Good news from the U.K.’s Bowland Shale deposit. The sheer thickness of the shale rock in northwestern England means gas production operations can actually be accomplished with minimal fuss on the surface, geologists found.
Indeed, the Bowland basin’s shale is roughly three times as thick as the Marcellus Shale over here in the U.S.—we’re talking 790 meters to the Marcellus’ 270 meters. This means horizontal wells in the Bowland can simply be stacked on top of each other, thus drastically reducing the number of wells that need to be drilled top-side.
Bloomberg reports:
“It’s quite unique, the thickness of the shale,” [Francis] Egan, who joined the company [Cuadrilla Resources] last year from BHP Billiton Ltd. (BHP), said in an interview in London. “What it opens up is the possibility of stacked laterals so you stack them like a staircase minimizing the surface footprint.”
Fracking remains a contentious topic worldwide, but the U.K. government lifted an existing ban on fracking last December. Moreover, the government is pushing for tax incentives so as to attract onshore drillers in the face of declining oil and gas production in the North Sea.
Bowland Shale Promise
The Bowland Shale could be a rich find for the U.K. Cuadrilla Resources Ltd., the exploring company, holds licenses that could include as much as 200 trillion cubic feet of gas—more than double Iraq’s gas reserves. Of this, some 10 percent or more could be recoverable.
Cuadrilla has put off actual exploratory operations until 2014. The company is undertaking some environmental risk assessment exercises presently but expects actual production to commence in 2015 or 2016.
Protests from regional voices carry the usual strains—noise pollution, increased traffic congestion, potential water aquifer contamination, and so on. However, the U.K. could certainly benefit on a larger scale from a thorough exploitation of the Bowland Shale.
Let’s say the recovery rate hovers around 10 percent. That would mean any gas extracted under those limits would still be worth around $215 billion.
Other companies have also taken note of the Bowland Shale’s peculiarities and promises. Dart Energy Ltd. (ASX:DTE) operates across Australia, Asia, and Europe, primarily on exploratory operations in coal-bed methane and shale gas. Now, it hopes to begin drilling operations in the Bowland next year, encouraged by promises of tax incentives courtesy of the U.K. government.
The company is presently working out possible joint-venture agreements. Dart already has a presence in that general area; the company is drilling development wells in Scotland. First sales of gas could come as soon as next year.
Our analysts have traveled the world over, dedicated to finding the best and most profitable investments in the global energy markets. All you have to do to join our Energy and Capital investment community is sign up for the daily newsletter below.
British Shale Revolution?
All of this is good news for the energy sector in the U.K. Production from the North Sea is definitely on the decline. That means companies must look homeward to find new sources. And so far, things have gone well.
However, the larger picture here is that a booming U.K. shale sector could mean big things for Western Europe as far as trade agreements go. That would make things hairy for Russian oil giant Gazprom, which remains the largest supplier of oil and gas to Western Europe.
The British Geological Survey is set to release its most recent estimates of British shale gas reserves shortly. Estimates have been remarkably high—to the tune of some 1,800 trillion cubic feet. Given the U.K.’s energy consumption patterns, that implies a 600-year supply.
Of course, not all of this gas would be recoverable. Still, even by our hypothetical 10-percent margin, we’re talking about adequate supply for the U.K. for the next hundred years.
However, unlike the U.S., there are regulatory concerns in the U.K. that could temper all the excitement. How revenue, land ownership, and related issues will be worked out might very well prove crucial to scaling up Britain’s shale operations.
Likewise, the environmental aspects have to be attended to. This means not only a thorough review of the infrastructure in operation, but also potential re-evaluations of environmental legislation.
And finally, the international aspect will be another factor. Canada, for example, is seeking out ways to get its oil sands-sourced gas out to Asian markets via terminals on the West Coast and U.S. Gulf Coast (and the TransCanada Keystone XL matter continues to be a big issue in that context). A British shale revolution would no doubt see the U.K. trying out its own export programs.
If you liked this article, you may also enjoy:
