Utility Week

18 | 24TH - 30TH JUNE 2016 | UTILITY WEEK Operations & Assets Analysis W ith no planning applications approved in the UK since 2012, the decision by North Yorkshire County Council to approve Third Energy's fracking application has begun to put the pieces of the shale gas puzzle together and has rekin- dled hopes of a shale gas revolution. Nevertheless, a number of obstacles remain. Here, Utility Week examines what those hurdles are, how they might be over- come, and what would need to happen for shale gas to become a mainstream part of the energy system. Proving it is safe The industry needs to allay safety fears, and speciƒ cally concerns about water contami- nation and seismic activity. Newcastle University professor of geo- energy Robert Davies heads the fracking research consortium Reƒ ne and says its research has uncovered a series of issues "around trust, the language people use, and the amount of engagement that's happened". Participants said they felt they "were being sold something" and were sceptical of the motives of industry players. Durham University CeREES Centre for Geoenergy director Andrew Aplin says the discourse has reached a point where talk won't cut through. He says operators need to use early wells to demonstrate "they can do it safely and with low impacts". Gas Forum managing director David Cox agrees: "I think once you see something going on and there's no end of the world – earthquakes or contaminated water – then people will start to relax a little bit." Demonstrating its commercial viability "We know there's a huge amount of gas in the ground," says UK Onshore Oil and Gas director Corin Taylor. "What we don't yet know is how much of that gas can • ow to the surface. Will enough • ow to the surface to make it commercially viable?" Aplin says around 20 to 30 wells will need to fracked before the industry can get a decent idea of the potential productivity of the UK's geology: "Some wells will probably produce a reasonable amount of gas; some won't. It's o™ en hard to know why until you actually build up that database." IGas chief operating oš cer John Blaymires believes UK shale gas should be viable if British wells can achieve the same • ow rate as US wells. Despite higher drilling and regulatory costs, he says UK has the advantage over the US of more developed gas infrastructure in and around its ƒ elds which it can "tap in to". He says: "We have a market on the doorstep so getting it to market is easier and relatively cheaper." Much of this will depend on the price of gas. The US shale industry has moved from boom to bust a™ er a fall in prices. Even if UK wells can match US • ow rates, they will still not be economic if the gas price is too low. The road forward The shale gas industry is still very much in its nascent phase. The North Yorkshire deci- sion marks a signiƒ cant step but one that is only the sector's ƒ rst. For the shale gas revolution to take hold, many steops more need to be taken before the industry can grow up. Safety concerns are likely to remain a concern and must be allayed to recruit public support or at least dampen opposition. However, the main driver behind how the industry will develop is economics. If frack- ing can prove itself commercially, one of the biggest hurdles to it becoming an established part of the UK energy scene will be over- come. Once the numbers stack up, the drills will be heading down and the fracking puz- zle will become complete. The big picture on shale The granting of planning approval for Third Energy's shale gas test well is a signifi cant development, but it is only the fi rst step for an industry with much to prove, says Tom Grimwood. Why developing a shale gas supply matters to the UK As the UK continues to decarbonise its energy system, with coal being taken completely o the system by 2025, natural gas is viewed as the logical transition fuel. In 2015. gas plants generated 30 per cent of the UK's power, and a recent report from Bloomberg New Energy Finance predicted gas would still be the country's largest single source of power in 2040. Gas also plays – and is set to continue to play – a big role in heating. It meets 70 per cent of the UK's heating needs and 80 per cent of British households use it to keep warm, as well as for cooking. The diˆ culty of replacing it with something else means gas is likely to keep playing a signi‰ cant role in heating for some time. While gas is set to remain an impor- tant part in the energy mix, production from the North Sea is in decline. Accord- ing to Decc ‰ gures, the UK imported 45 per cent of its gas in 2015, and by 2030 nearly three-quarters will come from other countries. Relying on imports for so much gas will leave the UK vulnerable to supply disruptions and price fluctuations. Having another reliable source of "home grown gas" such as will help to reduce the reliance on imports and boost the UK's security of supply.

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