Editorial comment
The UK will be a place for shale gas companies to see, and be seen, over the next few years. IGas is a leading onshore hydrocarbon producer in the UK, delivering natural gas and crude oil to Britain’s energy market and has recently announced that it has previously underestimated the volumes of its gas resources in northwest England. The company has now predicted that its licensed sites in Cheshire hold approximately 102 trillion ft3 of shale gas. These volumes of reserves could meet British gas consumption demands for many years to come. In an interview with the BBC, Andrew Austin, the company’s Chief Executive, said, “We [Britain] import around 1.5 trillion ft3, we consume around 3 trillion ft3 a year. Assuming you could recover technically something like 10 to 15% of the shale gas in place, then it could move import dependency out for about 10 to 15 years.” The company will start drilling this year.
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Many O&G players in the UK have strong hopes that the country will, at some stage, manage to replicate the success of the USA in harnessing the resource. Development of shale plays in Europe is slow, but the region’s markets are still affected by the huge shale exploitation in the US; last year LNG cargos were diverted from the US to Europe, which made gas from Russia expensive in comparison. But Gazprom is insisting that its gas is competitive now, and expects European exports to rise by 9.4% this year. The state controlled energy group is nothing if not confident. A recent Financial Times article quoted Alexander Medvedev, Gazprom’s Deputy Chief Executive, as saying “Gazprom will continue to play a leading role as a gas exporter. As The Beatles sang, ‘All you need is gas’.” Inaccurate song quotes aside; European gas demand is actually on the decline, as, over recent years, Europe soaked up the surplus US domestic coal supplies sidelined by the shale phenomenon.
Oil & Gas UK, the leading representative organisation for the UK offshore oil and gas industry, released a statement last month revealing that companies delivering drilling, completion, testing and maintenance for oil and gas wells generated gross revenue of £1.9 billion (US$ 3.05 billion) in 2012, apparently the highest since records began in 1996. Spending on equipment and technology rose by approximately 5% from US$ 178 million to US$ 186 million. Well services contractors spent up to 90% of their annual capital investment on developing new technologies. The Rt Hon Dr Vince Cable, Secretary of State for Business, Innovation and Skills, acknowledged ‘The Long and Winding Road’ ahead for the UK O&G industry, saying: “These figures show just how valued the UK’s expertise in the oil and gas sector is across the world. They also emphasise the value and potential growth of the industry to make a stronger UK economy. We want to continue to attract investment into the supply chain so that we can compete internationally.” The UK will clearly be working ‘Eight Days a Week’ to maintain its competitive edge on the international O&G stage.