potential stimulant for the UK economy developed effectively.

It established the Office of Unconventional Gas and Oil (OUGO) in March, “to promote the safe, responsible and environmentally sound recovery of the UK’s unconventional reserves of gas and oil”.

Part of that new office’s remit is to propose by the middle of this year ways in which local communities, as well as industry benefit from shale gas production.

It is acknowledged that new gas resources could stimulate industrial development – although in the UK’s case not necessarily drive energy costs down. Because land owners do not own mineral rights they would not directly benefit from shale gas deposits under their soil.

One thing is clear, the development of shale gas in the UK, and across the rest of Europe, will not advance as quickly or in the same way as it has in the US.

A UK parliamentary committee report published on 26 April said the UK should learn lessons from the US hydraulic fracturing (fracking) experience, including creating a climate in which companies can work while ensuring that environmental damage is avoided.

“We conclude that it is right for the government to exercise caution over shale gas estimates, given the uncertainty and confusion over definitions,” the House of Commons Energy and Climate Change Select Committee said, suggesting that estimates should be of the recoverable reserve potential – typically 10% of the total reserve estimate.

The committee heard evidence on how Poland’s original recoverable reserves estimates were reduced significantly. They also heard that a significant amount of drilling is required to get an accurate picture of the resource potential.

Initial fracking in the UK triggered minor earthquakes and heightened public concerns about the controversial recovery technique.

The Energy and Climate Change Select Committee went so far to reiterate its support for DECC encouraging the development of the offshore shale gas industry, before the UK’s offshore oil and gas platforms are decommissioned.

“One key to community acceptance will be a robust factual response by government to scare stories,” it said. “The other key to ensuring public acceptance of the shale gas industry is community engagement.

“Engagement should be early and businesses need to be able to demonstrate that they are both listening and responding to community concerns.”

The US has a 30-year lead in fracking and the geological data and technical expertise to back extensive unconventional gas and oil recovery. Building that sort of enterprise and activity in Europe could take years.

The BGS acknowledged in a report published in 2012 that the untested shale rock volume in the UK is “very large”.

More drilling, fracking and production testing is necessary, it said, to prove that shale gas development is technically and economically viable.

By: Nigel Davis
+44 20 8652 3214

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