The madness of shale

By Matt Peacock, Senior Partner

Of all of the many UK Government policy missteps I’ve encountered during my career, the notion that the UK could ever develop a functional shale gas industry at scale has to be the most risibly delusional.

Some context: from 2007-2011, I was the Group Communications Director for the world’s leading international gas major, BG Group (which was acquired by Shell in 2016). I’ve worked on US shale gas acquisitions in West Texas as well as other ‘unconventionals’ acquisitions (as they’re known in the industry) such as coal seam gas projects in Australia.

Here's the first thing I learned about shale gas: it is a wilderness technology. It works well in vast empty spaces where hardly anyone lives. And it is profoundly implausible in densely populated landscapes where a lot of people live.

A quick teach-in to begin with. Shale gas production is not the same as ‘conventional’ hydrocarbon production. Conventional oil and gas accumulations (like those in the North Sea) are deep and wide with a production life measured in decades. Wells are drilled vertically into the reservoir. A single well can produce thousands of barrels of oil equivalent per day, and it can keep producing (with maintenance and upgrades) for many years.

Shale gas accumulations were laid down in thin layers of sediment beneath primaeval rivers. They follow a long, sinuous and narrow path, snaking in a shallow and thin ribbon far below our feet. You need a very large number of wells, drilled horizontally, that follow the course of the ancient river. Typical per-well production volumes are a small fraction of their conventional equivalents. Most wells pass peak production after around 18 months. Maintaining production levels requires the constant addition of new wells.

Wherever the shale goes, the wells must follow, for mile after mile across the countryside. For every 30 or so horizontal wells you drill, you need a dense concrete ‘well pad’ covering around two to four acres, similar to a medium-sized industrial estate. The well pad houses production facilities operating 24/7 with a rig and derrick (the big tall metal tower) on site when drilling new wells.

To produce the shale gas, you need to fracture the shale (‘fracking’) by pumping water under enormous pressure into the subsurface. The water is stored in open-air pits about the size of a small reservoir. In most locations the water is transported to the well pad by tanker lorry; there are a lot of HGV movements in shale gas operations. And the gas has to get from wellhead to grid to reach our homes. That means lots of pipelines. Sometimes these are buried, but it is faster and cheaper to mount them on the surface.

That’s how it works. Now let’s turn to how it looks. Because this is where policy rhetoric and earthly reality part company, and to a baffling extent.

Here’s a simple task. It takes seconds. Go to Google. Type the words “US shale gas aerial photos”. Then select the “Images” tab.

That is what shale gas production looks like. The well pads, water pits, access roads and pipelines deform and scar the landscape far out to the horizon. It is brutally ugly and intrusive.

Now hold those photos in your mind and superimpose that kind of industrial despoilation onto the prime farmland, villages and country towns of the English green belt, Areas of Outstanding Natural Beauty and National Parks under which much of UK shale would be found (assuming it even exists at scale: more on that in a moment).

IMAGE : A single shale gas ‘pad’

UK shale production would require around 400 well pads (based on UK Government and industry estimates). They’d be located around half a mile apart in the densest production zones (similar to the Google images), supported by numerous open-air water pits and hundreds of miles of new pipelines. And much of this would be concentrated within narrow bands across some of England’s finest and most fiercely protected countryside.

A new industrial estate in every other field. Pipelines along every hedgerow. Endless lorries thundering through bucolic villages night and day. And all this in a part of the world where it takes months for a homeowner to get planning permission for a new conservatory, it can take years to clear planning for a new mobile phone mast, a decade for a new housing estate and half a century for a new railway line or road tunnel.

Then there are the vast amounts of water that would be pumped underground in parts of the country that are increasingly water-stressed. The fact that fracking can cause minor earth tremors (tolerable in the emptiness of the West Texan scrublands, rather less so in West Sussex). And that’s without even taking into account the emissions involved (including fugitive methane: gas wells leak) that would be fundamentally incompatible with the UK’s net zero commitments.

There is one final delusion at work here. These resources may not even exist at all. And, at best, if they do, they are almost certainly sub-economic.

In the oil and gas industry, there is a long journey from “hydrocarbons initially in place” (a rough estimate based on seismic surveys and other geological data) to “proven reserves”. The latter will always be an extremely small proportion of the former. To ‘prove up’ reserves, you have to drill test wells (and quite a lot of them for shale) which hasn’t happened at scale in the UK, and – as I’ve outlined above – probably never will.

You also need confidence that those reserves are “economically recoverable”. There’s no point in extracting a loss-making resource. No profit means no production. The UK is a very expensive place to build complex and controversial infrastructure. There is a reason why none of the world’s leading international oil and gas companies have invested heavily in UK shale. It would be a high-cost, low-gain sub-scale distracting side bet with very challenging economics. That’s also why shale gas hasn’t proven to be viable at scale anywhere in Europe, including in Poland where the largest unproved accumulations are located.

One of the many low points during the chaos of the Liz Truss administration was her reference to the UK’s “huge reserves” of shale gas. Um, no. They’re not “reserves” at all. They’re a guess, that’s all. And they are extremely unlikely to be “huge” under any industry definition of economic recoverability.

What’s more, the UK probably has the wrong kind of geology anyway. The UK’s sedimentary basins have been warped and deformed over time and are unlikely to offer much of value. Rather like the last few years of UK energy policy, in fact.

To paraphrase Oscar Wilde’s description of foxhunting, UK shale gas is the uninformed in pursuit of the unproducible. It is a stunningly foolish policy mirage and an inexcusable waste of political energy. Just stop.