UK to lead shale gas exploration in Europe
On December 13th, 2012, the UK Government lifted the ban on exploration and production of shale gas with the expectation to develop a dedicated industry upstream and downstream that could create 42,000 permanent jobs.
This ban had been decided in 2011 after small earthquakes had been recognized to be related to shale gas fracking operation in Blackpool in the Lancashire.
The tremors had been measured at 2.3 in April and 1.5 in May on the Richter scale, to be significant enough for the UK Government to ban fracking until new environmental and safety rules should be adopted.
By definition on the Richter scale, the tremor below 3.5 may be recorded by instruments but cannot be felt.
The conclusions of the reports published after the Blackpool earthquakes are rather positive.
The decision to lift the ban came after the reshuffle of the UK Government in September 2012 with new heads at the Ministry of State for Energy and Secretary of State for Environment, Foods and Rural Affairs.
In UK, the Secretary of State for Environment is in charge to deliver the licenses for drilling operations.
Within the UK Government this decision is well supported by George Osborn, the Chancellor of the Exchequer, who announced a new tax regime for the shale gas, excluding shale gas from the marginal tax scheme of 62% and 81% of the North Sea.
The exploration and production of conventional oil and gas offshore UK takes years for development and requires $ billion capital expenditure.
In addition it is not risks free unfortunatly.
By comparison, the UK Government sees in the shale gas a unique opportunity to reduce its reliance on LNG import and to develop on fast track an industry at home for reasonable amounts of investment with manageable risks.
In reference to the US experience, George Osborne justified his tax break: “so that Britain is not left behind as gas prices tumble on the other side of the Atlantic”.
By this statement the UK Government expresses clearly to see the shale gas not only as an alternative source of energy but also as a competitive advantage for all the industrial and economic chain behind.
As in USA, the UK Government expects the shale gas to create direct jobs on the upstream activities and all associated engineering services and to motivate the downstream energy intensive activities, such as petrochemicals, metals and manufacturing to relocalize in the UK.
Actual estimations are to generate 42,000 jobs.
Schlumberger and Cuadrilla to lead prospection
Schlumberger, one of the spearhead companies leading the shale gas exploration and production in the USA, has announced to increase efforts in the UK.
The shale gas reserves in the UK have been constantly revised upward.
The first estimations given by the British Geological Survey were around 5.3 trillion cubic feet (tcf) corresponding to 1.5 years of the national consumption.
Then the US Energy Information Administration (EIA) calculated that UK should contain 20 tcf of recoverable shale gas reserves.
Last numbers are closer to 40 tcf, but there are still uncertainty about the actual numbers since few seismic analysis have been performed at the scale of the country.
The structure of the formations and the potential recovery rates are still question marks.
So the UK Government is targeting to establish a comprehensive map of the whole country in beginning by the Bowland formation by 2013.
Currently, Cuadrilla Resources is the only company having licenses to operate shale gas exploration and production in the UK, it should be followed soon by many other prospectors.
