October 22, 2017

Fracking and future UK on-shore natural gas production

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The proposed use of ‘fracking’ to increase on-shore gas production has caused considerable controversy in the UK over the past decade or so. Fracking is a long-established technique for opening up natural gas reserves in ‘tight’ formations where the encasing shale contains limited cracks and fissures. Fracking opens up cracks and fissures so that the natural gas can flow to the drilled well and up to the surface.

The technique has been proposed for widespread use in the UK as the production of natural gas from the North Sea has diminished and dependence on imported supplies has increased.

By US Environmental Protection Agency – http://www2.epa.gov/hfstudy/hydraulic-fracturing-water-cycle, Public Domain, https://commons.wikimedia.org/w/index.php?curid=25673027

Several on-shore UK gas production projects have already been completed and many more are planned. The underlying strategic assumption has always been that the UK’s on-shore natural gas deposits are simply too large to be ignored and that fracking, despite controversy and protests, is the key to unlocking those reserves.

A new theory originating from Heriot-Watt University, however, now casts some doubt on the assumed scale of UK on-shore gas reserves. According to the new theory, the UK’s potential natural gas reserves may be smaller than currently estimated due to geological movements millions of years ago. If correct, the theory could mean that current estimates of on-shore natural gas reserves are inflated.

This is a good example of how unforeseen risks can impact on long-term project viability. For several years now it has been more or less assumed that there will be a large number of fracking-based gas well projects over the next few decades and that the gas produced by these projects will significantly impact on the design of the UK energy source balance.

If the new theory is correct, the scale of UK on-shore gas reserves may be significantly overestimated and the future number and scale of fracking-based gas well projects may be significantly less than expected.

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