UK shale gas estimate goes stratospheric
However the ‘anti-frackers’ take this latest news, it undoubtedly offers a huge boost for the UK’s energy prospects, both nationally and regionally
The figures for potential UK shale gas reserves just went stratospheric. The UK Government has now confirmed the much-rumoured finding that UK shale gas resources are potentially huge – as much as twice the size of the highest previous assessment.
According to the British Geological Survey report which focuses on just one shale gas play, the Bowland Shale in the UK north-west, the basin could hold as much as 1300 trillion cubic feet of natural gas – while the upper figure potential suggests 2000tcf.
According to the Department of Energy and Climate Change (DECC) site, the aim is to “unlock up to £110 billion energy infrastructure investment and support up to 250,000 jobs by 2020”. To put the announcement in perspective, it is not only suggesting the UK is sitting on an entire ‘new North Sea of gas’, it represents a world class-sized resource and the largest in Europe.
Making the announcement ahead of a more detailed announcement from the DECC, Chief Treasury Secretary Danny Alexander told Parliament the Treasury will now move quickly to consult on tax breaks and, within three weeks, publish detailed planning guidance to fast-track drilling. It effectively fires the gun for the Environment Agency to begin issuing permits for fracking projects.
Alexander also announced significant ‘sweeteners’ for local communities which can expect to be offered up to £100,000 in benefits for each well sunk and 1 percent of overall gas revenues.
While reserves are yet to be proven, and perhaps between only 10 and 30 percent of the gas may be recoverable, it is still, as one BBC report had it, a “landmark” development in the UK. That’s especially as Cuadrilla, the UK’s only licensed drilling company, was roundly ridiculed when it predicted its licence area around Blackpool could hold 200tcf. The CEO of IGas, which owns a license to the south of Cuardilla in Cheshire, had suggested the north-west basin could hold as much as 500tcf. But it was left to UK shale gas consultant Nick Grealy to be nearer the mark with his assessment of 700tcf.
The latest BGS assessment, however, blows them all away confirming the figure long rumoured since a London Times exclusive late last year which suggested the figure of 1300tcf. While the Times report thought the upper figure would be around 1700tcf, however, the actual figure is around 2000tcf.
For further perspective, even the major successful US shale plays are nowhere near as thick as the Bowland Shale. While the former average around 300 feet in thickness, the Bowland Shale is, in places, around 6,000 feet thick.
In short, while the actual recoverable amount requires further drilling to assess, the UK is not only sitting on an extremely commercially-viable amount of natural gas, it could prove to be a major economic boost to the country which more than takes up the shortfall from dwindling North Sea resources and would reduce increasing dependence on expensive imports of gas from Qatar, Russia and Norway. Make no mistake: if these figures are anything near correct the assessment makes the UK a front-runner in the development of global shale gas.
The day before the DECC/BGS announcement, Chancellor George Osborne’s Spending Review presentation to Parliament had given an inkling of what was to come when he declared the UK Government would “make the tax and planning changes which will put Britain at the forefront of exploiting shale gas”. One key effect of the Treasury/DECC/BGS announcement is that it is highly likely to give a massive impetus to UK shale investment.
When Centrica bought a 25 percent stake in Cuadrilla earlier this month it signalled the first significant investment from a major energy company. Centrica is expected to invest up to £100 million in developing the Bowland formation. The deal triggered an immediate 20 percent hike in IGas shares. And some of the oil majors, including ExxonMobil, Shell, Norway’s Statoil and, most recently France’s Total, are all currently considering a move to acquire UK shale assets.
But what the latest announcement, coupled with the government’s commitment to fast-track tax and planning assistance, almost certainly does is significantly boost new investment, including from private investors.
No one suggests that shale gas development in the UK or Europe could match the dramatic impact of the US shale gas revolution. Costs in the UK will be higher. Equally, the well-funded environmental lobbies will gear themselves up to fuel the potential resistance of local communities. And there’s one more potential barrier that could still impact the potential economic benefit to the UK and frighten off major investors: the example of Poland.
Poland too is sitting on significant shale gas resources. But earlier this year sheer state greed intervention effectively choked the shale gas golden goose at birth. By imposing stultifying over-regulation on the industry and demanding a ludicrous 80 percent of shale revenues most of the energy majors immediately left the country. We can’t forget that the UK DECC is headed by Ed Davey, a Liberal Democrat and green ideologue who is no friend to any new fossil fuel development and a major proponent of subsidy-fuelled renewable energy developments.
The BGS press officer, John Stephenson, has told me that the BGS propose to deal with further announcements of other potential UK shale plays in “bite-sized chunks”. However the ‘anti-frackers’ take this latest news, it undoubtedly offers a huge boost for the UK’s energy prospects, both nationally and regionally.
Read more on: shale gas in the UK, shale gas potential, UK world-class shale gas reserves, UK shale gas prospects, shale gas North Sea, shale gas, peter c. glover, Ed Davey, and department for energy and climate change
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