UK's shale gas revolution falls flat with just 11 new wells planned for 2015
The UK government's planned shale gas revolution has barely got out of the starting blocks with just 11 new exploratory wells for shale gas and oil due to be drilled this year even before the impact of plunging oil prices has fully begun to impact on the industry.
David Cameron has said the government is going “all out for shale” but just a handful of new wells are in line to be created in 2015 and just nine wells – eight new and one existing – have been announced as candidates for fracking.
Professor Jim Watson, research director at the UK Energy Research Centre and author of a recent report on the potential for shale gas in the UK, said that statements by politicians on shale gas’s potential had been speculative.
“Given the low number of wells that have been drilled in the UK, and the very low level of experience of shale gas production here, it is far too early to say how much shale gas could be produced.... The prime minister’s statement that shale could provide gas for the UK ‘perhaps for as long as 30 years’ is therefore very speculative and optimistic,” said Watson.
He added that it was unlikely the UK would have a significant shale industry until the early 2020s and even then the UK would still need to import the majority of its gas.
Neither the trade body representing the industry, the United Kingdom Onshore Oil and Gas (Ukoog) nor the Department of Energy and Climate Change, which is responsible for much of the regulation, collects data on how many shale gas projects are currently taking place and where. The list of 11 sites comes from a Guardian analysis of company statements, planning applications and communication with the main companies involved.
The push to exploit shale gas has received strong backing from both the prime minister and George Osborne. The chancellor has said the fuel presents “huge potential” for the UK economy and that he had put in place the world’s most generous tax regime for shale gas and fracking. But the head of the trade body representing the industry said this month that progress has been “glacially slow” compared to other countries.
The process of fracking – hydraulic fracturing – involves pumping large volumes of water along with chemicals and sand at high pressure underground to fracture rocks and release gas. It was banned temporarily in 2011 after a test well caused a minor earthquake near Blackpool. The moratorium was only lifted in 2012.
So far, a total of seven shale gas wells appear to have been drilled, in Lancashire and Cheshire. Ministers and the industry say that 30-40 wells will need to be drilled to assess the real potential of shale gas to UK gas supplies, which are increasingly reliant on imports from Norway and Qatar as North Sea production declines.
The industry says that the relatively low numbers of wells masks a lot of behind-the-scenes work adapting to new rules this year and an imminent expansion in early 2015 when a new round of onshore oil and gas licenses are expected to be issued.
“I think it [the number of wells] underestimates the amount of work done by each individual operator, bearing in mind we’ve had changes in planning, changes in permitting, etc. You should see more results of that groundwork over the course of the next 12-18 months,” said Cronin. He said the figure of 11 wells was a “reasonable” assessment, but he said that Ukoog did not collect exact numbers.
Shale interests expected to dominate the upcoming oil and gas licenses, and new players entering the shale market. Cuadrilla, IGas and Third Energy are three of the main exploration companies, working in consortia with bigger players including Total, GDF Suez and Centrica, and they are expected to be joined this year by Ineos, which owns the Grangemouth petrochemical refinery in Scotland.
In November, the company’s billionaire founder announced plans for a £640m investment in shale, saying the UK is not a great place for energy and manufacturing because of the cost of power compared to the rest of Europe, but “shale has the ability to change that”.
“I think Ineos will have an impact, as will round 14 [the oil and gas licensing]. You will obviously see,” said Cronin. “Could we be doing more? I’d love that to be the case. The reality is these things do take time.” Ineos declined to comment on the specific number of wells it hopes to drill this year.
In southern England, energy company Celtique Energie has said it is appealing a planning decision in July by West Sussex county council which rejected drilling to explore shale potential near Widsborough Green. Lodging an appeal with the planning inspectorate, chief executive Geoff Davies said the council had “not followed the spirit or the letter of government policy”.
In the north-west, iGas, which completed its acquisition of rival Dart Energy in October to become the UK’s biggest shale company, successfully drilled a well at its Ellesmere Port site over November and December. The results showed “significant gas indications were observed across the shale”.
Simon Clydesdale, Greenpeace UK’s energy campaigner, said: “The government has just thrown a staggering £5m at engaging people on fracking, yet ministers are not even able to share with them the most basic information about current shale developments. The industry hopes to drill thousands of wells across the land, yet it seems nobody is looking at the cumulative impact of this looming shale explosion.”
A spokesman for the Department of Energy and Climate Change said: “The government is working to develop the shale industry, but this is being done carefully to bring about the best outcomes for communities, the industry and investors. Shale has the potential to create jobs and make us less reliant on imports from abroad while moving to a cleaner, greener future.”
Shale gas wells to be drilled
- Preston New Road, Cuadrilla (4 wells)
- Roseacre Hall, Cuadrilla (4)
- North-west site location TBC, iGas (1)
- East Midlands site location TBC, iGas (1)
- Wisborough Green, Celtique Energie (1)
Shale wells to be fracked
- Preston New Road, Cuadrilla (4)
- Roseacre Hall, Cuadrilla (4)
- KM8 at Kirby Misperton, Third Energy (1)
Shale gas wells drilled already
- Becconsall site, Cuadrilla
- Grange Hill, Cuadrilla
- Preese Hall, Cuadrilla
- Ince Marshes, iGas
- Merseyton Road / Ellesmere Port, iGas
- Barton Moss in Salford, iGas