UK logistics companies might benefit from shale gas boom

Logistics
Source: DollarPhotoClub

According to a report prepared by the UK’s Lloyds Loading List, UK transport and logistics companies might be unexpected beneficiaries of the British shale gas development.

The experiences of the US and Canada show that shale exploration boom created increased demand for road hauliers and rail freight companies. It is not only people and equipment that need delivering. Hydraulic fracturing operations require several million gallons of water along with around 100 tons of silica sand, used as proppant. Once fracking is completed the water returns to the surface. Some of it is the water used in fracking (flowback water), the rest is water released from the fracked formation (produced water). Both types of water are very polluted and need to be disposed of safely. On top of that, the released fuel – gas (wet and dry) and oil – needs to be transported from wells to processing plants. The demand for suitable transportation is likely to be enormous.

“If the UK government does endorse large-scale shale gas production, the potential supply chain requirements are enormous. FTL carriers of steel products and capital goods, as well as liquid and solid bulk and project forwarders will probably be the first to benefit as rigs would need to be transported to drilling sites and also water and sand used in the extraction process,” a supply chain analyst told Lloyd’s Loading List.

“But there are many issues to address, among them transport infrastructure. The road networks in proximity to the drilling sites would be unable to cope with a projected rise in hgv traffic while rail transport, which in the longer term would handle the bulk of shale gas shipments to refineries, would require a significant upgrade,” he added.

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