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UK shale showing signs of life

The UK’s nascent shale-gas sector is showing signs of turning around after grinding to a halt last year when Cuadrilla Resources was suspected of setting off a series of tremors while hydraulically fracturing (fracking) a well in northern England

Cuadrilla, a UK-based, privately held company which has been at the centre of the UK search of shale gas, sparked a wave of interest in the country’s potential when it announced in September last year that it had found 200 trillion cubic feet (cf) of gas-in-place after drilling just two shale-focused wells. The wells were drilled in the Bowland basin in Banks, near Liverpool, and Preston in Lancashire.

The size of the resource potential announced – which, assuming a very conservative 10% recovery rate, would top the country’s proven gas reserves of 9 trillion cf – has prompted some scepticism within the industry. Indeed, the company itself has said that a total of around 10 wells across their Bowland basin holdings would be needed to refine the estimate and determine recoverable reserves.

Nevertheless, the discovery has provided hope that there may be life for the UK gas industry after the North Sea, where production fell by 35% from 8.5 billion cubic feet per day (cf/d) in 2005 to 5.5 billion cf/d in 2010, according to BP data. Over the same period, UK gas imports more than doubled to nearly 5.2 billion cf/d.

Small tremors

Cuadrilla’s shale search, though, had been troubled from the start by environmental concerns. And when reports emerged of small tremors coinciding with the company’s fracking operations in April last year, the government ordered Cuadrilla to suspend exploration and study the causes of the seismic activity. Cuadrilla said in November that the report, which the company said was carried out by a team of independent experts, showed that a confluence of unique geological conditions likely caused the earthquakes, but that they posed no threat to residents or property in the area.

The Department of Energy and Climate Change (Decc) has been studying the report since November and has said that it wanted to complete its own investigation before allowing Cuadrilla, or any other companies, to resume fracking operations. 

If we can’t find a way to work with our neighbours, we are not going to be producing hydrocarbons

Although that study is still being carried out and Cuadrilla’s rigs remain quiet, there have been signs that shale hunt is poised to restart and could accelerate. Tony Grayling, an official from the Environment Agency, told a conference last month that exploration should be allowed to resume after Decc’s investigation. “There are significant environmental risks associated with shale gas, as there are with other industrial activities. We think those risks can be managed,” Grayling said.

Even the opposition Labour party has backed away from its previous call for a moratorium on shale gas exploration. Instead, the Labour position now advocates what shadow energy minister Tom Greatrex recently called a “pragmatic approach”, under which exploration could resume so long as certain safety measures are in place. The policy shift could indicate a tentative policy consensus in the UK in support of shale-gas exploration, a rarity in Europe where fracking has proven to be a divisive issue.

Things are also looking more positive for the industry on the exploration front. UK-based gas producer IGas announced this month that analysis of its Ince Marshes prospect, also in the Bowland basin, had led the company to more than double its shale gas-in-place estimate from 4.6 trillion cf to about 10 trillion cf.

Following the improved outlook for its shale-gas prospects, IGas said that it had started the search for a farm-in partner after receiving “a number of enquiries from interested parties”. Industry majors and independents with unconventional exploration experience in North America, such as ExxonMobil, Chevron and Talisman, have been quick to snap up prospective shale-gas acreage across much of Europe. But the UK has largely been left behind in the European shale land grab.

That could be set to change. In addition to IGas looking for a partner for its project, the UK’s 14th onshore licensing round is expected to put significant shale acreage up for bidding, though no timeline for the round or specifics on exploration areas have yet been released. The events could see an influx of cash and technological expertise from North America join the UK shale gas hunt.

With a number of groups, such as Frack Off and No Fracking UK, already campaigning against shale-gas exploration, though, environmental concerns and local opposition to drilling are likely to remain at the fore of the debate. Mindful of the need to address those concerns IGas’ chief executive Andrew Austin summed up the challenge this way: “Given that we are often working close to local communities, the responsibility to work with those communities is absolutely key. In short, if we can’t find a way to work with our neighbours, we are not going to be producing hydrocarbons.”  

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