UK Lobby Group Upgrades Shale Forecast

Following the recent exploration drilling and flow testing in northern Britain,  industry lobby group UK Onshore Oil & Gas (UKOOG) has revisited the shale gas forecasts first published by the Institute of Directors (IoD) in 2013, it said March 11.

The central scenario for shale gas production per well has risen 72%, with each site at peak production providing gas for around a half a million homes, it said. "Given these new projections, it now makes absolutely no sense to ignore our huge resource of homegrown gas," said UKOOG CEO Ken Cronin.

The upgrade means: a balance of payments improvement of around £8bn ($10.4bn)/year; £1.8bn in community and local council benefits by 2035; the creation of 64,000 jobs and £33bn of supply chain benefits; and the potential to halve the UK's import dependency.

In 2013, the IoD had a central forecast of well production at 3.2bn ft³ of gas over a 20-year lifetime, with an upper forecast of 4bn ft³, which was broadly in line with US shale gas results. 

Following analysis, UKOOG has revised these estimates upwards to a central case scenario of 5.5bn ft³, an increase of 72%. This matches the US average, with a high-end scenario of 8bn ft³, which is in line with the best performing US shale basin, the Marcellus. 

This means for a site with 40 deep drilled horizontal wells as modelled by the IoD, there would be enough gas at peak to heat 500,000 homes, provide supply chain benefits in the order of £333m and £40m of community and local benefits.

Cronin described the upgrade as very significant. "The industry to date has invested between £400mn and £500mn in exploring for shale gas in the UK, creating local jobs and supply chain opportunities. The UK spends £7bn at present/year on importing gas into this country, generating next to nothing by way of UK benefits, leaving us less secure and creating a greater environmental impact as gas is shipped and piped in across oceans and continents."

He also said the reduction in drilling times means that the commercial prospects for the industry are strengthening. Igas reported March 11 a shorter drilling time  and better than expected results from its shale well at Springs Road.