We have the Ipod, Ipad and Imac, but now get ready for IGas.
The hype surrounding Britain’s impending fracking boom reached near fever pitch yesterday as one of the UK’s leading fracking companies vastly increased the estimate of its potential reserves.
IGas Energy has sharply revised upwards its estimate of how much gas it has from 9 trillion cubic feet to anywhere between 15 and 172 trillion cubic feet.
Given that Britain consumers about 3 trillion cubic feet of gas a year, then even the new low estimate means that it is enough to supply the whole country for 5 years. And the top end estimate, well the sky is the limit…
Indeed, Andrew Austin, the chief executive of IGas believes the North West of the UK could hold up to anywhere between 300 to 500 trillion cubic feet. The company has 300 square miles of licence area in the region.
300 tcf is decades of supply given current usage rates, but this will be dependent on how much gas there is and what percentage is economically recoverable.
But if a high percentage is recoverable, then these new figures put UK in the league of some of America’s largest shale gas reserves.
No wonder the company’s share price jumped 13 per cent yesterday, which is great news for its shareholders which include a state-owned Chinese energy company.
But once again the devil is in the detail. Basically the only way to know exactly how much gas there is underground is to drill a large number of wells. IGas has admitted that its estimate is “highly speculative”, and that it will have to drill many more wells before it can firm up the numbers.
Because of the nature of fracking, even to get a reliable estimate on reserves could take some 50 wells to be drilled, according to a report by the US Society of Petroleum Engineers.
The Financial Times also cautions that only a small fraction of the gas might be technically recoverable at the end of the day. This is a point agreed by analysts, who warned about the great uncertainty surrounding the numbers. “Additional drilling is needed to increase confidence,”? analysts at Jefferies told the paper “and more accurately estimate its potential.”
Indeed, Greenpeace’s Energy Desk has a list of factors, including clay content, width and depth of reserves that could impact the viability of the shale gas plays. They argue that even to recover 5% of the 500 trillion cubic feet could involve the drilling of 20,000 wells. And that is just one part of Britain.
It is no surprise, therefore, that analysts from Bloomberg argue that comparisons to a US-style bonanza are premature. Firstly, they argue shale gas will cost more to exploit in the UK than in the US. And secondly and probably more importantly, “a host of legal, planning and environmental factors will slow down the rate of development of UK resources”.
Britain is a much more densely populated land than the US, and you won’t be able to start drilling thousands of wells without one hell of a fight from local communities.
Indeed, even Andrew Austin, chief executive of IGas, quietly concedes that “It’s a fabulously English thing to try and divide up the riches before we’ve actually worked out whether or not we’ve got them in the first place. We don’t know whether the shale in this country will flow or not”…