UK study points to shale oil bounty

Shale gain: Fallon wants to develop resources while giving communities 'fair deal'

The Jurassic Weald basin shale play of southern England is home to a mid-case estimate of 4.4 billion barrels of oil in place, a UK scientific report has found.

The British Geological Society’s study begun late last year for the UK's Department of Energy and Climate Change covers counties such as Sussex, Hampshire, Surrey and Kent.

DECC also announced widely-expected plans to alter the right of landowners to block horizontal drilling under their homes.

The proposals, to be put out for 12 weeks' public consultation, would see shale and geothermal operators allowed to drill horizontally underground at depths of at least 300 metres.

Shale and geothermal operators have agreed to a one-off community payment of £20,000 ($33,680) for each horizontal well of at least 200 metres in length under the proposals.

Energy Minister Michael Fallon said the plans aimed to “allow shale and geothermal development while offering a fair deal for communities in return for underground access at depths so deep they will have no negative impact on landowners”.

The minister stressed that operators would still have to go through all other permitting processes before any operations.

"There are controls in place to regulate seismicity, environmental impacts and planning impacts and there are numerous opportunities for local communities to engage ahead of any development," he said.

The UK Onshore Operations Group said it agreed with government that "landowners’ enjoyment of surface land is not impinged upon at all by this activity".

UKOOG chief executive Ken Cronin said the current law "denies access to a much-needed natural resource" and said without amendment shale projects would be delayed and hit with unnecessary costs.

Planning experts pointed out that the existing mining legislation as applied to the petroleum industry requiring permission from landowners is based on vertical drilling from a single pad and came decades before horizontal shale drilling.

Catherine Howard, a senior associate at global law firm Herbert Smith Freehills, said “the law needs to catch up with this technological advance, and recognise that at the depths involved (over 2km) a land owner's enjoyment of his land will not be affected”.

The Jurassic Weald's potential within five clay formations of the Lower Jurassic comes with a low case estimate of 2.2 billion barrels and a high-case estimate of 8.6 billion barrels, BGS's study said.

The BGS stressed its estimates were of how much oil lay in the rock and did not refer to how much was potentially extractable.

The study is a follow up to an earlier report by the BGS of the Bowland-Hodder shale, which made headlines last year when it was estimated the northern England play could hold as much as 1329 trillion cubic feet of gas.

The results will likely spur interest in shale prospective licences set to be offered in the UK’s 14th onshore licensing round, which is expected to be announced next month.

However the report, which Fallon previously promised would be published in the Spring, may be greeted with a backlash of opposition from residents and has already raised the ire of campaigners.

Greenpeace UK energy campaigner Lawrence Carter accused the UK government of “stripping away people's property rights while trying to kick off a Klondike-style shale oil rush in the Home Counties”.

Carter pointed to a recent Greenpeace-commissioned survey that found three-quarters of Britons were opposed to the property rights changes and he also accused the government of ignoring the issue of climate change.

Last year a government-commissioned report by Amec found that even a high rate of shale gas exploration and production activity would have a “manageable and acceptable” level of impact on the UK’s environment.

Read the full BGS study [.pdf format]

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