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Gas under the fields: Cuadrilla Resources’ exploration site in Singleton, Lancashire
Given that Britain’s shale gas industry – despite being in its infancy – is already a source of considerable controversy, it’s worth considering what its potential really is. Could it transform the country’s energy mix? Does its potential justify drilling for gas, and perhaps upheaval to local communities? And how much gas is out there?
The British Geological Survey (BGS), which estimates levels of shale gas in geological formations, emphasises that these are, indeed, strictly estimates. In association with the Department of Energy and Climate Change, the BGS recently completed an estimate of the resource of shale gas, known as gas-in-place, in an area between Wrexham and Blackpool in the west and Nottingham and Scarborough in the east. The estimate of gas available ranges from 822 trillion cubic feet (tcf) at the lower end of the scale, to 2,281tcf at the upper. The central estimate for the resource is 1,329tcf.
Shale gas explorer Igas has released details of its estimates of resources, too. A recent statement on an area of 300 square miles of north-west England put the amount available at anywhere between 15tcf and 172tcf of gas.
Clearly, there is considerable uncertainty. And gas-in-place does not equal recoverable gas – even if the figures are correct. Or as the BGS puts it: “The proportion of gas that it may be possible to extract is unknown as it depends on the economic, geological and social factors that will prevail at each operation.”
Does it matter that there are unknowns? Igas enjoyed a spike in its share price on the back of its recent announcement, and the media focused on the headline-grabbing notion that there is 172tcf of gas in the area.
But some are concerned that the shale gas industry is being overhyped. Tim Fox, head of energy and environment at the IMechE, says: “The issue is a lack of data, and the only way to get that data is to undertake a relatively significant exploration programme, with exploratory test drilling to build up a distinct profile of the geology of the rock in the area and understand the technical difficulties in getting that gas out of that rock. The big difference between the UK and the US is that the geology is very different.”
Fox says the shale gas formations in the booming US industry are “relatively shallow and relatively homogeneous. They are not far below the surface, and that makes it easy to understand how much gas is likely to be there. The bulk of our formations are much deeper. We don’t have the data for rock at that depth in anything like the granularity we need to understand it.”
In addition, there are concerns that there are many politically and socially unacceptable areas in which to drill. “The next question is: is there a market for the gas at the price we can get it out?” he says.
None of this is to say that a shale gas resource that can be commercially exploited in the UK would not be welcome. “The UK faces a dilemma in terms of its sourcing of gas in the future,” says Fox. “With the North Sea resource of gas declining, we import about 40% of our gas requirement in the UK, and, as we move forward into 2030, we expect to be importing about 80%. If gas is coming from overseas, then there are obvious concerns about energy security. From an energy security and energy supply point of view, the government is right to be examining alternatives.
“Having said that, in the case of shale, it has probably been overhyped in recent months.”
Fox believes that the engineering challenges involved in establishing the industry have not been fully considered. “What hasn’t been understood is the scale of the activity that would be required to have any significant impact on delivery of supply to UK gas demand,” he says.
Further, he adds, the population density in Pennsylvania – which enjoys a thriving shale gas industry – is about a quarter of that in Lancashire and Yorkshire. In Texas, it is a 12th. “The ability of a community or an area to absorb shale gas production is partly dependent on population density and the impact that drilling will have on the community,” he says.
So what is the potential of shale gas? “To think that it’s going to have in the UK anything like the impact it’s had in the US is just not tenable from an engineering point of view,” says Fox. The engineering institutions, including the IMechE, have a responsibility to provide a dose of realism, he adds.
Scott Flavell, energy expert at PA Consulting Group, says it is too early to gauge what the size of the industry will be in the UK. “Everyone has to be cautious. Leaving aside the politics, and the planning and the environmental issues, you’ve got to get the gas wells operating and flowing. Then, over time, you can understand its potential.
“The gas could be flowing, but if it’s expensive then the gas itself could be uneconomic to produce. Therefore you might have a whole lot of reserve, but people are not interested in investing to produce. That’s something of the problem inherent in any oil and gas development,” says Flavell.
Producing large quantities of gas, as is done in the US, would require large quantities of wells, he says. “The issue then becomes if you think that’s achievable in a country the size of Great Britain.” Community engagement is essential, he adds. Thousands of wells would be required to produce large volumes of gas. “That is always going to be difficult.”
But shale gas should nonetheless be exploited, he says. “It’s been demonstrated in the US and Australia that unconventional gas, whether it’s shale gas or coal gasification, can be developed, but you need the right fiscal regime in harmony with the environment. You need to make sure the regulatory regime is tight, and that the community has confidence in it. With all those things together, the industry can develop.”
But in the UK shale gas production is unlikely to reach the level of that in the US, he says. “If it could one day be at a level of about 12%, that’s where I think it will probably have a place in the market, to augment supply from other sources. To predict that it might replace North Sea gas is probably a bit unrealistic.”
In the future, shale gas could complement liquefied natural gas, North Sea gas and gas from the Continent.
“It won’t replace North Sea gas,” says Flavell. “We can see that shale gas has been exploited successfully in other parts of the world, but we shouldn’t assume it’s going to solve all our gas problems. The challenge will be to develop shale gas fields in harmony with community expectations.”