British shale company Cuadrilla is looking to expand its explorations into Lancashire and, with partner Centrica (LSE: CNA), apply for test drilling permissions at up to six new Fylde sites, reports BBC.
The first applications would be for further fracking and testing operations at Cuadrilla’s extant Grange Hill location.
BBC quotes Frances Egan, Cuadrilla’s chief executive:
“We want to let everyone know what is happening over the next couple of years. There is a lot of gas in the ground in Lancashire and we need to drill a few more wells to answer the question that everyone keeps asking which is ‘how much gas is there?’ That’s the purpose of the programme.”
Cuadrilla may well have good news to report, after all. The British Geological Survey just recently stated that previous estimates of shale gas reserves at the Bowland Basin may be quite far off the mark. In fact, new estimates peg the reserves at almost double their previous figures. Some 1,300 trillion cubic feet of gas may be what we’re talking about.
Of course, Cuadrilla has faced and continues to face stiff opposition from anti-fracking activists and environmental groups, who point to the inherent hazards and possibly disastrous side-effects.
Perhaps mindful of these concerns, Cuadrilla chief Egan noted that present restrictions have more to do with wintering birds than any industrial concerns. Nonetheless, the British government has stated that shale gas drilling zones stand to receive 100,000 GBP toward “community benefits,” as well as 1 percent of all revenue earned.
The Grange Hill site is about 250 miles northwest of London, and Cuadrilla expects to drill up to three new exploratory wells at unnamed locations (separate from the Fylde sites mentioned earlier).
Britain’s (Re-)nascent Shale Sector
All of this comes at a rather crucial stage as far as the nascent British shale industry is concerned. After all, just two years back the twin tremors in Blackpool, allegedly linked to fracking operations, resulted in a national moratorium on the process. Only recently has the British government reviewed matters and decided that fracking is safe under heavy supervision.
The fracking operations undertaken in the near future will be vital to proving the viability of fracking as a responsible means of oil and gas development in Britain. Lancashire is not far from Blackpool, so we should expect redoubled attention to the events unfolding here.
Cuadrilla’s proposed six new sites would be the first new fracking sites since the Blackpool incident, and local protests mostly focus on the fact that neither Cuadrilla nor the British government have provided adequate guidance as to what safety precautions are being taken. Despite these ripples of protestation at the local and regional levels, Boris Johnson, Mayor of London, has committed himself to fracking.
As Bloomberg reports, Johnson has advocated “maximum boldness” in approaches toward developing shale reserves to meet London’s ever-increasing demand for energy. Within the next two years, the gap between energy supply and demand will be less than 2 percent, forcing many industries to suspend operations during peak hours.
But northern England’s shale reserves could suffice to meet demand for almost half a century. And just south of London may lie as many as 700 billion barrels of recoverable shale oil, suggests the U.S. Energy Information Administration.
With all these resources literally lying underground, it behooves England to develop a responsible shale development program that both addresses valid community concerns and advances the industrial development of these reserves.
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Cuadrilla is clearly leading that effort alongside its partner Centrica. The Telegraph notes that the two intend to pursue development at Grange Hill in addition to the six new wells over the next two years.
Cuadrilla is the company responsible for the two earthquakes at Blackpool, which were directly linked to fracking, and therefore is taking a more cautious route this time around. There are numerous environmental permits and other hurdles to be overcome before the two companies can begin any operations.
Another matter of some concern is the proposed plan of offering compensation to locals in the area of fracking. As The Telegraph notes, quoting Dan Byles, MP, chair of the all-party parliamentary group on shale gas:
“Generating the money for the local community is the easy bit – the hard bit is defining who is the local community, who actually should be benefiting? There is a danger if you say, ‘You are 7km away from a pad but a lateral fracture is going to come under your home, so we need to compensate you’, that is feeding the myth that you are going to even notice or be affected by the fact this is coming under you. The danger is if you only pick individual households and say ‘we are going to give you a cash payment or a council tax reduction or cheaper energy bills’, that’s the quickest way to split a community because you can’t do it for everybody.”
This is, certainly, a tricky problem, and it’s one that the British government will need to untangle as it moves shale development along.
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