Discussion > _Is_ shale gas all it's cracked up to be for the UK?
Nial
Sorry I did not spot this sooner.
The UK has issued Hydrocarbon licenses to a large number of companies in the UK already, for the purpose of extracting "conventional" oil, gas and coal. In almost all cases there is shale deep below the conventional resource. The companies who operate these licenses are aware of the shale resource but are waiting for a government all clear before they risk new investment.
Cuadrilla is a bit special; they came to frack from the start.
To the West and South West of Cuadrilla a company called Igas operates a license and they know they have the Bowland shale beneath them but can not develop it.
Aurora Petroleum has a license due South of Cuadrilla and they have the 3000 foot thick Bowland shale below them but for them 700 feet has been identified as oil shale and they call it "The Motherlode". They can not drill until the government gives the all clear.
I wrote to a number of companies where I knew that significant shale deposits are involved, one was Egdon Reources and the MD responded:
Dear Mr Brooks,
Egdon Resources are a small onshore focussed exploration and production company with interests in the UK and France.
As a significant holder of onshore licences we do have some areas where we believe there is the potential for shale-gas and shale-oil. These areas are still at an early exploration stage and we continue to work with our joint venture partners to assess the technical potential. We will continue to watch how the various debates and legislation develop around the potential exploration for and production of these resources in the UK and France and should the conditions prove favourable for shale-gas or shale-oil we will look to progress our evaluation of these areas through additional drilling and technical work.
However, I should stress that given the uncertain environmental and legislative position at present our primary interest remains the exploration for and production of oil and gas from conventional oil and gas reservoirs.
Best Regards
Mark Abbott
Managing Director
Tel: +44 (0)1256-702292
There is shale under most of the UK but so far only companies that already had Hydrocarbon licences have been able to assess it in a small way.
Dung
Let me start by saying I have no axe to grind here, I have no work interests or investments in any form of energy production. I have come to understand that shale gas could make a big contribution to the UK's energy supply, then Doug Proctor made a couple of posts here...
http://www.bishop-hill.net/blog/2012/5/21/cuadrilla-were-not-at-no-10-seminar.html
..in which he downplayed the importance/ usefulness of shale in an energy solution mix.
Unfortunately I think his second post is mostly a lot of irrelevant waffle that has little useful information wrt the UKs shale resources.
I don't have time to replying to all Doug's points but a few.....
> Go to Arthur Berman formerly a writer for World Oil, Shale Gas if you want some good info.
From 2010...
http://www.theoildrum.com/node/6785
“You get about 150 Tcf and that’s about 7 year’s worth of US supply from shale.....So the gross resource from shale is probably about 7 years worth of supply.”
“It hasn’t been proved to me yet that any of it is commercial, but they’re drilling it like mad, there’s no doubt about it.”
The last few years have proved it has been _very_ commercially viable.
> Also see below. High costs that involve local labour and equipment
> (first, it's mostly large corporations anyway, so the profit leaves your
> town except for field maintenance) (RobL 21-05-2112 @ 7:52 PM,
> you still pay the high prices though your neighbour is employed, and
> that dollar from you pocket is still the dollar that your butcher doesn't get.
The UK currently spends a lot of money importing gas, there is some concern of the
security of that supply.
Your butcher might not get the money directly but might when the guy doing the
drilling needs a bacon roll (stupid simplification I know). He definitely _won’t_ get it
if we’re spending that money importing energy from abroad.
Doug then discussed the economic aspects of shale production (at great length)
> 1. Long-term. This might be called “full-cycle”.
> 2. Short-term. This is how you and I generally think about the
> economics of a project when we ask, does it make money.
> 3. Finding and Development. Known as F & D.
> 4. Drilling, Completion and Equipping. D,C & E.
> 5. Operating.
This is just standard economic analysis that any company approaching a venture that incurrs initial investment before longer term returns must undertake.
All I need to know is that there are companies who are keen to drill.
> Your energy costs MUST rise if shale gas is an important component
> of your energy sources as it is harder to get out and goes away faster
> than our previous gas reservoirs.
Your energy costs must rise _EVENTUALLY_ with _ANY_ natural resource.
> Shale gas will also – once supply gets in line with demand –
> raise the overall price for gas, to the benefit of the conventional producers
> , as gas at market has the same value regardless of its source.
This is completely nonsensical. at market if the resource becomes more plentiful the price will come down.
> And since all the places where gas could substitute for oil have already
> been taken care of, gas prices will do nothing for oil prices, up or down.
Like it's done in America?
> Shale gas is expensive to produce. The economic downturn globally has
> reduced demand below supply,
Perhaps in America, but here i the UK we use relatively much more and as above import it from abroad.
> but gas fields cannot just be shut down. Gas goes into storage underground,
> but the buyer now can chiesel away at the price as there is always someone
> with lower profit demands or more urgency to sell. So prices drop below cost,
> while producing companies try to hang on until demand exceeds supply.
> And then prices will rocket.
This will only happen if you flood the market. I'm sure those who want to drill will have taken this into account. A lower level of supply could be useful in keeping a cap on UK energy price increases and add to our energy security.
Thanks for the lengthy contribution Doug I'm afraid I still think that in the UK shale should be approached with much enthusiasm.
Nial