Special Digest


24/05/2014

The Weald Report - Swan Song for Onshore Fracking?


The UK shale bubble has burst. No gas and insignificant oil in the South. And why even northern shale gas is now a bad idea.

On May 23rd, strategically released just the day after the Euro elections, the government published the new BGS/DECC report on shale gas and oil prospects in the South East of England.

The pro-fracking press seized on the estimates for shale oil present in the Weald shale - a best guess of 4.4 billion barrels, with whoops of joy. But a day later the penny dropped. This report is a dead-end for shale exploration and production in the South.

Firstly, as we expected, the report dismissed shale gas as being present in insignificant quantity. Any Tory dream bubble of a shale gas revolution in the south burst.

But more unexpected was the cool view the report expresses towards the other possibility - shale oil.

Despit the hype over "billions" the estimates were actually low. Between 2 and 8 billion barrels in place in the rock. But the bad news is that the shale is not likely to give up its oil easily. Indeed the BGS suggests that fracking on its own may not be enough - further treatment - ie heating the rock in situ - a complicated and energy-wasting process - might be needed.

The US Energy Information Administration suggests that the average US recovery rate for shale oil is around 5% - "The recovery factors for shale oil are typically lower than they are for shale gas, ranging from 3 percent to 7 percent of the oil in-place with exceptional cases being as high as 10 percent or as low as 1 percent. The consultant selected the recovery factor based on U.S. shale production recovery rates, given a range of factors including mineralogy, geologic complexity, and a number of other factors that affect the response of the geologic formation to the application of best practice shale gas recovery technology. Because most shale oil and shale gas wells are only a few years old, there is still considerable uncertainty as to the expected life of U.S. shale wells and their ultimate recovery."

The BGS suggests that the Weald shale may not even match US experience. Also their report also draws attention to the fact that some of the Weald is urban, which will reduce the area where fracking is possible. But - generously and optimistically - assuming a recovery rate of 5% for the Weald that would make only about 220 million barrels of oil available over the entire lifetime of fracking in the South-East - maybe 40 years.

For comparison, the UK oil usage just in 2012 was around 550 million barrels. In other words the whole lengthy countryside-destroying industrial fracking process would only yield about FIVE MONTHS of UK oil demand.

Another comparison - in terms of natural gas, 220 million barrels in energy terms equates to around 1.3 trillion cubic feet of gas. The UK gas usage is running at around 3 trillion cubic feet. Again the oil would only equate to UNDER SIX MONTHS of our annual gas usage. And of course we use both oil and gas.

Professor Aplin of Durham University said in the New Scientist news he has assessed the extractable oil from the Weald basin at only 1% - far less than even the 5% figure above. A mere 44 billion barrels recoverable, a month's worth!!!

The conclusion is simple. NO WAY can shale oil (or oil shale as we might now start to call it if it needs heat treatment to release it) have any impact on our energy imports and give us ANY energy security. Neither can it provide an economic boost - except to the pockets of drilling companies. FRACKING THE SOUTH FOR OIL WOULD BE POINTLESS AND CRAZY.

The Telegraph caught on to this. Although they did not spell it out, they did their research into how the Weald shale oil compared with the North Sea oil reserves. They found (remember that Weald 220 million figure) 26.6 BILLION barrels of oil had been extracted from the North Sea and a very small (no matter how the frackers boast about it) onshore production. In 2012 330 million barrels were extracted. Proven viable reserves in the North Sea amount to 3 BILLION barrels. A total of 8 billion is possible out there.

How many wells?

We can guestimate the number of wells that would be required to drain the whole of the Weald basin of its extractable oil.

The lifetime production of a shale oil well is only an estimate, as there is not sufficient history in the US to come up with any firm figures. But taking the Environmental Information Authority's 2014 Outlook report as a guide, we can use an estimate of median 103,000 barrels per well. This would mean to extract 200 million barrels would need over 2,100 wells. This figure would rise bearing in mind the BGS-stated difficulty of extraction compared with the US.

In summary?

These figures are the clearest possible indication that onshore fracking for oil would be criminal desecration of the countryside for no valid economic or political reason.

Naturally the government would be disappointed by this. Arch pro-fracking minister Fallon did not know what to say, retreating behind a comment that it was not for him to say whether the report was good or bad news. In reality he must be gutted, as must Cameron and Osborne. Their reason for fracking has just gone up in smoke.

What about shale gas?

Well of course the expectation is now that frackers will focus attention on the North of England, where earlier the BGS said that some 1,300 trillion cubic feet lay in the Bowland shale. Assuming a 5% recovery rate, as we could expect from US experience, this might produce about 65 tcf of gas, 20 years of UK demand.

But the new oil report starts to unravel the possibilities in the north. The BGS state "It is likely that only the most prospective intervals of this large volume could be commercially exploited.". In other words only part of the Bowland Shale area could be accessed. One of the reasons, of course, again, is that much of the area sitting on top of Bowland shale is towns and cities. In other words, if only half the area is available for fracking (and the reality means it could be a lot less than that) we are down to ten years of gas at most. And that would require somewhere between 25,000 and 50,000 wells, or about 600 to 1200 wellpads. Again - for 10 years gas supply is it worth it? The overwhelming answer must be no.

The Telegraph figures raise a different way of tackling the pro-frackers. For quite some time it has been realised that the North Sea has far more shale underneath it than on mainland Britain. There are no reliable estimates, but back a couple of years ago a BGS expert hazarded a guess of ten times more shale gas lying offshore than onshore when giving evidence to a parliamentary select committee.

More recently, Bloomberg told the Lords Economic Affairs Committee "Geologists suspect that the UK also has large offshore shale gas resources. Moreover, the UK offshore industry is one of the best developed in the world the North Sea has been under constant development for more than 50 years. However, offshore shale drilling is currently (and, perhaps, inherently) uneconomical because shale developments rely on continuous drilling to make up for rapid decline curves, but day rates for drill-ships, semisubmersibles and jack-ups are much higher than for onshore rigs."

And "The UK does have a very well-developed offshore services market, but it has almost no experience in onshore work. In addition to the lack of experience, there is a lack of equipment the vast majority of high-horsepower rigs and pressure pumping systems needed to frack are located in North America."

To the same committee Professor Riley of City University said regarding regulation "There are a number of issues. The major problem is what I referred to earlier. The entire approach to oil and gas has been focused on offshore. Recalibrating for onshore will be a major task. I do not think we have entirely captured what that involves. We can learn a lot from the American experience. One of the major differences, for example, is scalability. You start off perhaps with 10 wells and then go to 100; you may go to 1,000. You must have the regulatory capacity to deal with that, but you also have to look, for example, at the availability of back-up water treatment facilities to deal with the different types of waste that come out of developing shale. We have not been used to that, and it would be quite a new feature of the operations.

In other words and in summary, time and time again we hear there is no onshore service industry, there is no adequate regulation. There is maybe ten times the gas available offshore rather than onshore - we are possibly taking a century of gas rather than just a decade. Yet the government and the industry want to frack our homeland. Why? Bloomberg said it. Money. It is not worth the frackers developing cheaper ways of working offshore when they see David Cameron's onshore island as a soft tocuh and an easy and quick - if dirty - option.

This is a strong argument against onshore fracking, and why even the North should not be fracked. IF we can not wean ourselves off fossil fuels, offshore is where the next round of shale exploitation will happen. Meanwhile for short term gain our land will have been fracked and have an uncertain future.

Please not I am not advocating fracking under the North Sea. But even the most died-in-the-wool climate change sceptic has NO DEFENCE against the argument that fracking under the North Swa would be a better option IN THEIR TERMS than attempting to frack onshore, with all the risk of public discontent and opposition that will engender.

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