Onshore oil and gas exploration, and indeed fracking, in the UK is not new – it has been going on for around 150 years in the recovery of conventional onshore oil and gas. In that time, 2,000 wells have been drilled, of which around 10 percent have been hydraulically fractured. In the UK today, there are 120 sites with 250 operating wells producing around 20,000 barrels of oil equivalent a day.
The main difference between recovering conventional oil and gas reserves (which are trapped in reservoirs under impervious rock formations), and shale gas (which is both produced and trapped within shale rock itself) is that the former can be relatively easily extracted by drilling alone. To release shale gas, however, it is necessary to stimulate the flow of the gas by hydraulically fracturing (fracking) the rock using high-pressure fluids. It is primarily around the fracking process and its perceived consequences where most of the public concerns lie.
US and UK industries
The US has led on the technology and extraction of shale gas. Some of the statistics and projections quoted are impressive, though there is an ongoing debate as to how sustainable the sector is in the longer term. An IHS Global Insight study found shale gas production supported more than 600,000 jobs in 2010, contributed $76.9bn to the economy and is projected to triple its contribution to $231bn by 2035. As well as financial benefits, shale gas has also reduced the dependency on energy imports with annual net imports of natural gas falling by around 49 percent between 2007 and 2011. The IHS report also stated that, over the next 25 years, the shale gas industry will generate more than $933bn in tax revenues for local, state and federal governments, and will give an annual average addition of $926 to each household between 2012 and 2015.
Oil and gas wells in the UK
Have been hydraulically fractured
Sites in the UK today
Barrels of oil equivalent produced per day
There is currently no commercial shale gas production in the UK, with activities limited to exploratory drilling by a small number of companies. However, shale gas may be attractive as an emerging energy resource for the UK, depending on geological conditions and improvements in the technology of extraction. In particular, it could be a potential replacement for North Sea oil and gas production, which has reduced over the last two decades. In 2000, the UK was exporting gas equivalent to 14 percent of UK gas demand: by 2011, it was importing 45 percent of UK demand, and, by 2030, this is expected to increase to more than 70 percent. This poses a threat to UK energy security if it is not replaced by other energy sources.
The study of the UK’s Bowland-Hodder Shale resource by the British Geological Survey in 2013 estimated the total resources of the entire Bowland Shale layer were between 23trn and 65trn m3, higher than previously thought. A more accurate estimate won’t be available until drilling and analysis has taken place, but it is likely the amount of gas in this area could provide the UK with decades of natural gas.
The Institute of Directors presented a scenario where UK shale gas production could attract investment of £33bn and boost employment by supporting up to 74,000 jobs. Similar conclusions were drawn in a report by Ernst & Young, which focused on the viability and benefits of developing a UK supply chain for the shale gas industry, estimating around 65,000 jobs could be created across the UK economy. However, these estimates depend critically on the cost of extraction in the geological conditions in the shale deposits in the UK.
Innovate UK’s review
Innovation has been, and will continue to be, a key driver of UK growth, productivity and economic prosperity, accounting for up to 70 per cent of economic growth in the long term. It enhances health and welfare and helps us address key challenges facing society, such as ensuring clean and sustainable energy, and food security, and responding to demographic change. The challenges posed by shale gas are therefore ripe for innovative solutions.
The majority of papers, reviews and reports published about UK shale gas have focused on estimating the available resource, the economic benefits, impact on the UK’s energy mix, and its environmental impact. There has been little focus on the role innovation might play in helping unlock this potential multibillion pound emerging market and assisting it in overcoming barriers to implementation and growth in the UK.
That’s why the experts at Innovate UK stepped in. Building on the UK’s recognised history of innovation in the conventional oil and gas sector, we commissioned an independent review of the opportunities. The review provided evidence that identified and quantified the role innovation could play in overcoming barriers faced by shale gas exploitation and how UK businesses might benefit in both a national and global market.
In consultation with industry, government and key academics, the review provided a detailed analysis of the accessible UK and global market for shale gas, the role of innovation in accessing that market, and identified where the UK has, or could gain, a significant competitive advantage.
The independent review set out and prioritised a number of areas where UK business could benefit through developing innovative technologies and tackling the main barriers to market. In particular, it highlighted that encouraging innovation in system monitoring and environmental management would be important to increase confidence in shale gas exploitation in the UK.
Innovation in both these areas will help allay public concerns over fracking. They could, for example, include technologies that could minimise the amount of water used in the fracking process, minimise noise and light, and even provide open-access, online data to the public so the local communities can get live information from fracking sites.
Based on this independent report, Innovate UK, along with the UK Government’s Department for Energy and Climate Change and the Natural Environment Research Council, set about encouraging innovation in the sector. We ran a £2m competition that supported 19 feasibility studies into technologies that could support a UK shale gas sector and drive forward innovation.
Some of these projects are already attracting interest from developers and putting British businesses one step ahead of the game. Equipment supplier Trolex, working with Durham University, is developing a model to be used by developers to measure emission levels from shale gas sites to improve systems and minimise environmental impact.
Similarly, Slough-based Smartreamer, is developing its SmartFrac method to identify and locate natural fractures in the rock. This will make is easier and more efficient to recover shale gas while minimising fluid use.
Another project, led by surface solutions provider Keronite, is developing novel water purification treatments to ensure the fracking process is as safe as possible. Waste treatment firm Kemartek Technologies is developing a mobile water treatment plant that may remove the need for wastewater to be transported to large treatment sites and reduce transport movements.
Thanks to this programme, innovation will help ensure that shale gas can be exploited in the safest way possible, improve public understanding, enhance our security of energy supply and provide economic growth to local communities and the UK.
By supporting this work, and other companies in the sector, Innovate UK is thinking about the future and making sure it is home-grown businesses that will benefit from this potential multibillion-pound market.