| LONDON, June 27
LONDON, June 27 Shale resources in the north of
England could be much larger than previously thought, raising
the prospect of new domestic gas supplies to replace dwindling
North Sea reserves, a government source said on Thursday.
A report by the British Geological Survey (BGS) due to be
published later on Thursday will estimate there is 1,300
trillion cubic feet (tcf) of gas in rocks in the so-called
Bowland shale area, which could transform the country's energy
Previous estimates have suggested a total of some 5.3 tcf
could be recoverable in Britain as a whole, implying a resource
of 53 tcf assuming a 10 percent recovery rate.
Britain, Europe's largest gas consuming nation, hopes to
follow the United States into energy independence by exploiting
shale gas, but the country's industry is at an early stage and
it is not yet known whether shale gas can be produced
The government is keen to reduce the country's dependence on
gas imports from countries like Norway and Qatar, as imports are
due to surpass gas from domestic North Sea production by 2015.
Britain's energy secretary Ed Davey is due to announce the
estimated size of the shale resources later on Thursday. He will
also outline policies aimed at stimulating investment in shale
and the electricity market.
Finance minister George Osborne has promised generous tax
breaks for shale gas developers and there are plans to help
improve the industry's public image by passing on some of its
financial benefits to local communities.
Typically in shale only 10 to 15 percent of the gas in place
is recoverable, and that recovery depends on the type of rocks
and their response to the controversial fracking technique used
in extracting the gas.
Britain's annual gas consumption is about 3 tcf, meaning the
country could look forward to decades of energy independence
should 10 percent of the 1,300 tcf estimated resource be
Big resources, however, do not always translate into new
Initial excitement about Poland's shale resources, for
example, has been tempered after early drilling suggested
extraction would be tough and downgrades to initial estimates of
volumes of gas in place, prompting U.S. major Exxon Mobil Corp
to quit the country.
Companies already exploring for shale in the Bowland area in
northwest England, the country's most prospective area, include
IGas, which has estimated it has between 15.1 and 172.3
tcf of gas in place on its licence alone, while Cuadrilla, which
is partnered with utility Centrica Plc, has said it
believes there is 200 tcf of gas in place in the area.
Drilling to test the shale over the next few years will
prove critical for the country's infant industry, which must
also reassure a sceptical public and vocal environmental lobby.
Shale gas is ordinary natural gas trapped in dense rock
formations. The process of hydraulic fracturing, or fracking, in
which water and chemicals are pumped deep underground to break
open the rocks, has lead to fears it could cause earthquakes and
contaminate drinking water.
A year-long ban on drilling was recently lifted after the
government imposed more stringent rules on fracking to reduce
any earthquake risks.
Shares in IGas were up 9 percent in early trading on