Shale Gas

Memorandum submitted by British Geological Survey (SG 03)

Unconventional hydrocarbon exploration can be defined as obtaining fossil fuel energy directly from hydrocarbon source rocks, whereas conventional exploration targets hydrocarbons that have migrated to a reservoir, mainly sandstones and limestones. Organic-rich shale contains significant amounts of gas held within fractures and micro-pores and adsorbed onto organic matter. Shale gas prospectivity is controlled by the amount and type of organic matter held in the shale, thermal maturity, burial history, micro-porosity and fracture spacing and orientation. In the UK licences have already been taken up by forward-thinking companies and the interest will be high for the next licensing round.

The initial success has been exploring for gas but in a few US basins oil is being targeted. Four different types of exploration are possible:

1. Gas window source rock maturity areas

2. Biogenic gas in source rocks immature for oil

3. Biogenic gas in older source rocks which have been rejuvenated by bacteria-laden freshwater flushes

4. Oil window source rock maturity areas

1 What are the prospects for shale gas in the UK?

It is too early in exploration of UK shales to be certain about the contribution which shale gas production could make. In the US shale gas extracted from regionally extensive units such as the Barnett Shale currently accounts for ~6% of gas production. Comparisons with the US suggest that there will be some production in the UK and all organic-rich shales in the UK are likely to be tested for their resource potential. Company exploration information will be confidential for several more years because the license holdings are not yet resolved and information on new hydrocarbon plays is always tightly controlled.

The lowest risk exploration is where source rocks have accompanying conventional hydrocarbon fields, which in the UK include the Upper Bowland Shale of the Pennine Basin, the Kimmeridge Clay of the Weald Basin and possibly the Lias of the Weald Basin. Deeper Dinantian shales should also be tested in the Pennine Basin and possibly in the Oil-Shale Group of the Midland Valley. Higher risk is attached to the Upper Cambrian source rock on the Midland Microcraton, which although it has not been severely tectonised, has not sourced conventional fields that have been preserved. The highest level of risk is attached to black shales within the Caledonian and Variscan fold belts, which have high organic carbon but are tectonised (affected by thrusts, intruded by igneous intrusions and converted to slates) and also have no overlying fields.

The BGS have written reports on Worldwide Shale Gas and UK prospectivity for DECC, parts of which have been included in their Promote website prior to the 14th Round of Onshore Hydrocarbon Licensing.

https://www.og.decc.gov.uk/upstream/licensing/shalegas.pdf

These reports contain a fuller analysis of the prospects, data and risks. Key data relating to shale porosity, permeability and gas content has not been acquired in the past because conventional hydrocarbon exploration has concentrated on sandstones and limestones. The properties of shales have been largely ignored. The BGS also have a paper, based on our work up to March 2009, just published in the 7th Petroleum Conference proceedings (I sent this to you as a pdf).

Map showing some of the main potential source rocks at outcrop, in relation to the conventional gasfields and gas discoveries. Larger subsurface extents of the source rocks are excluded from this simplified map. Lower Palaeozoic, higher risk prospects not all shown and partly underlie Mesozoic formations.

2 What are the risks of rapid depletion of shale gas resources?

For a number of reasons exploration in the UK is likely to be slow at first. Only three licences in the 13th Round of Onshore Hydrocarbon Licensing in 2008 were targeted on shale gas. On one of these the first exploration well has been drilled (Preese Hall by Cuadrilla Resources). Hydraulic fracturing will commence in January 2011 according to their website. It is unlikely that existing licence holders on acreage taken for other (Coalbed methane or conventional hydrocarbons) targets or new awards in the 14th Round could achieve a faster completion than that of Cuadrilla, in view of the planning laws, lack of benefit to locals (in contrast to US) and the technological advances (not all applicable to conventional exploration) that need to be applied. The relatively densely populated state of the UK is also a hindrance to development.

If only small quantities of gas can be produced from the shale horizons then it is inevitable that there will be a rapid depletion. If there is success in any of the plays then large parts of the country will be opened up, but it will be a slower process than in the US.

‘It is estimated that the UK could be producing 10% of its current gas needs from shale if it can be extracted at a commercial rate’

This statement from the call for written evidence is based on the position reached in the US about a year ago, and reported in the press, when US shale gas contributed about 10% of their needs. This needs several qualifications to be applicable to the UK. Firstly in 10 years time the figure will be 30% or more in the US because nearly all the discoveries there are now in ‘unconventionals’. Secondly in the US there is no significant offshore gas production. Thirdly, assuming near complete discovery of conventional fields, there is likely to be a relationship between conventional and unconventional production in any basin because they both derive from the same hydrocarbon source rocks. Therefore in the UK, dominated by (current) large offshore gas production and large offshore basins, it is not realistic to compare these figures with the UK’s likely onshore unconventional production. UK onshore basins are small in comparison with UK offshore and US onshore basins.

Offshore shale gas would have the size to affect the figures more dramatically. The US has no need to look offshore and no plans as yet, so we would have to lead the way (very difficult from our level of ignorance so far) but a lot of the existing infrastructure in the North Sea could be used. BGS unconventional hydrocarbon resource reports have not looked at the offshore.

3 What are the implications of large discoveries of shale gas for UK energy?

If shale gas can be produced in the rest of the world this will temporarily reduce the importance of the large LNG exporters. The US has mothballed some of its projected terminals and the tankers are being diverted to Europe. The security of supply both for domestic and imported gas will improve because producers will need to sell and prices are likely to fall, perhaps marginalising the more difficult shale gas exploration.

January 2011