Scotland may have shale for 30 years' worth of UK gas needs

Mon Jun 30, 2014 7:43am EDT

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* Resources in Scotland's populous central belt

* Most British shale in northern England

* Licensing round for drillers due this summer

* No fracking for extraction has yet been started

LONDON, June 30 (Reuters) - Scotland, heading for a September independence referendum, could hold enough shale gas resources to cover UK gas needs for more than 30 years, a geological report published by the British government showed on Monday.

But Scotland's roughly 80 trillion cubic metres of gas is only around 6 percent of Britain's potential, with the rest mainly in the Bowland Shale region across northern England.

The British Geological Survey report, the third focusing on high potential areas which have covered northern and southern England, said the populous Midland Valley area of Scotland also holds around 6 billion barrels of shale oil.

Energy Minister Michael Fallon set the findings firmly in the context of Scotland potentially splitting from Britain.

"Only the broad shoulders of the United Kingdom can attract investment in new energy sources and maintain the UK's position as one of the world's great energy hubs - generating energy and generating jobs," he said in a statement

Britain is betting on the development of shale gas to help curb its growing dependence on imports and to stem a decline in oil and gas tax receipts as output from the mature North Sea basin falls rapidly.

Scotland already produces the bulk of Britain's oil and gas and estimates for future conventional fossil fuel production show this is set to continue.

In total, the three BGS reports on unconventional oil and gas resources showed Britain has around 1,409 trillion cubic feet of shale gas and 10.4 billion tonnes of shale oil in place.

These estimates are based on scarce data and further exploratory drilling needs to be undertaken to determine how much shale oil and gas can actually be recovered, the BGS said.

None of Britain's shale gas explorers have yet undertaken any hydraulic fracturing, or fracking, whereby shale gas is extracted from deep rock formations by breaking it using water, sand and chemicals.

The shale gas industry is gearing up for Britain's first onshore oil and gas licensing round in six years that will allow companies to bid for permits in shale oil and gas areas.

Some of the companies active in Britain's shale market are IGas, Egdon Resources and Cuadrilla.

"This report will give reassurance to investors who wish to explore for oil and gas onshore in Scotland," said Ken Cronin, chief executive of the UK Onshore Operators Group representing the industry.

Some critics of shale gas, including environmental groups, claim shale gas extraction damages the environment because of harmful chemicals it uses. (Reporting by Karolin Schaps, editing by William Hardy)

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