The Parliamentary Committee on Energy and Climate Change asked for evidence on the subject of The Impact of Shale Gas on Energy Markets. There were 30 submissions, but the one I went to right away was from Cuadrilla Resources, the only company who have actually drilled for any.
Here in public, although currently ignored by the press, are some revelations and hypotheses about the potential for shale that could have important international implications. Hang on to your hats. Everything you thought you knew about UK energy is out of date. Read it all, but here are the key points. For busy journalists, I've underlined some key points.
It is apparent from our exploration and appraisal of the Bowland Shale formation in Lancashire that the UK has a very large amount of onshore gas in place. Our prior estimate for gas in place (OGIP) in the Bowland licence area alone was 200 TCF. We will review this estimate after further analysis of the 3D seismic survey we completed over the licence area, as well as analysis of data from the next well, which we are drilling at the Anna's Road site near Blackpool.
1. What are the estimates for the amount of shale gas in place in the UK, Europe, and the rest of the world, and what proportion is recoverable?
1.1 Cuadrilla believes that the prospects for shale gas in the UK and in parts of continental Europe are very promising, based on assessments of a number of geological formations that are not dissimilar in scale to US and Canadian sites where major deposits of natural gas have been discovered.
1.2 While the full economic benefits of shale gas have not yet been fully ascertained, based on prior estimates and research, we believe there are at least 200 trillion cubic feet (TCF) of original gas in place (OGIP) in the Bowland basin. We will review this estimate after further analysis of the 3D seismic survey completed over the licence area, and analysis of data from the next well, which we are drilling at the Anna's Road site near Blackpool.
1.3 The recoverable reserve is a function of shale geology and as much, if not more a function of the number of horizontal wells that can be drilled and fractured. However, this in turn depends on the economic and social constraints of such development. Our exploration has shown that the Bowland shale in Lancashire is significantly thicker than any comparable US shale. This opens the possibility of developing with a much lower-density surface "footprint" than US shale plays.
1.4 Cuadrilla understands that economies of scale and advances in technology will drive down development costs over time and that recovery estimates of 15 to 20% may in time prove to be conservative. Furthermore, a recovery factor of even 15% would yield a reserve of some 45 TCF from the Bowland shale alone. This is some five times larger than the UK's booked gas reserves of 8.7 TCF (proven reserves), and almost double the 25 TCF at a maximum (proven + probable + possible). (Source: DECC -- UK Gas Reserves and Estimated Ultimate Recovery 2012)
2.1.3 The experience of the shale gas industry in North America is that improved knowledge, a product of continuous technical development and operating experience, leads to better recovery and some mature shale plays now have recovery estimates of up to 40%.
The figures as I noted recently are likely conservative, but they are already so high, so immense on a global scale, that to think that if there were only 200 TCF, they would be a disappointing lead balloon we can safely ignore, is quite frankly ludicrous. It would be like refusing to cash in a first prize Lotto ticket because the EuroMillions prize was greater. But speaking of wanting to be a millionaire, we don't want to give you that.
The constant objection I hear is "the UK is too crowded". It wouldn't seem too crowded to anyone who has visited all three Cuadrilla drill pads as I have. The first at Preese Hall was on a farm, not visible at all from any road. Singleton, as I noted before was overlooked by utterly disinterested cows and wild birds. Banks is in the middle of a cabbage field, several hundred metres from the road. I counted two houses within sight.
But it is the incredible thickness of the Bowland shale that changes the whole discussion.
2.3.2 In the case of onshore shale development, on-going drilling of new wells does not mean populating the countryside with ever-increasing drilling locations. Horizontal wells can radiate from the same well bore like the tines of a fork, and radially in several directions. Because, as we said above, we have learned the Bowland shale is unusually thick, this can be repeated at different vertical levels, so called "vertically stacked" horizontal wells. One pad can manage around 36 such horizontal wells, using present day technology, and as technology evolves, more in the future. Each horizontal well is equivalent to a piece of keyhole surgery. The "drill" is a remotely controlled turbine whose position may be two kilometres down and three kilometres away, but whose location is always precisely known. The horizontal wellbore is comparatively narrow, about 8 inches in diameter. All fractures are typically thousands of feet below aquifers. Above the Bowland shale formation in Lancashire lies the Manchester Marl, a thick impermeable rock forming the ‘regional seal’, a barrier between the hydrocarbons trapped in the Shale rock below and the aquifer a further several thousand feet above. A lot of development can thus take place from a single pad -- hence our view that the UK offers a low-density development opportunity.
I've mentioned before that Cuadrilla were incredibly unlucky in that they had the only proven link anywhere in the world between fracking and earthquakes. That has delayed UK production by 18 months, but perhaps it was meant to be. Cuadrilla's, and the UK's great good luck if we take it, is that the Bowland is one of , if not the thickest shale plays in the word. They say "unusually thick" and have said 3,000 feet thick. I add the caveat, "in public". To give an idea of our national luck this is a chart of the thickness of the Bowland compared to North America
Back to the Cuadrilla evidence:
2.3.3 Shale gas operations need to be commercially viable in order for them to be practical. Therefore, it is necessary to take into account development costs, market prices from gas and other liquids and other financial incentives and burdens. Importantly, the industry needs the efficiency of a small number of pads as much as citizens require it.
Permit me to observe, as an Anglo-American who made a conscious choice to live in the UK, that my fellow Britons, or at least the English ones, are not renowned for optimism. But we have some great geological luck in the Bowland and we can use it to everyone's benefit.
One piece of that luck that I'll expand upon is that the thickness of the Bowland Shale lends itself naturally to drilling that is low impact. That means producing game chaning amounts of natural gas from what may potentially be a handful of sites. That knocks one of the great fears of the public. There is certain to be shale development in someone's back yard. But it won't be in many people's back yards. A prime reason for shale pessimism in Europe has been "Europe is too crowded", and in the Bowland at least, that objection simply no longer applies.