UK Shale Gas Numbers Could Be Stratospheric
While Europe dithers over whether the blatant economic success of the US shale gas ‘miracle’ will translate to these shores, the UK Government has been slightly more pro-shale active. But, while the threat of (liberal democrat-instituted) over-regulation still casts a shadow, the pro-shale (mostly conservative) wing of government looks set for a stratospheric boost.
For the second time in the last couple of months, the London Times reports industry sources as claiming the upcoming British Geological Survey’s (BGS) official assessment of UK shale reserves, due next month, will be “increased dramatically”. If the report is to be believed, the figures being touted for domestic reserves could well prove to be a dazzling “200 times greater than experts previously believed”. The Times suggests that the BGS’s previous estimate of 5.3 trillion cubic feet is likely to be increased to a huge 1,300 to 1,700 trillion cubic feet. And that would be “enough shale gas to heat every home in Britain for 1,500 years.”
If the figures are borne out when the report is finally published in a few weeks time, it would have major ramifications for the UK economy, cheaper gas prices – including across Europe whether European states join the shale revolution or not – and, somewhat negatively, for investment in the green energy industry.
The UK’s biggest gas supplier BG’s (formerly British Gas) Centrica has already pulled out of green energy commitments in America to invest directly in the US shale gas revolution. But at the recent World Energy Conference in Davos, Centrica CEO Sam Laidlaw was doing his best to play down the potential of UK shale gas. Politics? Because at the same time, Cuadrilla, long vilified for claiming it has around 200 trillion cubic feet of shale gas in its section of the Bowland Shale Group in north-western England, was being courted by some of the industry big boys, including Shell, Statoil and Exxon-Mobil – and Centrica’s parent company BG. According to one source, Cuadrilla are already “dotting the i’s and crossing the t’s on an agreement with an energy major.”
So where does the UK shale gas prospect stand exactly in relation to, say, what is happening in the US? Well that’s where it ought to get really exciting for the UK generally. In the big Marcellus and Barnett shale plays in the United States the formations are generally about 300 feet thick. In places, the UK shale formation is 6,000 feet thick. Speculation in the industry generally suggests that the overall size of the Bowland Shale alone could be as high as 1,000 trillion cubic feet. Cuadrilla, as yet the only company with a licensed area for drilling, only covers one third to one quarter of it. Of course, much depends on flow rates which require more drilling to clarify the prospective return. But even if just a ten percent recovery rate was achievable from the Bowland Shale (significantly above 20 percent is much more likely) that would yield 20 trillion cubic feet. The entire UK consumption rate in 2011 was just 2.8 trillion cubic feet. No wonder industry anticipation is running high.
And the potential scale of the UK’s “vast” shale gas resources is confirmed from a second source. Gordon Pickering’s US firm Navigant Consulting was commissioned by the UK Department of Energy and Climate Change (DECC) to assess the country’s shale gas potential. Though Pickering refused to give the exact figure that’s in his DECC report, he did publicly confirm that not only is the UK’s shale gas potential significant – it’s scale has the capacity to put European gas prices generally into a steep decline.
All in all, the pressure to resume drilling and fracking in the UK is about to become intense. And, in the face of the UK stealing a serious lead on its European competitors, opposition to shale development in European capitals could well soon crumble. The signs are already there, as the green lobby voices find themselves increasingly isolated. Chevron has been busy accruing license agreements to drill across much of the east of Europe. At the end of January the Romanian Government performed a u-turn and granted exploration licences in the east of the country. In December Germany’s Parliament voted down a Green party motion to put a France-style outright ban on fracking. Though some German ministers still appear reluctant to green-light fracking there is also increasing evidence that a raft of Germany’s coalition ministers now favour fast-tracking development. Even French opposition to developing its own potentially enormous shale gas reserves could be about to end.