Despite the desperate hopes of the many who want to dismiss any impact of UK shale as inconsequential, that old trouble called facts keeps getting in the way.
The recovery rate of Cuadrilla's 200TCF resource would range from 5 to 40%. How large the recovery would be depends on the results of further drilling and future technology. To argue today that it wont' mean much is rather pointless, especially because "only" a 5% recovery rate for example still would supply over four years of total UK usage. That sounds like a yawn until understanding at today's prices it would have a value of 'only' £70 billion pounds taxable at 62%.
Cuadrilla are on the public record as saying that their estimate is conservative, but an investor presentation by Igas just to the south of the Cuadrilla concession shows that the scale of the Bowland resource shows potential to expand. Igas are already on the record as saying that their first serious exploration for shale at Ince Marshes near Ellesmere Port Cheshire show a recoverable reserve of over 4 TCF. This from the Chairman's statement shows how the company is now positioning themselves:
Since 1 January 2011 we have moved from being a non-operated partner having equity interests in CBM licences under appraisal, to delivering material hydrocarbon production, having full control (as operator) and ownership (100% in most cases) of our assets and having early indications of significant shale resource potential.
Just as DECC has a sentimental attachment to Peak OIl, many UK operators continue publicly to talk about CBM. CBM was the reason most got their license in the first place, but luckily under UK regulation the license is for hydrocarbons including gas and oil thousands of feet below the coal layer. CBM has trundled along for years. I continue to be amazed how companies can do almost nothing in the way of activitiy but still continue to exist, but shale is changing the dynamics at least at Igas:
Successful appraisal of our unconventional resource potential continued with Ince Marshes-1 well, which was spudded on 4 November 2011. This well was planned to log and core the coals in an area around which less was known than elsewhere in our portfolio. The entire coal sequence was encountered shallower than anticipated and the decision was taken to continue to drill into the deeper horizons to better understand the geology and resource potential of the area. While it was anticipated that shale would be encountered, the results of the drilling, the logs and samples received, completely surpassed our expectations. We encountered and logged a significant Bowland Shale section of approximately 1,000ft. The well was TD‘d in the Bowland Shale due to the limitations imposed by the CBM well design criteria. The well was suspended so that it might be re-entered and deepened at a later stage to fully appraise the entire thickness of the Bowland Shale. The logs and samples were sent for independent analysis. These results indicate a resource in excess of twice the pre-drill estimate and with the total organic carbon (―TOC‖) observed between 1.2 and 6.9 (average 2.7) and initial analysis of the samples support our view that we may have discovered a potentially world class shale resource. Clearly, further wells and analysis are required to fully appraise the shales and critically flow tests need to be performed, however our results combined with those of operators in neighbouring licences in the Bowland Shale are extremely encouraging.
Combine the caution of public statments by public companies and English reticence, and extremely encouraging sounds like just that. As I've noted before 1,000 feet of shale is world class shale all by itself. Within the investor presentation geological data allows us to make some educated guesses.
We already know that Cuadrilla have revealed over 3,000 feet shale at Preece Hall. The question is how big is the resource. Cuadrilla have been stymied by the seismicity issue from investigating further to see a) if they can get the gas out of the ground and b) if Preece Hall was a fluke and there isn't much gas elsewhere.
Igas figures show what could be confirmation that the Cuadrilla and Igas PEDL's have a lot of gas, since now we see that forty miles south of Preece Hall the Bowland Shale is still 1000 feet thick. In other words, the surface extent is as healthy as the thickness. This map shows how far the Bowland extends:
There's more geological information within the presentation showing the further extent above and below ground which confirms that the Bowland resource could be significantly bigger than the 200TCF figure as it extends south. But this is the interesting part:
This seems to at least suggest the possibility, as we've seen in the Marcellus, Barnett, Eagle Ford and other US shales, that the Bowland shale has at least some oil potential towards the south.
To have huge gas resources in the UK is game-changing in itself, but surely no one is going to suggest that we leave oil, even as the price heads south, in the ground?