Politics

Unpublished government report scales back predictions on UK fracking

pnr180101 Ros Wills 3

Cuadrilla’s Preston New Road shale gas site, 1 January 2018. Photo: Ros Wills

The Government expects the UK to have 30-35 unconventional oil and gas sites by 2022 and 155 wells by 2025, according to an unpublished report.

The figures, released to Unearthed, the investigative journalism unit in Greenpeace UK, appear far less ambitious than much-quoted estimates by the Institute of Directors and EY. They predicted 4,000 wells by 2032, with a peak drilling rate of 400 new wells per year.

The Department for Business, Energy and Industrial Strategy (BEIS), responding to a freedom of information request, told Unearthed:

“According to a 2016 Cabinet Office report, by 2020 we have estimated that there will be approximately 17 sites, with around 30 to 35 sites by 2022. We have not produced estimates beyond this date. In terms of wells, we have estimated that there could be around 155 wells by around 2025. We do not hold any estimates beyond 2025.”

The Implementation Unit report on shale gas has not been published or quoted by ministers.

But the Government has used the 2012 Institute of Directors (IoD) and 2014 EY estimates in its support for shale gas. These reports calculated that the shale gas industry would create at peak 64,500 jobs and generate £3.3bn of spending.

AndreaLeadsom

In July 2016, Andrea Leadsom, then Environment Secretary, quoted the EY report as saying there would be “significant benefits for jobs and growth from a successful UK shale industry”.

In January 2017, INEOS used the IOD/EY figures on jobs in its eight-page pull-out Fracking what everyone should know inserted into 10 local newspaper titles in the East Midlands.

Greenpeace UK’s Head of Energy, Hannah Martin, said:

“These estimates from the heart of government are a far cry from the US-style fracking boom forecast by shale advocates.

“Yet instead of publishing the figures, ministers decided to bury them in a Cabinet Office drawer. This is despite the fact that this analysis seriously undermines the promises of fracking jobs and investment repeated by government and industry for years.”

Frack Free Lancashire is urging people to demand immediate publication of the report. Details

How realistic are the report’s figures?

The BEIS estimates appear cautious when you look at drilling commitments and comments made by operators granted oil and gas licences in 2016 under the 14th licensing round.

Operators took up about 100 licences, or PEDLs, of which at least 55 were for shale gas exploration.

All the shale gas PEDLs included a commitment to drill at least one well by 2021. This would suggest there should be at least 55 shale gas sites from 14th round shale gas licences alone for the operators to meet their commitments and keep their licences.

This figure assumes one site per PEDL. But INEOS Shale, the biggest holder of shale gas licences, has said it is looking to establish 10 sites per 10km2 licence area.

According to the 14th round licence commitments, operators have agreed to drill a minimum of at least 75 shale gas wells by 2021. The BEIS figures suggested there would be about three wells per site. But INEOS and have Cuadrilla have talked about 10-12 horizontal wells per site.

Industry reaction

The industry representative organisation, UK Onshore Oil and Gas, has maintained its scenario of 400 sites and 4,000 wells by 2038. The organisation’s Chief Executive, Ken Cronin, said today he was confident that if forthcoming flow testing were positive UKOOG’s scenarios were achievable:

“UKOOG’s publicly available analysis shows that 400 sites built in the next 20 years would reduce our gas import dependency by half.  Each site, based on a typical US model, would have 10 wells.  This is consistent with the recent EY report, which was carried out on behalf of the industry and investigated scenarios where imports would be halved by shale gas, in order that the industry could start to forecast what supply chain and skills would be required to ensure maximum value was created in the UK.

“We have now started the exploration phase which has included significant 3D seismic surveying across Lancashire, the East Midlands, Yorkshire and the North West and 5 wells across 4 sites have been drilled or are under construction.  There are a further 2 wells with planning permission and planning applications are in for a further 10 wells across 6 sites. This exploration and appraisal phase will determine where the gas is, the qualities of the shale, and what a production pad scenario will look like.”
[See bullet point at the bottom of this post].

Dan Lewis, senior adviser at the Institute of Directors, which produced the analysis behind the 4,000 well figure, told Unearthed:

“The 2013 projection that, at peak, the UK’s drilling schedule could see 400 new laterals installed hasn’t come to pass, for a variety of reasons.

“One major factor behind this is that further research into the UK’s geology has been held back by planning. Another is the fall in gas prices that have made exploration harder to justify.

“Of course, it is disappointing that the shale gas sector in the UK has not yet delivered the jobs, taxes and lower energy prices for all as in America. We are nonetheless encouraged by the findings last month at Preston New Road and more exploration is coming.”

The pro-fracking group, Lancashire for Shale said:

“It’s no surprise to learn that the Government is continually revising its estimates concerning shale gas, given that it does so for other energy sources too. As Cuadrilla has already pumped £7m into the Lancashire economy and created over 50 jobs from its work on just the first two wells, we are well-placed to benefit from the investment in jobs and people this industry will deliver, however many wells are eventually drilled.”

Current situation

So far, there are three active shale gas sites in the UK.

At Preston New Road, near Blackpool, Cuadrilla is currently preparing to drill two horizontal wells. IGas is doing site construction work at Springs Road, Misson, and Tinker Lane, both in north Nottinghamshire. IGas expects to drill first at Springs Road in the middle of this year.

180118 KM Eddie Thornton 2

Third Energy’s KM8 site at Kirby Misperton, 18 January 2018. Photo: Eddie Thornton

Third Energy, which hopes to frack a sandstone formation, is waiting for hydraulic fracturing consent from the Government for its site at Kirby Misperton in North Yorkshire.

Other proposals for unconventional exploration are currently going through the planning system in the East Midlands, Cheshire and Lancashire. But progress has been slow and three sites, at Roseacre Wood (Lancashire), Harthill (Rotherham) and Bramleymoor Lane (Derbyshire), are scheduled for public inquiries, with decisions not expected until later in the year.

  • The four sites referred to by UKOOG comprise: Preston New Road (2 wells), Springs Road Misson (2 wells), and Tinker Lane (1 well) and Kirby Misperton.  The further two wells with planning permission are at Preston New Road. The further 10 wells across six sites going through the planning system are: Bramleymoor Lane, NE Derbyshire (1 well); Woodsetts and Harthill, Rotherham (1 well each); Ince Marshes, Cheshire (1 well); Roseacre Wood (4 wells); and Altcar Moss (2 wells). Ince Marshes and Altcar Moss are at the scoping request stage and no applications have yet been submitted.

 

 

 

 

 

 

 

22 replies »

  1. Easy to sit behind desks and throw out big numbers.

    Not so easy to take on a well organised community.

    The industry has been exposed and the people will not allow the industrialisation of the countryside for an industry that is neither needed nor wanted.

    The pen pushers can keep adjusting numbers but it is becoming clearer by the day that there are far to many obstacles in the way for a UK shale gas industry to ever develop.

    Shale will fail

  2. The 64,000 jobs figure was a myth anyway, based on a desktop multiplier with no justification for the figures of ‘induced jobs’. Even the 4000 wells on 400 sites would only produce 6,100 direct jobs even by the report’s own figures. Find out more about the background to this pervasive myth here: http://frackfreeryedale.org/myth10jobs/
    We wonder if INEOS, UKOOG and other myth-mongers will now scale back their estimates for jobs created by the fracking industry in the next ten years? Call it a hunch, but I’m betting that they’ll just keep spouting this for months and years to come, even though it has even less basis in fact than it ever did. Which wasn’t much to start with.

    • Well, i hope you all had a good weekend? I suspect these reports are little more than redacted and sanitised mere shadows of the original report. Not so much released, as escaped from captivity after being shorn of all truth and facts?

      The simple truth is that this government are back peddling as quickly and as quietly as possible away from the politically contaminating pariah that fracking and its related avoidances of the word represent to the growing awareness of the public.

      I visited some friends over the weekend, and also to their friends were staying with them for a while and who had just returned from Canada visiting relatives for Christmas. They spoke of long trips across Alberta and how they had to stop for repairs at a town called Hinton.
      Hinton, they said was in an area where fracking was taking place on a massive scale, and they said the air stank of sulphur and smelled like a gas station when the wind blew from the fracking fields, they both developed severe headaches and sickness and felt exhausted and were glad to get away when the repairs to their vehicle were completed. They said, it was the first time they had even thought about fracking at all, but their experience had forced them to find out more, which was why they spoke to me.
      I found myself being unexpectedly as diplomatic as i could, because i realised i wanted them to find out for themselves the truth about fracking, and to make up their own minds, if they just got a horror story from me it could be counter productive and just put down to my own personal bias.
      So as gently as i could, i pointed out some interesting aspects and issues for them to look at themselves and said if they wanted anything to contact me and also to look here at Drill Or Drop, they didn’t even know this website.

      I realised then, that it really is personal experience that frames our opinions, we could all spout on about this or that horror story, or that defence, or that proviso, but in the end, we really must be open to our own basic instincts for truth, and far from being just the truth as we see it, it must come from much deeper places within ourselves, to talk to aspects of our own human experience that are formed perhaps in early development, truth, companionship, trust, friendship, family, the need to protect not just ourselves but future generations and their children.

      That is what i think the whole fracking issue has revealed, it has shown us that there are certain fundamental human virtues and human survival instincts that are being re awoken after a long sleep, perhaps that was the shock of the last great world wars, a sort of enforced coma of the humanity survival instinct. the insanity of the political scene and the equal insanity of corporate profit motives have shown just how much is still to be revealed, like it or not.

      We thought it was all over, that we were on the road back up to civilisation again after two devastating world wars and countless undeclared wars since?
      That science and technology would save us from ourselves? But the simple and now starkly revealed truth of it, and as a catalyst of the fracking issue and so many other aspects of just how far we have fallen again in the last 70 odd years. Is that we have slept for too long, and the self destructive forces of greed and avarice and hatred and exploitation and insanity have regrouped and are marching across the world once again.

      It has become obvious that we must come to terms with the forces we have ignored for far too long, the greed the avarice, the hatred and the need to exploit and not give back to the earth that we live on without a moments gratitude or thanks or appreciation. Science and technology will just exacerbate and amplify those forces, it is ourselves as human beings who must take responsibility for our own actions and to find some way of climbing back into the sunlight once again, we have spent too long in the shadows, we have forgotten what the light looks like..

  3. What is it with the UK and “forecasts”?? Why doesn’t someone simply tell the truth and state it will depend upon the “success” of early tests. If they go well (excuse the pun) then the process will be accelerated, if there are hiccups then it will be probable that things will take a little longer whilst fine tuning is conducted.
    How many years did it take before the N. Sea was showing real returns from exploration? A lot longer than for on shore UK horizontal fracking (so far). This could quickly change, or it may not. These sort of “forecasts” are speculation. They will only be validated or shot down once a serious amount of fracking has taken place.

  4. meanwhile back in the real world, empirical flow rates and scientific analysis of that data do not scale back predictions for uk shale industry. Who should we trust? Greenpeace’s interpretation of an undisclosed secret report or the scientific evidence coming from the rocks?

  5. Shale is failing??? Really?

    More rigs being mobilised in the good old USA. Costs of drilling dramatically reduced since 2014, oil price up (for the moment) which means for anyone who can do the maths. that profitability increasing.

    Most “writing” on the wall is really something else.

    • The definition of profit

      ‘a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something’

      Let’s see what the experts say about the production costs of UK shale

      Oxford Institute of Energy Studies price per therm 49p to 102p

      Ernst and Young price per therm 53p to 79p

      Bloomberg price per therm 47p to 81p

      Centrica (investors in Cuadrilla) price per therm 46p to 66p

      In 2017 the price of gas was between 35p and 53p per therm

      Plenty of evidence UK shale is not profitable with nothing to prove it could do more than break even occasionally.

      Nothing on the horizon that shows UK shale making profit

      https://www.statista.com/statistics/374970/united-kingdom-uk-gas-price-forecast/

      UK shale gas making profit?

      Not what the experts say.

    • I don’t really think the words “something else” are of much help, but suit yourself? Suitably vague perhaps?

      I think maybe gasman has “more suitable” word for writing on your wall worth kicking around? It describes the whole fracking debacle perfectly?

  6. There are no “experts” in UK shale economics John. There are some who wish to speculate, and some who wish to fabricate, but until input costs and output statistics are proven that is all that it is.

    Was it not around 2014 in USA that shale was proven to be uneconomic by the “experts”?? What happened? The shale industry found huge economies on the cost side and then markets started to firm prices.

    But then, why worry? The “huge industrialisation” which is your other fall back, will simply not happen if some “experts” are correct. But, that will not stop the other “experts” saying “huge industrialisation” will take place.

    No wonder the majority of the public remain to be convinced around your own confusion.

    • Here’s what we know.

      The experts tell us UK shale will loose money. A ponzi scheme runs at a loss.

      But the Government still partially supports it.

      In order to keep up the illusion the trick is to not let the investors and the public see the numbers.

      We know ‘fracking’ is now not ‘fracking’ due to a ridiculous amendment to the infrastructure bill.

      What would happen if the word ‘profit’ which is defined as

      ‘a financial gain, especially the difference between the amount earned and the amount spent in buying, operating, or producing something’

      was altered specifically for shale gas references to

      ‘the difference between the amount earned and the amount spent in buying, operating, or producing something’

      The new terminology of ‘shale profit’ would now mean that the more you loose the bigger the ‘shale profit’

      This new terminology could be slid into an unrelated long winded bill put before parliament a few minutes before summer recess and pass un noticed.

      You could then publish big ‘shale profit’ numbers but just to make sure you didn’t get found out you could deny the public access to the accounts saying it was in the National interest.

      I may patent this idea if it has not already been put in place.

  7. Oh dear John-“the trick is not to let the investors and the public see the numbers.”

    Not a difficult “trick” as there are no numbers, as yet.

    No wonder you are so worried about the N. Sea investments. Not so much as “here’s what we know”, more “are we sitting comfortably, and I will recount a nice fairy tale”. Too many “coulds” give the fantasy away.

    • For someone who puts no evidence in their posts, only pure conjecture, that’s an incredible Oh dear John….

      Perhaps we could take the definition of fact as ‘something that actually exists; reality; truth:’ and change this to the ‘stating of anything that pops into my head, plus additions of poor humour and not back any of this up with evidence’ for Martin’s benefit. We could even extend this to a private members’s bill and slide it through parliament at the same time as the ‘shale profit’ bill; that way some business sponsored governments, when asked a direct question can answer in this way and avoid the truth;
      oh hang on they do 😉

  8. Evidence? You mean like “could” (John) and “might” (Prof. Smythe)?

    Facts? Like there are no facts for the economics of UK shale gas as yet.

    Try looking up the definitions for speculation and fabrication instead, Sherwulfe. (Although you will already be familiar with those.)

    Enjoyed your “evidence” based post-it “could” give me many hours of pleasure searching for some, but I think I can avoid the challenge.

    A little challenge for you Sherwulfe. How about an evidence based post for the costs of UK production of gas from fracking-and that means no extrapolation of data from outside the UK and needs to be based upon recent, actual costs and outputs within the UK?

    Lalaland may be a better source than Giggle.

  9. “Get your facts first and then you can distort them as much as you please”. Mark Twain

    Speculate first and then you can distort as much as you please-the antis. Goodness, we have come a long way.

    • ‘How about an evidence based post for the costs of UK production of gas from fracking-and that means no extrapolation of data from outside the UK and needs to be based upon recent, actual costs and outputs within the UK?’

      I think you owe us about a years worth of ‘evidence’ from you before we pander to your diversions;

      ‘Go right straight down the road, to do what is best, and to do it frankly and without evasion’. George C. Marshall

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