Bibliography
Schulz, H.-M. et al (2010), ‘Shale gas in Europe: a regional overview and current research activities’ in Vining, B.A. and Pickering, S.C. (eds.) Petroleum Geology: From Mature Basins to New Frontiers – Proceedings of the 7th Petroleum Geology Conference, London: Geological Society
Smith, N. et al (2010), ‘UK data and analysis for shale gas prospectivity’ in Vining, B.A. and Pickering, S.C. (eds.) Petroleum Geology: From Mature Basins to New Frontiers – Proceedings of the 7th Petroleum Geology Conference, London: Geological Society
Stevens, P. (2010), The ‘Shale Gas Revolution’: Hype and Reality, London: Chatham House
Response to additional questions following second evidence session
Further to the written submission of the Geological Society to the Committee’s inquiry into Shale Gas, Dr Jonathan Craig appeared at the oral evidence session on 1 March, in his capacity as chair of the Petroleum Group of the Society. Subsequently, the chair of the Committee wrote to him with further questions. The responses below have been prepared in discussion with Dr Craig, and are presented on behalf of the Geological Society.
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Is shale gas more likely to be a regional rather than a national phenomenon in the UK, i.e. is shale gas more likely to be locally distributed than transmitted nationally?
Two distinct considerations should be taken into account: geology (regionality of occurrence of the resource) and distribution (regionality of use).
First, the size and geographical location of shale gas resources in the ground is dependent on the geology, which varies from area to area. So the physical occurrence of shale gas in the ground is by its nature a regional phenomenon. In particular, some UK hydrocarbon basins are more likely to yield shale gas than others. The Midland Valley of Scotland, for instance, is more promising than the Grampian Highlands in this regard, as the rocks in the latter do not have the characteristics necessary to produce shale gas. The essential conditions for the occurrence of shale gas are relatively unstructured sedimentary basins which include a shale section of sufficient thickness (10s to 100s of metres) and thermal maturity, with high TOC (Total Organic Content) (>1%), preferably liquid-prone and overpressured, typically at depths of less than 3,500 metres. More is known about the geology of the UK than that of almost anywhere else in the world – but while we know that there is potential for shale gas, and we have a great deal of background data, we do not know whether it is economically viable, because past exploration has not been carried out with the objective of identifying shale gas resources. Exploration for this specific purpose remains in its early stages.
Second, once shale gas is extracted from the ground, its means and ease of distribution is a matter of the technology, engineering and economics of the gas grid. Shale gas and other forms of ‘unconventional’ gas, once they have been extracted from the ground, are no different from ‘conventional’ natural gas, and hence the factors affecting its distribution are the same. (It is the location, the nature of the reservoir rocks, and the concomitant means of extraction of gas which cause it to be considered ‘conventional’ or ‘unconventional’ – though as pointed out in our previous written evidence, these terms are not clearly defined.) The technical and economic factors affecting operation of the gas grid are outside our area of expertise, and we offer no comment on them, but assuming that these do not present a barrier there is no reason that the use of gas need be regionally restricted. However, as noted below, there may be benefits in using locally produced gas to supply local needs (see question 4).
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How difficult is it in the UK for new entrants to contribute gas to the grid?
The relevant factors regarding grid technology, engineering and economics (including system pressures, spare capacity, market structures and regulation) are outside our area of expertise, and we cannot comment.
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Is the higher population density in the UK, compared to the US, a barrier to shale gas exploration?
We take this question to refer to both exploration and production of shale gas. It is important to consider both physical and social/psychological potential barriers.
To some extent, there is greater physical restriction on the development of shale gas resources in the UK compared to the US, because of greater competition for land use in many areas, and the greater likelihood of proximity of a gas field to population centres. These restrictions can be mitigated to some degree by the use of horizontal well drilling and ‘superpads’ (also known as ‘multipads’ – rather than drill evenly spaced vertical wells, a group of wellheads is clustered together, and the well shafts ‘splay out’ into the gas field below). This is more expensive, but the additional cost may be offset by the reduced economic and social costs associated with land use. Such methods have been used in the US, in some instances allowing drilling to take place under populated or build up areas, such as Dallas/Fort worth airport.
There is also likely to be a greater social and psychological barrier to the development of shale gas in the UK. Open spaces may be more highly valued in light of their relative scarcity, bringing a greater public and regulatory determination to protect them. Significant parts of sparsely populated land are protected as National Parks, Areas of Outstanding Natural Beauty, etc. However, the UK hydrocarbons industry has demonstrated that it can successfully exploit resources in such areas while meeting the highest environmental and social standards. Wytch Farm, the largest onshore oil field in Western Europe, discovered by British Gas in the 1970s and operated by BP since 1984, is located in one of the world’s most famous and sensitive regions of outstanding beauty and natural interest (not least because of its geology and geological heritage), which includes the Jurassic Coast World Heritage Site, designated wetlands of international importance, and national nature reserves. BP has set world standards in environmental protection and community engagement, using horizontal drilling at distances of more than 10km, keeping the size of well sites and other facilities to a minimum, using innovative design, and screening them with trees, for instance, in order to minimise environmental and visual impacts.
As identified in our earlier written evidence, the difference between the UK and US planning regimes is also a significant factor.
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How can the UK public be convinced to accept the impacts of onshore shale gas exploration and production?
Historically, the hydrocarbons industry has often not done as good a job as it could in communicating with the public and decision makers the benefits and the challenges of unconventional gas exploitation, and of building confidence and trust. Decision makers have frequently found themselves in the position of making judgments on the basis of poor knowledge, and sometimes inaccurate or misleading information from a variety of different sources. Responsible and forward looking oil and gas companies recognise the onus on them to behave accountably and transparently, and to provide evidence about their exploration and production plans and their likely impacts to the public and to policy makers. Given the current poor public perception of industry credibility in this regard, there is the potential for learned and professional bodies and academia to play a role in building trust and brokering dialogue.
The industry also faces some challenges in communicating with the public which are beyond its control. In particular, inaccurate assertions made by some environmental campaigning groups may not be subject to the same levels of scrutiny and testing as the public statements of oil and gas companies, and the dissemination of such assertions through the media stands in contrast to the high levels of rigour and quality control achieved through the application of peer review to the pronouncements of professional scientists. It is incumbent on policy makers, responsible media organisations and scientific bodies such as learned societies to encourage open and balanced public debate about how we are to meet our energy needs in the context of affordability, security and environmental change, and to hold to account those on all sides of this debate.
Public concern over such matters might helpfully be addressed by challenging the implicit assumption that the extraction and use of resources are aimed at providing ‘somebody else’s energy’. There is often a disconnect between local infrastructure projects, which may arouse opposition, and the provision of one’s own services. This perception is less likely to arise where installations predominantly meet local needs. For example, in countries where CHP (Combined Heat and Power) plants are common, these are often located near to population centres, the energy needs of which are met in part by the heat generated, lending to a higher level of public acceptance of such plants. If shale gas were to be used to supply local energy needs (e.g. if the Bowland Trough or Fylde area were seen to be providing a service to Blackpool and the surrounding conurbations), such development might be regarded more positively. This is consistent with a holistic system approach to energy resources, as outlined in our previous written evidence.
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What more should the Government do if it wanted to support unconventional gas?
The fundamental driver for exploitation of hydrocarbon resources, conventional or otherwise, is price. If such activity is profitable, or has sufficient potential to be so, companies will make the necessary investment – and at present, a number of companies are demonstrating their willingness to invest in UK exploration for unconventional gas. If Government should wish to influence resource prices in order to stimulate investment, several policy instruments are available to it, including subsidies for particular resources or technologies, feed-in tariffs, tax breaks, regulation, and carbon pricing. Policy with respect to unconventional gas should be seen in this context, as one aspect of energy policy and macroeconomic policy more generally. It is beyond the scope of this document for the Society to comment on such matters (and largely outside our area of competence, although many of our Fellows in industry will have informed views on issues such as the likely efficacy and unintended consequences of particular policy measures). Factors which might lead Government to favour one resource type over another might include energy security – for example, if growing domestic shale gas production were seen as likely to reduce dependence on gas imports (conventional or otherwise) from particular countries. Intervention to stimulate investment might also be prompted by considerations outside energy policy, as usually understood, including employment and training.
To ensure that best use is made of domestic resources and that the UK shares in the economic and service value of global resources, it is vital to ensure the continued excellence of the UK’s world-leading Earth science research base and the supply of high-quality trained personnel.
Other issues such as the planning regime (which can also be regarded as being a cost factor) and ensuring balanced and open public debate have been addressed elsewhere.
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Are tax breaks necessary to stimulate the shale gas industry, as in the US?
As noted above, tax breaks are one of the policy instruments available to government to influence price.
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Will the lack of an onshore service industry hinder development of unconventional gas in the UK and Europe?
The phrase ‘service industry’ is broad and rather vague. The Earth science community tends rather to think of what might be termed the ‘geoscientific service industry’ which supplies geological consultancy and expertise to hydrocarbons companies with regard to exploration and production. (Such expertise and services derive from academia and government, specifically through the activities of the British Geological Survey, as well as from industry sensu stricto.)
Although there is little history of unconventional gas exploration and production in the UK, there is no reason to think that the requisite service industry is a limiting factor. UK service industry geologists are among the best in the world. As noted above, there is no intrinsic difference between conventional and unconventional gas, and the geological understanding required in each case is shared. It is true that the service industry required to support the particular technologies of horizontal drilling and hydraulic fracturing of wells is less developed in Europe in comparison to the US, but this is unsurprising given the immaturity of the unconventional gas industry in Europe. The determining factor here is not whether development takes place onshore or offshore, but what activity is required to enable it to happen. The service industry supporting these technologies in Europe is sufficient for the current testing phase. The expertise for this industry to develop is not likely to be a limiting factor, and if they perceive that they can derive value from a growing onshore unconventional gas industry in Europe, companies will position themselves accordingly.
The successful operation of Wytch Farm, referred to above, which set new records for horizontal directional drilling distances, both demonstrates the fitness for purpose of the UK service industry for horizontal drilling (and for onshore development), and constitutes a site for learning from best practice.