January 2013
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British shale gas: More holes for Blackpool, Lancashire?

Henry Terrell / Contributing Editor

In August 1942, during World War II, fuel oil stocks in Britain were falling. Some 3 MMbbl were held in storage depots across the country, only two months’ supply at wartime consumption rates. Luftwaffe raids had destroyed almost a million barrels, while oil tankers from America and the Middle East were being sunk by prowling U-boats.

But there was a secret almost no one, not even in the UK, knew—Britain had producing onshore oil fields.

The first serious efforts to find oil in Britain were launched 30 years earlier, during World War I, when German submarines threatened to choke off the flow of oil that Britain depended on to fuel its naval fleet. The decision by First Lord of the Admiralty Winston Churchill to switch all the Royal Navy’s boilers from domestic coal to imported oil was a mixed blessing. The oil gave the ships greater efficiency and range, but left the island nation dependent on foreign energy sources. An extensive exploration effort proved disappointing, as only a trace amount of oil was discovered in a couple of Scottish wells.

A better understanding of petroleum geology led to a more scientific exploration effort, and in 1939, the D’Arcy Company discovered two small producing fields in Notinghamshire, followed by three more the next year. Nevertheless, total British onshore oil production in the summer of  ’42 was barely 700 bbl per day. A lot more wells were needed, and soon. One limitation was the available oil rigs, which were heavy and designed for the deep, prolific formations of Persia. The old, cumbersome giants were slow to drill and, with their enormous wooden derricks, slow to disassemble and relocate.

Yank roughnecks. The answer was smaller, modern, more nimble drilling rigs from Oklahoma, and experienced crews to run them. The whole story of Noble Drilling, Fain-Porter Drilling, and the “United Kingdom Project” has been told in fascinating and entertaining detail in The Secret of Sherwood Forest, by Guy and Grace Woodward (first published in 1973, and still in print). The American drillers operated in strict secrecy for fear of Axis bombing or sabotage. (One local rumor had it that the men were an American film crew making a movie starring John Wayne.) Using four National 50 rigs with 87-ft jackknife masts, the drillers completed 106 wells in a little over one year. Oil production from the forest reached 3,000 bpd. Although total contribution to the war effort was small, some 3.5 MMbbl of high-quality crude were produced by war’s end.

Gas to part the fog. There was also natural gas, of course. Although you can’t make 100-octane aviation fuel from it, there was a need in aviation—dispersing the notorious English fog. Aircraft returning from successful raids often crashed on socked-in airfields. To remedy this, the Secretary of Petroleum ordered Operation Fido, which involved placing flares burning associated and distillate gas along runways, cranking out sufficient heat to drive the fog upward and out of the way.

Today, British onshore oil is not much in the news, but British gas is—specifically, shale gas. American gas production has been the envy of the world. U.S. shale gas, lumped with other unconventional deposits (coalbed, tight gas, etc.) makes up almost half of U.S. natural gas production, a number that is expected to climb to 70% or more over the next 20 years. Its shear abundance has been its greatest weakness, as prices have been clobbered.

Britain still gets most of its natural gas from its own offshore fields, but the North Sea is experiencing a steady decline. The UK was a net exporter of gas until 2004, but since then has turned increasingly to foreign sources like Norway and, more recently, Qatar. Reuters recently estimated that the UK would have to double its gas imports between now and 2030 to meet projected demand. Since Norwegian North Sea fields are also experiencing a production decline, and Qatar exports are leveling off, future gas demand will have to be met by other sources, possibly LNG from the U.S., the eastern Mediterranean or Mozambique.

You can see the appeal of British shale. A 2010 report by the British Geological Society identified several potential shale gas deposits in northern England, including Widmerpool Gulf, near Nottingham, and the Elswick gas field, near Blackpool, Lancashire. BGS estimated there were about 5.3 Tcf of gas reserves, or about two years’ worth of current UK consumption. British gas company Cuadrilla Resources has been far more optimistic, estimating that there could be 200 Tcf of gas hiding in the Bowland shale. Cuadrilla is talking about gas in the ground, of which 10–20% may be recoverable with today’s fracturing technology, but that’s still very significant. An updated estimated from BGS is eagerly anticipated later in 2013.

Earth-shaking. In the U.S., most of the opposition to “fracking” (scary word, that) has centered on groundwater contamination, while in the UK, the fear has been earthquakes. This stems directly from a series of small but measurable quakes in the Blackpool area in 2011, where Cuadrilla was doing some hydraulic fracturing tests. Fracing was stopped while government and private geologists conferred. Then last month (December 2012), the British government gave the go-ahead to further fracing. The potential for damaging earthquakes is considered small (shale formations tend to slip under slight shearing pressure, rather than letting really big quakes build up) and the potential benefit to the public is considered sufficiently promising.

A lot more may be known when the BGS releases its new study. It’s likely that UK shale gas may not rescue the nation from declines in the North Sea. But it could make a difference. Not a Barnett shale difference, perhaps, but it could become part of a reasonable, domestic, environmentally friendly, British energy mix. Or at least enough to give some visibility to a foggy future. WO

About the Authors
Henry Terrell
Contributing Editor
Henry Terrell henry.terrell@gulfpub.com
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