Despite the government’s pledge to ‘go all out for shale’, the UK shale industry has been stuck at an impasse. So far only Cuadrilla has managed to sink one exploratory well in Lancashire and was forced to suspend the operation after the drilling induced earth tremors in nearby Blackpool.
However, although there seems to be very little support for fracking among the British people, most industry experts agree that UK shale exploration will become a reality, albeit no sooner than 2018 or 2020.
It is still very early days. While the UK has managed to frack one well, there have been over a million hydraulic frack operations now in the US, where it has often taken many wells over several years to understand new plays, and to optimise frack design operations.
So what are the challenges that make replicating the U.S. “shale renaissance” in the UK so difficult?
Speaking at last weeks’ Shale UK conference in London, Jeremy Lockett, Subsurface Manager at Centrica, explained that while the geology of the Marcellus – the most prolific of the U.S. shale plays – is “boring” in the sense that it has nicely detailed and predictable geology, the geometry of the Bowland area in the UK is vastly more complex than the Marcellus.
This has serious implications.
“Nice simple geometries are what you need, anything that’s complicated just makes life more difficult,” he explained.
These simple geometries mean that companies can repeatedly drill wells, in adjacent plots, that are more or less the same and expect similar results. With shale wells depleting at a much faster rate than conventional wells, this ability to churn out wells on autopilot is crucial to the economics of the play.
“Another factor in the US is that in a new play, multiple operators work in small areas adjacent to each other; there’s less operators in the same size plays as in Europe so the learning curve is much quicker; the technical pace to crack the code in the US is much faster; permitting and the government processes are also faster,” Mr Lockett said.
The set-up of shale development has been streamlined – he explained – “when you want to drill a well and when you’ve got dozens of land owners, you fundamentally break up the areas into these unitised blocks, so you can talk to all the land owners. You agree on a certain area there, and we build one well pad inside that area and we have a fixed equity in it. It just makes the management of the sub-surface much much easier.”
The U.S. benefits from standardised development, with drilling efficiency being one of the biggest drivers of development schemes. Pads in the U.S. are often semi-standardised, which means that the supply chain works much easier.
With shale development in the UK at a very early, exploratory stage, such standardisation is a long way off.
Another beneficial feature of the Marcellus that is absent in the Bowland is the virtual absence of major faults. The presence of faults makes the planning of exploration blocks more difficult as drilling through a major fault carries the risk of induced seismicity. The tremors caused by Cuadrilla in 2012 – which led to an 18-month moratorium on fracking in the UK – happend when they drilled through a tectonic fault.
What’s more, the presence of faults limits the length of horizontal wells and forces the company to drill more vertical wells, increasing the footprint above ground.
“We can see these major faults going south in the Bowland area, you can see lots of faults areas, big faults, with 2-3 kilometres space between,” Mr Lockett said, adding: “That might also impose practical limitations on how long the wells can be in the UK.”
Surface access and infrastructure
As Peter Clutterbuck, of Global Energy Consultants, told delegates at the Shale UK conference, land access is a crucial problem for Europe.
In the U.S., very low population density means that people can pretty much build drilling pads where they like. The companies can put pads pretty close to where they want them, increasing pad efficiency. In Europe, higher population density in built up residential areas precludes surface access; sometimes to a very very big portion of a play area.
On the plus side, operators in the U.S., drilling in remote areas, have to deal with the lack of infrastructure; the lack of adequate roads, pipelines, and no access to the utility grid.
“So you’ve got no power, no water which, to be honest, in the UK you’re probably no more than a kilometre from at any given time,” said Mr Locket.
While the U.S. abounds in companies servicing the oil and gas industry, the situation is far more complicated elsewhere.
As Mr Clutterbuck pointed out, “in most parts of the world you could not do a multi-stage horizontal frack because the service company capability is not there; it costs too much to set it up. In the US, for example, the costs are much cheaper because there’s much more competition among service companies.”
“There are limited service capacities in Europe meaning that at the moment costs are typically around double of what they are in the United States,” he said. Consequently, the cost of exploration is high: wells in Europe often cost 25 million dollars, the frack itself can cost 7 million dollars.
This is why, commerciality is yet to be proven in Europe, even with oil at over 100 dollars per barrel, he said.
Environmental concerns and social acceptance
The social acceptance of the shale boom in the U.S. is much greater than anywhere else in the world. This is despite the fact that, in the words of Professor Robert Mair, “there have been some bad experiences in the U.S.”
The main difference between the U.S. and the UK in this respect is the fact that in America, the landowners own the mineral rights to the deposits under their properties. This serves as a very strong incentive to support exploration.
By contrast, in the UK and the rest of Europe, mineral rights belong to the state, and therefore the local population is more likely to react with hostility rather than enthusiasm to any planned exploration in their area.
Having said that, leaving the mineral rights in the hands of the American landowners created an environment where regulations were lax and certain irresponsible practices were allowed to persist.
Even now, over a decade into the “shale boom”, the regulatory environment in the U.S. is very loose, certainly form a federal point of view, with differing levels of regulation state-by-state.
Speaking at a POLITEA event entitled: “Shale Gas: Securing the UK’s energy supply”, Professor Mair was adamant that UK regulations “are perfectly adequate to ensure that none of those things that went wrong in the US will happen here.”
Answering a question from the floor, Professor Mair, admitted that the government has not been “pro-active” enough and “have not been on the front foot” in engaging the stakeholders and the public.
“If that’s not done,” he concluded, “then there will be no shale gas extraction in the UK.”
DISCLAIMER: The views Jeremy Lockett expressed at the conference were his own and do not necessarily reflect those held by Centrica.
Article continues below this message
Have your opinion heard with Shale Gas International
We accept interesting, well-written opinion and analysis articles of up to 1,500 words, that offer unique insights into the shale industry. The articles cannot be overtly promotional in nature and need to fit into at least one of our content categories.
If accepted, the article must be exclusive to Shale Gas International website and cannot appear on any other websites, publications, etc. Each article may contain up to three links to external websites relevant to the content discussed in the piece.
If you would like to contribute to Shale Gas International website, please contact us at: editor[at]mw-ep.com