Assessing the benefits of onshore drilling
Selling shale in North Yorkshire
Senior executives representing five shale gas companies will try to sell fracking to local businesses next week. They are speaking at an invitation-only seminar at the Scarborough Spa conference centre targeted at companies which could be part of a supply chain should shale gas take off in the region.
Lee Petts, from the organisers the Onshore Energy Services Group, said the event aimed to give North Yorkshire businesses:
“a glimpse of the opportunities that a rejuvenated onshore oil and gas industry could one day bring.”
The group has identified the benefits of extracting North Yorkshire shale gas as:
· Boost to local employment by creating supply chain opportunities for local businesses
· Contribute to reducing UK climate change emissions by substituting for coal and imported liquefied natural gas in electricity generation
· Boost to local and national tax revenues
But opponents of fracking have criticised the seminar as what they call a lobbying exercise for a shale gas planning application, due to be decided in North Yorkshire within the next few weeks.
They point to the event’s promotion which says it offers “unrivalled networking opportunities” and “ample opportunity to meet local government representatives”.
A spokesperson for Frack Free Ryedale said:
“The shale industry clearly feels the need to lobby officials in order to try and cajole and pressure them into accepting fracking in North Yorkshire.”
The spokesperson added:
“The amount of revenue, tax and income generated I suspect is overhyped and takes no account of the very real and likely negative impacts on other businesses such as tourism and farming.”
The lowest operational price for extracting shale gas has been variously estimated at 46p-102p a therm, compared with just over 25p for North Sea gas.
John Powney, of Ribble Action Against Fracking, based in Lancashire, responded:
“Shale gas is one of the most expensive, dangerous and dirty ways of natural gas production. It has no competitive edge over conventional means. This is going to be a hard sell to shrewd Yorkshire business people.”
Forecasts of oil production in the Weald
Yesterday, EY claimed oil production in the Weald in southern England could generate up to £52 billion over 40 years, pay up to £18bn in tax and create up to 5,607 jobs a year.
The figures came in a report commissioned by UK Oil & Gas plc, one of the companies invested in an exploratory oil well near Horley – the so-called Gatwick Gusher.
They were based on three scenarios, the most optimistic of which forecast total production of up to 1,125m barrels of oil in Kimmeridge limestones across the Weald basin. At peak, the forecasts suggested, the region could produce 330,000 barrels a day.
The EY figures assumed the limestones would require acidization to stimulate the oil but not high pressure hydraulic fracturing. It did not give details of the number of wells needed but it said “back-to-back” drilling of production wells would be required. The BBC said EY envisaged 2,400 wells at up to 100 locations to achieve the forecast volumes.
Stephen Sanderson, executive chairman of UKOG, said:
“This Report confirms UKOG’s view that the development of Kimmeridge Limestone oil in the Weald Basin can make a very significant contribution to the economy, employment and energy security of the UK.”
But this interpretation was challenged today by Andrew West, a campaigner, with the group Frack Off. He said the figures needed to be put into perspective. EY’s low scenario, which forecast 140m barrels would provide the UK with just three months of oil, based on consumption of around 550m barrels a year (link). The high scenario, of 1,125m barrels, would provide two years.
“Spread over 40 years this provides just 2 years or 19 days of UK oil consumption each year.”
Andrew West added:
“The main threat from the test well at Horse Hill and this forecast from Ernst & Young is that they provide the companies involved with data and a narrative. If this remains unchallenged it will allow them to secure more investment and advance their tight oil plans drilling more wells on more sites in the South East.
“Given the massive costs involved in tight oil exploitation it is highly unlikely that any of the small UK companies will ever produce much oil in the Weald. What they are trying to do is to create a "speculative scenario" and then sell out to a much larger company while avoiding any real detail or discussing the impacts of production.
“Ernst & Young's total production figures (even if you accept them at face value as being achievable) would require the drilling of thousands of wells. The low scenario production figure of 140 million barrels would require 1,120 wells, the high scenario 1.1 billion barrels requires 9,000 wells. We have based our estimates on a generous 125,000 barrels from each tight oil well, these figures are taken from a USGS report (see continuous oil).“
“This is just enough oil on paper to make a few people rich but the figures are highly dubious and even if you accept them they are not nationally significant and certainly do not justify the destruction of the Weald."
"If communities living in the Weald are opposed to a massive unconventional drilling campaign then every small step along the way needs to be fought tooth and nail.”
Loopholes in benefit promises for shale gas communities
People living near shale gas exploration wells may not receive any industry payments, despite a scheme promoted by the representative organisation, UK Onshore Oil and Gas.
Research by the website DrillOrDrop.com and campaigners in Bassetlaw has shown that the UKOOG commitment to pay £100,000 to shale gas communities only applies if the well is fracked.
IGas has applied for planning permission to drill two exploratory shale gas wells near the village of Misson, on the Nottinghamshire-South Yorkshire border. But it has said it has no plans to frack the wells so the community will not get the payment if the application is approved. IGas has its own community benefit scheme but there is no guarantee that an application from Misson would be approved.
Even if a well were fracked, the UKOOG scheme may not pay out. For a site to qualify, the fracking operation must meet the definition in the Infrastructure Act based on the volume of hydraulic fracturing fluid.
And even if a well were fracked and the volume used met the Act’s definition, the £100,000 community benefit payment is voluntary and not covered by legislation.
So far, the scheme has no definition of a community, no firm details of when the money would be paid or to whom.
Added to this, if a well is drilling for oil or for gas in rocks other than shale there will be no payments. So the community around the Horse Hill oil well will receive no payments from UKOOG. Nor will communities living near wells drilling for coal bed methane.
David Burley, of Frack Free South Yorkshire, said:
“It is now conceivable that operators could erect well pads and drill exploration wells all over the place and not pay a penny”.
Ruth Hayhurst is the only journalist reporting from the UK fracking frontlines. Her news website DrillOrDrop.com has daily updates.