Potential game changer

Massive UK shale reserves could change Euro energy dynamics

Shale rock underneath some of the wealthiest counties in southern England may contain billions of barrels of oil, a government report said.

The Weald basin, covering counties south of London including Surrey, Sussex and Kent, may have oil in place of as much as 8.6 billion barrels, according to a report published today by the British Geological Survey. It didn’t say how much could be extracted profitably. The U.K.’s current extractable oil reserves are 3.1 billion barrels, data by BP Plc show.

The report is likely to add to the controversy about drilling for shale oil and gas in the U.K. The government wants to develop the resources to cut energy costs and boost the economy. Opponents say the process of hydraulic fracturing, using high volumes of water, sand and chemicals to drill shale, can damage the environment.

Last year, the BGS said the Bowland basin, which extends across east and northwest England, may hold as much as 1,300 trillion cubic feet of gas. That’s enough to meet demand for almost half a century with extraction rates similar to U.S. fields, according to Bloomberg calculations.

The U.K. government has offered tax breaks to drillers to stimulate the shale industry amid rising fuel imports and declining reserves from the North Sea, which has yielded about 42 billion barrels since the 1970s.

No Shale Gas

The likely range of shale oil in place in the Weald is 2.2 billion to 8.6 billion, the BGS report said, adding that shale gas potential in the basin is limited.

IGas Energy Plc, a shale explorer with some operations in southern England, rose 3.9 percent to 134 pence by the close in London.

In the latest move to spur the industry, the government said today it plans to “simplify” access to property for the shale and geothermal industries. A consultation on the matter will be open for 12 weeks.

“The new proposals would simplify procedures which are costly, time-consuming, and disproportionate for new methods of underground drilling,” the Department of Energy and Climate Change said in an e-mailed statement. “Oil, gas and deep geothermal companies will be able to explore their potential, and will in return provide a voluntary community payment for access.”

Opponents of drilling criticized the plans, saying they could damage the political prospects of the ruling Conservative Party in areas of traditional support.

“Stripping away people’s property rights while trying to kick off a Klondike-style shale oil rush in the Home Counties is a highly toxic policy mix,” Greenpeace said in an emailed statement.

In October, the group encouraged landowners to use trespass laws to block exploration, saying drilling horizontally under people’s land was illegal unless the property owner gave consent. Protests last summer at Balcombe in the south hampered drilling by Cuadrilla Resources Ltd.

 

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