The subject of the size of the amounts of UK shale gas been open to much speculation and misunderstanding right from the start. Key opponents such as Damian Carrington of the Guardian have derided Cuadrilla's estimates from the very start and they have been consistent in insisting that we don't even have any gas, so why bother looking and full speed ahead, although whether that would be under wind, nuclear or coal isn't specified. The main thing is we don't have any gas anyway. Andrew Rawnsley famously told us the weekend previous: 

Then there is the huge hole at the heart of the frack-heads' dream. No one even knows yet how much shale gas can be profitably extracted. Estimates of the exploitable reserves vary wildly.

The explanation is geology. Shales in Europe are generally thinner and deeper, and therefore much more expensive to tap, than those that have been successfully exploited in the United States. And Britain looks likely to be one of the less promising prospects in Europe because its shales are typically among the thinnest.

The Daily Telegraph yesterday asked the question how much gas do we actually have without getting even close to providing an answer.The discussion is complicated by basic misunderstandings of the reserve and resource figures.This definition is from the Society of Petroleum Engineers may help

Unlike the inventory of a manufacturing company, reserves are physically located in reservoirs deep underground and cannot be visually inspected or counted, but rather are estimates based on the evaluation of data that provides evidence of the amount of oil and gas present. There is no definitive answer until the end of a reservoir's producing life. All reserve estimates involve some degree of uncertainty. The estimation of reserves volumes is generally performed by highly-skilled individuals who use their experience and professional judgment in the calculation of those volumes. 
 
Reserves represent that part of resources which are commercially recoverable and have been justified for development.
 
Meanwhile, this is the introduction to a presentation DECC made at Prospex in London last week. It hasn't  yet been published on the DECC site, but is in the public domain and I've placed the full report in the NHA Library to your right.
 
Assessment of the shale gas resources of the Carboniferous basin shales of central Britain: preliminary report

The UK shale gas industry is in its infancy, and ahead of more drilling, fracture stimulation and testing there are no reliable indicators of potential productivity. In 2010 DECC estimated that, by a simple scaled basin-size analogy with similar producing shale gas plays in North America, the total UK shale gas recoverable reserve potential could be as large as 150 bcm (5.3 tcf, with 4.7 tcf of that in the Upper Bowland Shale of central Britain). Following on from that work DECC has commissioned the BGS to evaluate the gas in place resource potential for the entire Bowland shale, and work is underway to integrate over 15,000 miles of 2D seismic data with over 100 wells that penetrate the interval, Rock-Eval laboratory studies and basin modelling. By the end of 2012, a detailed technical report will be published on the DECC website with maps, well correlations and thermal maturity cross sections. This interim report provides a quick look at the mapping progress, An estimate of the potential resource size of the greater Bowland Shale gas play will be added in the final detailed technical report. 

We're running out of 2012. We may or may not see the technical report this month, but key point number one means I have to apologise to Andrew Rawnsley for saying the shale was six thousand feet thick:

In the Bowland Basin, the total Bowland-Hodder unit is interpreted to reach a thickness of up to 1900 m (6300 ft), but the interval may be much thicker within the narrow, fault-bounded Gainsborough, Edale and Widmerpool basins (Figs. 4 & 5; up to 3000 m / 10000 ft, 3500 m / 11500 ft, and 2900 m / 9500 ft respectively).  

 Where they have been buried to sufficient depth for the organic material to generate gas, the Bowland-Hodder unit basin shales have the potential to form a shale gas resource analogous to the producing shale gas provinces of North America 

 The full scale of production activities which might eventually be proposed in the UK is unknown, but this preliminary work indicates that there is significant potential for shale gas and shale oil production. 

 The key word in the second sentence is of course 'potential'. But since the financial risk lies entirely on private companies, what's to lose by looking? As Francis Egan of Cuadrilla said last to the ECC committee, "We can't talk the gas out of the ground."

Many people will be scratching their heads over what much of the report means, but this report shows the Bowland Basin extending across northern England. The Cuadrilla discovery may yet prove to be only the tip of a shale iceberg, with other areas of equal, or even greater, importance.  

This is only for Northern England. Southern England is also being studied, and many consider that area especially interesting for oil. Central Scotland and  Northern Ireland don't even get a look in yet, although geologically they are of great interest.

Oh, and before I forget from page 4.

Where the shales have not been buried as deeply, there is potential for shale oil. 

That may explain this story from the Sunday Times,

EXXONMOBIL is considering taking part in Britain's shale gas revolution.

The world's largest oil group has entered talks to buy a stake in the Bowland shale project in Lancashire, owned by IGas, the London-listed developer.

The interest of Exxon will be a boost to the British government, which last week lifted an 18-month ban on fracking, the controversial method used to extract gas locked in underground rock formations. The freeze was imposed after drilling by Cuadrilla Resources caused two small earth tremors in northwest England.

IGas launched a search in the northern summer for a partner to help it develop the Bowland project. It is understood that Shell, Total of France and Norway's Statoil are also considering bids.

Maybe this proves nothing except some tyre kicking at this point.  But the fact they've entered the lot at all must mean something.

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  • Doug Proctor

    The Bowland shale excitement can be traced back to one company, Cuadrilla, pumping itself. Go back and everything comes back to the unsubstantiated claims: 200 TCF resource, 800 wells. That is it.<br /><br />Now let us do some simple math. The 800 wells comes from the land available to be drilled, maximum size of basin etc. No interior economic barriers are placed. It is actually hard to figure out what that "800" means, because Cuadrilla also says that the wells will be drilled 6-8 per pad, with one pad covering/draining a square mile. So perhaps that is 800X8. Can't figure it out.<br /><br />But what you can figure out is that each well costs 10.5 million pounds. And what is this number, actually? Can't say for sure: could be just drilling, or could be drilling and completion. Let's go with the latter, D & C, even E (equipping the wellbore). You still need surface, mineral rights, facilities, pipelines and an amount set aside for a abandonment and reclamation. Let's be not too hard on them and we could get `10% more/well. In US terms, what, $15 million/well.<br /><br />Drilling on a pad saves you only mobilization costs to the site. The drilling costs remain the same. The Bowland shale is about 1400m deep. Not too bad. Still, at $15 million/well, that is a lot.<br /><br />Now Cuadrilla says 200 TCF resource. Okay, though the UK survey says 4.7 TCF. Whatever: a recovery factor of 15% is pretty low for some "reasonable" producible formation, but let's go with that. So Cuadrilla says 30 TCF revoverable.<br /><br />30 TCF! from 800 wells, that is 37.5 BCF/well! Them's huge numbers!<br /><br />And that ain't happening. Average recoverables in the States, as shown by lots of studies, are more of the 3 - 10 BCF, going from average to the core. But we are talking whole field average, not core. And after the basin pressures have plummeted by nearby production!<br /><br />So Cuadrilla is putting in your mind - not their fault, just what you are given to run with - a ten-fold improvement of historical averages. Yep, Britain is still the best when it comes to Mother Nature's largesse, it's just kinda funny that a resource that has been known since the 1890s is only now revealing itself to be such a fabulous beast.<br /><br />37.5 BCF per well. Perhaps they meant, per section, per pad of 8? Now we are down to 10 BCF/well. And unless the Bowland is bizarre, how many are you going to get per square mile? Two?<br /><br />200 TCF as a "reasonable" resource number is pure hokum: it is counting molecules in the ground without any consideration of cost, technology or economics. The number doesn't even make sense at $20/mcf, because once your rock is tight enough, nothing, including nuclear blasts, let it come out (yes, the US did try some of these: nice glassy containers wrapped around wellbores).<br /><br />Now keep considering where the numbers came from: a public company that wants to be worth a lot of money. <br /><br />Another example: In North Dakota, all the hullabaloo can be traced back to one similar company: Continental. Continental claimed in Nov 2011 that the Bakken oil shale had a potential of 20 billion barrels, from 40,000 wells, with recoverables averaging 500 mstb/well. Okay .... and at $10.5 million/well, without all those other costs and profits, it had better do so! A minimum of $60/bbl is necessary for each of these wells, and I suggest that is on the low side.<br /><br />And if the average is 500 mstb/wsell, the core would have to be, say, 1 million/well?<br /><br />Doesn't make sense.<br /><br />The only thing that comes for free in the oil and gas business is the credulity of the investing masses.<br /><br />The British shale gas excitement is developing like the Al Gore Carbon Credit scam: all excitement and guess who made off with a bundle and who was left holding the bag. If you can find some company to ride this hype for a few months, you'll probably make money. Just remember to get out at the first sign of trouble.

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  • Moneybags11

    In reply to: Doug Proctor

    Doug<br /><br />thanks for your comments. It sure raises questions about just how "fabulous" the Cuadrilla prospect will actually turn out to be. Just a quick question with regards to the matter of how much gas can be produced per well and what it costs per. Given the fact that the shale deposit is so thick (1600m per the above article) is it possible to have multiple horizontal wells (at different vertical heights) from a single vertical well (how many horizontals would be possible 1, 5, 10?) and what effect would this have on the cost per well? Steering technology is highly developed so technically speaking in a non-fracced well it is possible to have multiple branches however I'm not sure if this is possible if fraccing a well. I'm no expert on shale drilling but to me this would seem to be a major variable that could have a significant impact on the viability of Cuadrilla prospect. If it is possible to have multiple horizontal sections per vertical well then this would make the wells significantly more efficient & productive. Pad drilling would then add another multiplier in terms of efficiency. Not sure if this is happening anywhere in the States given that the shales generally are not thick enough to accommodate. Maybe cost per well isn't necessarily the best metric on which to determine viability?? <br /><br />At the end of the day as Francis Egan said "We can't talk the gas out of the ground" so private investors will need to run the gauntlet and put their money on the line.

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  • Moneybags11

    In reply to: Moneybags11

    A more reliable measure of the comparative cost of drilling a well and connecting it to a pipeline would be cost per fracced shale meter. after all there are multiple variations in the configuration of a well which will no doubt impact the economics of the well. They all come back to the production capacity however, and the core of that is how many meters of fracced shale do you get from a well and what does it cost. A multiple horizontal well in the Bowland Shale could end up being significantly cheaper as it would have the following advantages;<br /><br />* 5 x the amount of fracked meters for a single well<br />* 1 lot of casing<br />* 1 hole drilled down to top of shale - in the Bowland this would save approx 200 days drilling compared to a well with a single horizontal section<br />* 1 completion - pipework, connection to pipleline etc<br />* reduced rig moves<br />* reduction in site preparation<br /><br />On a cost per meter of tracked shale basis I would suggest that the Bowland prospect could actually be a lot cheaper. <br /><br />Of course the gas still needs to be flowed and that is still one of the big unknowns in the UK.

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  • Striebs

    In reply to: Doug Proctor

    Doug ,<br /><br />The BGS have stated that the basis of the 4.7TCF survey was thin shale so perhaps we should stop referring to it and wait for their new report . The thickness of the shale may have lead to more of the gas been contained but conversely being harder to get out .<br /><br />Cuadrilla are a private company , not public . The 200tcf figure was an estimate of gas in place . It was certainly not hokum and I doubt it was pumped . Some people have misconstrued that 200TCF , deliberately and otherwise . The license confers rights to exploit the communally owned minerals .<br /><br />As you say once the sweat spots are drilled the economics can quickly turn to pot . Having said that it cannot be denied that the best shale wells are extremely profitable . We don't know what proportion of Cuadrilla's shale is in the sweet spot or what the distribution of well productivity will be . There are no US analogues for the deeper lying shale .<br /><br />It's only necessary to compare the amounts of money which can be borrowed against unconventional reserves vs the conventional reserves to get a cautiously realistic expectation from professionals with skin in the game .<br /><br />I think expectations have got out of hand to the point of virtually guaranteeing disappointment and that the following are mistakes :-<br />- that gas will be cheap for any longer than 30 years (unless seabed methane clathrates come in)<br />- that countries will not resort to burning coal when gas prices rise<br />- that gas will be so cheap that we can afford CCS with it's 25% parasitic energy consumption increasing gas consumption 1/3rd .<br />- that countries which have not got shale will keep their coal in the ground<br />- that the US will export gas in any quantity - I think Congress will stop them unless they can show they have a backup source in reserve .<br />- that gas can remain sub $6/mcf in the US for any length of time<br />- that demand side efficiency improvements can be ignored<br /><br />Whilst I salute George Osborne for showing courage to do something when his predecessors did nothing I think history will judge him (unfairly) on gas prices 30 years into the future rather than the next 10-20 .<br /><br />There is no alternative to gas in the short-term for heating peoples homes or cooking their food .<br /><br />Mankind needs unconventionals to soften the landing and buy time until the next generation of nuclear/thorium/fusion/energy storage/grid tech arrives and the UK needs to stop capital flowing out of the country and create jobs .<br /><br />It's going to be fascinating to see how solutions are customised to harvest the UK's thick Shales and stimulate reservoir volumes in a shale deposited in portrait rather than landscape . <br /><br />It would be an even bigger disaster if a tool got stuck after drilling say 3X 8,000ft horizontal laterals from the same vertical .<br />At those depths it's likely to be all expensive high strength proppant . Even so , who is to say that the fractures will remain propped open . Perhaps the chances of success are higher with gas than oil which requires much wider fractures .<br /><br />Shale has a crucial role to play for the next 50 years but if by using shale oil and gas we are using up a contingency we really need to use the time it buys us to come up with a flexible long term plan for the second half of this century .<br /><br />The recipe for happiness has got to be setting expectations realistically , not at the extremes like Dellingpole or Rawnsley .

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  • One thing, the Horn River formation in British Columbia is also brittle shale, though much thinner than the Bowland is claimed to be. They put the resources of gas in place at 250 trillion cubic feet, of which they expect 20% to be recoverable. Could the Bowland be similer?

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  • Roger

    Don’t forget that the size of the fractures can be varied.<br /><br />Just because the bowland is 20x as thick it does not mean that you necessarily need to drill and frack 20 layers. I suppose it is an option but far more likely they will just fracture the shale deeper.<br /><br />So for instance in the USA with a 400ft thick shale, you drill into the middle and try to limit your fracture to 200ft deep so you fracture the shale but leave the rock below and above intact.<br /><br />In the UK they could possibly go 3,000 deep into the shale and then diverge horizontally. Instead of fracturing just 200ft deep they fracture 2,000ft deep into the shale.<br /><br />And because the depth of fracture is a square function to the area of rock fractured, fractures that are 10x as deep actually fracture 100x as much shale rock.<br /><br />Therefore for each hole into the ground they could potentially fracture 100x as much rock and hence produce 100x as much gas for the same cost assuming the shales bare a similar quantity of gas per volume of rock.<br /><br />What is clear is that the thickness of the bowland is a [B]MASSIVE[/B] [B][U]advantage[/U][/B].<br /><br />We may be getting a little ahead of ourselves but I am thankful for 6,000ft thick shale. Why some are trying so hard to turn that into a negative is beyond me.

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  • andagain

    [QUOTE]Therefore for each hole into the ground they could potentially fracture 100x as much rock and hence produce 100x as much gas for the same cost assuming the shales bare a similar quantity of gas per volume of rock.[/QUOTE]<br /><br />Would that imply 100x the seismic activity? Remember that any detectable activity is likely to lead to demands for a ban, and shales enemies in DECC will probably give it to them.

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  • Roger

    In reply to: andagain

    [quote]Would that imply 100x the seismic activity? Remember that any detectable activity is likely to lead to demands for a ban, and shales enemies in DECC will probably give it to them.[/QUOTE]<br /><br /><br />If the rock you are to fracture has stress within it a frack could release that energy, it wont matter much how deep you frack as the tremor happens because of the existing stress in the rock not the fracking process itself.<br /><br />The good news is that if you have a tremor in an area, the stress is released in that local area and any further fracking would likely be tremor free.<br /><br />I wouldn’t worry about tremors caused that deep in the ground, they are very weak.<br />A van driving past your home is far more powerful and we don’t fear or ban that.<br /><br />In fact a magnitude 2 tremor has an energy of 63 MJ<br />Less than two litres of petrol or diesel.<br />Why would any sane person fear that 6 km below the earth when they put in two dozen more times as much petrol/diesel into their cars petrol tanks which are less than a meter from your seat.

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  • andagain

    In reply to: Roger

    To answer your last question, I think the linked article explains a lot:<br /><br />http://www.overcomingbias.com/2012/12/reasons-to-reject.html

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